Traditionally, if you wanted to have a cell phone in the U.S., you’d have to sign on with a carrier for at least two years. If you were dissatisfied with the service or wanted to take your business elsewhere before the contract was up, you’d have to pay hefty “early termination” fees. Verizon told me to pony up $175 if I wanted to pack my bags.
Now T-Mobile wants to pay those fees for converts, if they’ll switch to its service.
It's part of the company’s “UnCarrier” business plan: If mobile customers cancel their contracts with other carriers and switch to T-Mobile, the company will reportedly pay up to $350 toward new customers’ cancellation fees if they bring three or more lines.
That’s a nice chunk of change, but it’s worth noting that an average early termination fee can easily approach $200. If you want to cancel a family’s worth of lines at once, you’ll still incur a good amount of financial damage. Additionally, part of the deal is a device change. That works out if you wanted to upgrade anyway, at least.
Still, it further “shakes up the wireless industry,” as T-Mobile has been trying to do lately.
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The past year has been an exciting one for T-Mobile; as 2013 New Year’s resolutions, CEO John Legere vowed to “End 2 year service contracts,” “End upgrade runarounds” and “Deliver a nationwide 4G LTE network.” Hint: T-Mobile accomplished all that, and that was predictably good for business -- the company gained a million new customers in the fourth quarter of 2013 alone.
A traditional (and true) argument against T-Mobile is that their network is inferior to the Big Three. This has been especially true in the 4G market, as T-Mobile fell behind Sprint, AT&T and Verizon. Combine the recent nationwide 4G LTE network and a major purchase of low-band assets from Verizon earlier this week, and it’s clear that T-Mobile is trying to address the criticism.
It remains to be seen if T-Mobile can compete with Sprint’s gigantic net of prepaid, no contract services (Virgin Mobile, for example) who reap the benefit of Sprint’s 4G LTE network. What T-Mobile does have over those other services? It gets most of the popular phones at launch.
It’s only January, but if 2014 is as momentous for T-Mobile as 2013 was, the Big Three have good reason to be worried.
Update: T-Mobile announced that it will pay up to $650 for cancellation fees.