Ina Fried

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T-Mobile: AT&T’s New Plans Make You Pay for the Same Phone Twice

T-Mobile lashed out Tuesday at new rate plans from rival AT&T, criticizing them as a poor imitation of T-Mobile’s earlier efforts.

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Mike Sievert, T-Mobile’s chief marketing officer, said that when his company did away with phone subsidies it also lowered monthly rates. AT&T’s new Next plans, by contrast, charge the same monthly rates while also eliminating the discount typically provided by carriers when purchasing a new phone.

“You get to pay for the same phone twice,” Sievert said in a telephone interview.

Both AT&T and T-Mobile’s plans allow customers to upgrade more frequently by trading in their old device. The programs take advantage of the fact that modern smartphones tend to have significant resale value in the months after they are first sold, as well as the fact that the industry spends a fortune to both sign and retain customers.

T-Mobile’s monthly rates are lower, though its Jump program does require a $10 monthly fee, which also includes insurance against theft, loss and damage.

“Our friends at AT&T have really gotten it wrong,” Sievert said. “Far from being disruptive innovation, it’s just another way for [AT&T] to take more money from the customer than ever.”

AT&T, obviously, has a different viewpoint, saying that the carrier’s Next program is about offering its customers another choice in how they buy their phones.

“AT&T Next is designed for people who want zero down payment and a new smartphone or tablet every 12 months. It’s something no other company offers and it’s an additional choice we offer customers along with traditional two-year subsidized pricing and no commitment pricing,” said AT&T spokesman Fletcher Cook in response to T-Mobile’s comments. “The best choice for customers who prefer keeping their devices for two years or more is our popular two-year subsidized pricing.”

Both of the programs from AT&T and T-Mobile are designed to remove a key cost for the carriers — the large amount of money they spend to discount new phone purchases for customers. Verizon is rumored to be readying a similar program.

T-Mobile is pitching its program as part of its ongoing “un-carrier” effort to systematically go after key customer gripes about the cellphone industry.

“For us, it’s all part of a larger strategy,” Sievert said. “There is so much left to be done in this industry.”

T-Mobile CEO John Legere indicated at an event last week that the company has a third phase to its campaign, which began in March with the effort to end device subsidies and continued last week with the early upgrade program. Another event is expected this fall.


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There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google