In what some see as a return of a “quasi un-carrier vibe” from days gone by, T-Mobile called out AT&T and Verizon for raising fees on cell phone bills, reiterating that T-Mobile isn’t doing that during these inflationary times.
T-Mobile once again emphasized its Price Lock commitment, which ensures it won’t raise the price of its existing wireless rate plans even as costs for everything else go up. In fact, T-Mobile said in a press release Tuesday that when consumers switch to T-Mobile’s Magenta Max, they’ll get $200 per line via a virtual prepaid card and up to $1,000 with five lines.
It’s all part of the debate happening now as prices go up and profitability takes center stage. Can carriers post stable revenues when they’re dealing with increased costs themselves or do they need to raise prices?
“I was wondering myself, is T-Mobile going to raise any pricing?,” said Wave7 Research principal Jeff Moore. “T-Mobile is not immune to this,” but they made their intentions pretty clear on May 27 when they launched an ad featuring actor Ben Barnes talking about “economic adjustment charges” from T-Mobile’s rivals.
To be sure, T-Mobile faces a well-entrenched base of consumers who for years were accustomed to Verizon boasting the best network and AT&T bragging about better coverage. So it’s got its hands full trying to persuade these diehards to come to its side in the 5G era.
Through TV ads and at investor conferences, T-Mobile has been pushing this theme that “you don’t have to choose” between the best network and lowest prices anymore, Moore said. In the old days, “maybe you had to choose between getting the best network or saving money on your wireless plan. Now, you can do both. You can get the best 5G network and you can save money.”
It’s reminiscent of the old days where T-Mobile positioned itself as the underdog to help consumers and the ire has always been cast on AT&T and Verizon. Of course, much of this latest promotional campaign seizes on the headlines about price increases, he said.
The Price Lock PR positioning is a good tagline in light of today’s economic environment, said analyst Bill Ho of 556 Ventures. “The $200 per line isn’t as much as the old days (~2015) of getting up to $650 to switch or paying off the remaining balance of phones, but it’s in that spirit,” he said.
However, “beneath the hood, the $200 requirement is for the flagship Magenta MAX plan. This ensures new subscribers /accounts would yield higher ARPU and ARPA, respectively,” Ho said, noting that the increased pricing was telegraphed by AT&T CEO John Stankey in AT&T’s first quarter earnings call that set the stage for rival Verizon to follow suit. “T-Mobile just took advantage of their negative press and pushed their promotion agenda,” he said.
What’s appearing in ads is a promise of 20% savings over AT&T and Verizon, and “I think that’s based on a comparison of the Essentials plan” to some of the low-end plans from AT&T and Verizon, Moore said.
UScellular also said it won’t raise rates through 2023.
“We clearly have two camps. Verizon and AT&T boosting taxes or fees and then you have T-Mobile and UScellular saying that they’re going to hold the line,” Moore said. “I think what T-Mobile might be trying to do right now … they have this un-carrier branding and I think they’re trying to shine that halo a little bit.”
If T-Mobile raised prices, people would immediately jump on that and accuse them of being less “un-carrier” than they used to be. “Now they can shine their halo and say, ‘well other people are raising their rates. We’re not.’”
Indeed, in a report this week, Wave7 noted a February 19 increase in one of T-Mobile’s fees, as seen here. The fee applies to T-Mobile Essentials customers and select others, but on balance, most T-Mobile customers were not impacted by this fee increase, according to Wave7.
He pointed out that pricing of unlimited plans has not changed. What AT&T increased was on older plans. “The pricing of unlimited plans has not been impacted for any of the three carriers,” he said.
Wave7 also reported that Verizon no longer has shared data plans on its website. Reps have it as an option – for example, if someone is half-way out the door and says they’re leaving because they don’t want to pay for an unlimited plan, “the rep can pull that out of his back pocket and say, ‘well, we do have this plan,’” Moore said.
In a blog post Tuesday, analysts Walter Piecyk and Joe Galone of LightShed Partners reviewed a host of events and metrics in the wireless industry and suggested “maybe it’s time to just increase price.”
Sure, wireless operators use “admin fee” increases because they fear increasing the advertised headline rate plans; high rates cause churn and impact growth, “or so they believe,” the analysts wrote, noting that in T-Mobile’s case, it would raise extra scrutiny from regulators based on its promise not to raise rates for two years.
“Perhaps these companies should reconsider,” the LightShed analysts said. “Churn is at near record lows and there is broad consumer awareness of inflation, providing the cover for these pricing moves. We also question the sustainability of phone subsidies to retain subscribers or impact what marginal switching still exists. Is it time to give up on share gains and just start increasing price?”
Backlash from AT&T’s price increase on some plans seems to be limited, they said, citing a statement by AT&T’s Stankey at a May 23 investor conference where he said: “On the demand side, I’m not seeing any softening right now.”