T-Mobile ups the ante by eliminating fees

T-Mobile is continuing to rock the boat. From dubbing itself the “Uncarrier” to its CEO crashing an AT&T party earlier this year, the carrier has gone the unconventional route to try to change its fate as the number 4 wireless operator in the U.S.

Its latest antic is no less dramatic as the carrier moves to completely eliminate all overage fees. T-Mobile’s announcement included the shocking fact that more than 20 million Americans were slapped with overage fees in 2013, totaling some $1 billion going straight back to the carriers. Sprint, meanwhile, never charged overage fees and they benefited hugely from the increase in customer satisfaction and reduction in calls to the company about the fees.

But that’s not all. T-Mobile CEO, John Legere, is also laying down the gauntlet and challenging his competitors to do the same and has even gone so far to start a Change.org petition that already has almost 200,000 signatures.

When you take this news with T-Mobile’s previous moves to do away with mobile contracts, simplify service plans and recent news that it would give away free data to cellular tablets purchased at Walmart, it looks like the operator is squarely in the consumer’s camp as it battles against AT&T, Verizon and Sprint.

And its actions have not gone entirely unanswered by the competition, which have all lowered pricing on family (or “Framily,” if you’re Sprint) plans in an effort to fight back. But then the other guys aren’t in the lowly spot T-Mobile is in in terms of customer base and don’t have the same incentive to shake things up.

That said, there are some downsides to T-Mobile’s new overage policy, namely what happens if you max out your data plan in the middle of the month? According to the carrier’s web site, if you’re on the 500MB plan and exceed it you’re pretty much out of luck because service will be suspended. For those on the Simple Choice Plan, once you’ve used up your allotment of 4G LTE data, you’re essentially downgraded to 2G speeds for the rest of your billing cycle, after which you’ll enjoy the higher bitrates again.

This seems complicated and more than a bit frustrating for customers, but it has to be better than the cases of extreme bill shock we’ve been hearing about on a regular basis over the past few years. Also, the simple truth is that as much of a bane as overage fees are to customers, they do bring funds straight to the carrier.

So if T-Mobile’s fees are going the way of the dodo, will that impact their bottom line? Or are they banking on the strategy speaking to customers who are fed up with having to monitor their usage on a daily basis and would rather switch than deal with the hassle?

Only time will tell if this bold move will pay off in increased customers, but so far the numbers aren’t great. During the first quarter of this year, T-Mobile’s ARPU dropped by about $5 from the previous year, and while the carrier did net more than 850,000 new postpaid subscribers, it still fell short of Verizon’s 1.5 million new subscribers.

With such stiff competition, maybe Sprint will be more aggressive in its moves to acquire T-Mobile. Sprint has not been adding new customers at as fast a pace as the other wireless carriers, and a merger could create formidable competition for AT&T and Verizon. But unless the regulators give their blessing, T-Mobile may be relegated to that fourth spot for a long time to come.

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About Anita Karve 37 Articles
Anita is a writer and editor with 20 years of experience covering just about everything in the technology space with a focus on computer networking and telecommunications. She was managing editor of Billing & OSS World magazine and technology editor at Network magazine and most recently was in charge of newsletter coverage at TM Forum.

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