T-Mobile, in 'Disrupt-and-Attack' Mode, Makes 'Smart' Move

By Craig Galbraith Comments
Posted in News, T-Mobile, Wireless, AT&T
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Who would've thought that T-Mobile would be the talk of this week's Consumer Electronics Show in Las Vegas?

The brash CEO of America's fourth-largest wireless operator, John Legere, has made headlines by crashing an AT&T party and by announcing a plan to pay the early-termination fees (ETFs) for anyone who wants to break their contract with their existing provider and switch to the Magenta Network.

“When T-Mobile was looking for a new CEO, we encouraged them to hire a disruptive one," noted Yankee Group senior analyst Rich Karpinski, commenting specifically on a New York Times article. "We didn't expect that John Legere, who has a past in traditional telecom, would be so aggressive and out-of-the-box. But he's done a stellar job of shaking things up—while delivering strong marketing, sales and operational execution as well.

T-Mobile's new offer is good for up to $650 and five individual lines per family. It's the latest move in the operator's "uncarrier" strategy, which it launched last spring. The company was the first major operator to do away with postpaid contracts for new customers. This latest move is the next step in its strategy.

The ETF plan was leaked a couple of weeks before Legere's announcement on Thursday. AT&T beat T-Mo to the punch last week, saying it would pay up to $450 in credit to customers who would switch – but Karpinski thinks it'll work better for T-Mobile.

" ... buying customers has never been a successful long-term strategy in the mobile industry, and one that Wall Street will surely hate, as it dampens profits. Also, weren't operators just saying they wanted to put an end to device subsidies so they could lower their costs? What they've done – at least T-Mobile and AT&T at this point – is take some of that real subsidy savings and send it right back out the door," Karpinski said. "We were surprised to see AT&T ‘go there’ last week. It's smart for T-Mobile, though, as it is still in disrupt-and-attack mode — a place that the operator knows very well."

Follow senior online managing editor @Craig_Galbraith on Twitter.

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