Over the past year, T-Mobile's new policies have ushered in a new wave of changes to the way the US wireless industry works. It was the first national operator to introduce phone-financing plans, early upgrades and free international roaming; additionally, it also offers to pay your cancellation fee if you break another carrier's contract to move over. It appears that such practices must come at a cost: CEO John Legere announced that beginning April 1st, T-Mobile will no longer offer its Advantage Program, which features monthly employer rate plan discounts, to new customers. Existing beneficiaries will see the deduction removed from their accounts on April 25th. As a consolation, affected subscribers will now receive a $25 reward card every time they get a new phone.
Update (4/2): According to Legere and CMO Mike Sievert, T-Mobile has listened to its customers, and will let current users keep their discounts. More details are apparently coming tomorrow, but the new plan will only apply to new customers.
Update (4/3): The updated blog post is now available, and confirms that anyone in it, or who applied before April 1st will keep their discounts, however customers will need to verify their employment annually. Going forward however, the plan will work as described, with new customers under those plans getting a $25 reward card when they buy a phone.
First, we'll dive into what this entails. Most wireless operators broker deals with corporations in which employees of that company get a percentage discount on their monthly rate plan -- often, the discount increases as more employees sign up for service. Typically these incentives will range from 5 percent to as much as 30 percent. By removing them, many customers may find themselves with a noticeable change to their bill. If you're a government employee (including military), you're exempt from this transition and you'll continue to receive your usual discount.
In a blog post, Legere explained his reasoning behind the change:
"The old programs were designed to help big carriers close big corporate contracts, with employees as bargaining chips. We aren't playing that game anymore. This change is about simplifying wireless for everyone ... including employees of small and large companies alike."
Legere maintains that despite this move, the value of T-Mobile's Simple Choice plans are still much better than "the other guys." Unsurprisingly, he's positioning this modification as another in a string of UnCarrier initiatives to prove that his company's changing the game by separating itself from the rest of the industry. In a series of tweets to disgruntled customers, Legere answered concerns by saying that not all of T-Mobile's customers could take advantage of these discounts, and he wanted to apply the cost savings to the entire subscriber base instead of reserving them for exclusive deals.
Many of the company's earlier changes have been immensely successful -- Simple Choice, Jump! and unlimited international text plans are just a few examples. But there are also a few recent policy changes that haven't been as popular: Last month T-Mobile adjusted its Jump! early upgrade plans so you could only upgrade once you've paid off half of your phone, and earlier this month it bumped unlimited data rates up $10.
Arguably, these aforementioned changes may simply be side effects of those UnCarrier moves that have proven quite successful. After all, incentives (such as free international data) come with their fair share of costs, and T-Mobile needs to compensate for those losses somehow -- especially since Legere announced that the company would continue adding more UnCarrier plans in the future. "This is just one more step in the [UnCarrier] movement," he said. "And, we're not done yet."
[Image credit: Getty Images]
Lots of questions about employer discounts. Current corp customers can keep their discount. Details tomorrow! #WeHeardYou- John Legere (@JohnLegere) April 2, 2014
Good news. Tomorrow we will announce that current corp customer employees can keep their discounts. New plan will apply to new customers.- Mike Sievert (@SievertMike) April 2, 2014