What if Uncarrier 4.0 is other carriers’ early termination fees covered? [UPDATE: It probably is]

houdini

Ever since John Legere teased Uncarrier 4.0 on his twitter account earlier this week, I’ve been racking my brains trying to decide what it’s most likely to be. In terms of its own plans, value and available products, T-Mobile has done about as much as it can do to convince customers to join. It has unlimited (and unthrottled) data, international roaming, a non-contract plan, and the ability to upgrade whenever you want. So, what else could it possibly do?

After posting the announcement piece I was emailed by someone whose clear desire was to remain anonymous. He left no email for me to get back in touch and used a pseudonym. So, I wasn’t able to verify anything of what he gave me. It’s why I’m not posting this as a “this is what Tmo’s plans are”. Instead, it got me thinking and I wanted to hear your thoughts on how likely it is and what it could mean for the mobile industry. All in the spirit of speculating and provoking thought and debate.

Here’s the information I was given:

…he’s teasing a project code named “houdini” which will give switchers up to $350 in credit when they switch to TMO… Emphasis will be on families switching up to 5 lines regardless of contract end dates…

New customers will receive instant credit when they trade in a smartphone, then get a credit for the ETF charged by their old carrier when they submit the final bill to TMO.

I have to admit, I was very skeptical when I read it. For single lines, this makes little business sense. Let’s say you are with Verizon, have only one plan, and want to switch to T-Mobile. You get your early termination fee covered, sign up to EIP on T-Mobile and pay it off immediately then cancel your Simple Choice plan. In that situation, Tmo has lost money.

But, when you start talking families, it makes a lot of sense. I mean, if you have 4 lines on Verizon or AT&T, and are desperate to save some money, switching to a different carrier is no easy task. Of course, you could save a packet on T-Mobile, but if you have a good chunk of time left on your contract with VZW, how do you get out of it to switch? It’s even harder still to switch if each of those 4 lines has a different end date.

Let’s use a “typical” 4 person family: Dad, mom, brother, sister. Dad has 12 months left on his line, mom has 4, brother has 8, sister is due an upgrade. In that situation, the endless cycle would normally continue as the daughter starts looking around for upgrades. Switching isn’t an option, since the rest of the 4-person family are nowhere near an end.  Using Verizon as an example, the early termination fee for smartphone users is $350 minus $10 for each month they’ve had the contract. So, Dad is $350-$120 = $230. Mom is $350-$200 = $150. Brother is $350-$160=$190. Sister is $0. In total, that’s $570, a total which T-Mobile could potentially pay off if they trade in their old phones (to pay the down payments on new ones) and get their final bills covered by this “Houdini” scheme. Switching and sorting the finances isn’t hassle-free, but it’s not going to be expensive.

To T-Mobile, it would be a fairly bold move. But with families, it’s not as risky as with a single consumer. Customers may well choose to go through this hassle to switch to a carrier with better value and more customer-focussed plans, but would they really be bothered to do the opposite, and leave again? I doubt it. Tmo could have a group of people here who are customers for life and have no desire to leave. This is presuming that they’ve checked coverage in their most-frequented locations and know they’ll be good with magenta.

Here in the UK, we find independent phone stores offering to pay off the last few months of our contracts all the time. The normally limit it to around 6 months, but it is done. Our termination fees are nowhere near as cheap as the U.S., we have to pay the line rental remaining on our plans. But, I’ve personally never seen a carrier offering the same service. Only third party/independent stores.

Now, I’m not saying this is going to happen. I have no way of verifying the information, and I’ve not seen any internal notices or paperwork. But “Houdini” could be just about one of the best magic tricks T-Mobile has pulled off it is in anyway a real plan. Other carrier’s I’m sure would kick up a stink that Tmo was incentivizing the opportunity for their customers to leave. Would it be classed as antitrust? Who knows. It’s not even a real thing yet. It may never be.

What do you think? Could Tmo pull this off? Is it going to happen, or is Uncarrier 4.0 something much less exciting and predictable? Let us know your thoughts on what you think phase 4.0 should be.

[UPDATE:

I received another email from one of our tipsters, who sent me an image of an internal document. I promised them I wouldn't publish it here, but, let's just say it goes along with what I've heard already.

This carrier ETF rebate promotion will be launched on January 15th, according to our source. In order to qualify, you must trade in your old device and purchase a new T-Mobile one. The rebate to cover your other carrier's ETF will be achieved by a combination of the trade-in value of your old phone and the promo rebate to cover the difference. If you have a smartphone, the maximum rebate value is $350, for a feature phone it's $200.

For example. Let's say you're the Dad in the above situation, you have $230 to pay your old carrier. Your old phone is worth $100 on trade-in, so T-Mobile stumps up $130 to cover the rest of the cost. How much you get from T-Mobile is entirely dependent on how much you need to pay to end your old contract and how much your old device is worth.

Of course, this is still just a rumor. But we don't have long left to find out if any of this is genuinely in T-Mobile's plans.]

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