T-Mobile CEO Strikes Out at AT&T Again

T-Mobile's  (NYSE: TMUS  ) John Legere has no problem calling out his competitors. He has built his company's growth strategy around the idea that it's not like its rivals, with the clear implication that other players in the mobile phone market are less than honest with customers.

He has not spared any of the major players from his verbal and social media attacks. He has gone after market leaders AT&T  (NYSE: T  ) and Verizon  (NYSE: VZ  ) , which hold the top two spots, as well as Sprint  (NYSE: S  ) , which is locked in a battle with T-Mobile for third.

His latest salvo has AT&T firmly in the cross-hairs. On a blog post Monday, Legere showed open revulsion for AT&T's advertising that touts its pricing plans for families.

Leaving my office last week, I pulled alongside a bus covered with yet another ad for AT&T's "Best-Ever Pricing" for families. These ads are everywhere. AT&T's sinking some serious dough into marketing their latest-greatest family pricing, which strikes me as funny. Because their deal is no deal at all, and next to T-Mobile's Simple Choice Family Plan, AT&T's "Best-Ever Pricing for Families" is a joke. 

That's a pretty harsh assessment, but Legere was comparing the AT&T offer not to T-Mobile's current deal, but one it will begin offering July 30. The new promotion will give a family of four up to 10 GB of LTE data – 2.5 GB each – until 2016 for $100 a month. That's cheaper than what AT&T is spending millions pushing, and Legere gleefully does the math in his blog post.

AT&T's "Best-Ever Pricing" four lines for $160 vs four lines for $100 with T-Mobile -- with unlimited talk, text, and data plus up to 10 GB of LTE data on our data-strong network. Plus, their "Best-Ever" deal comes with a boatload of crap -- domestic overages, international roaming fees, hidden device subsidy costs, and on and on. 

It doesn't take a genius, right? That's $60 in your wallet every month for a family of four -- or $1,440 over two years. What would your family or small business do with those savings?

Legere is not pulling his punches, nor does he spare his other competitors. "Yes, AT&T's 'Best-Ever' ploy is terrible, but Big Red and the Framily aren't any better," he wrote referring to Sprint and Verizon's plans.

How do the deals stack up?
T-Mobile released a chart comparing its family plan with those offered by its competitors. The numbers -- which match what AT&T, Sprint, and Verizon are showing on their websites -- show T-Mobile offering the lowest price for a family of four.

The chart also highlights that T-Mobile has begun offering some subscribers music streaming from a number of popular services -- including Pandora Media and Spotify -- without counting it against data caps.

T-Mobile is undercutting its competitors and breaking tradition in an industry that always had relative price parity. Sprint, Verizon, and AT&T may package their offerings differently, and one service may be a better deal for some customers in certain circumstances. But in general, prices have always been roughly the same.

By charging less than all three of its major competitors, T-Mobile is sending a message to consumers and ending what has been barely hidden collusion by the major carriers to keep prices above certain levels.

Why is Legere doing this?
Mobile phone companies -- along with cable and Internet service providers -- are the least-liked companies in the United States, according to the American Customer Satisfaction Index. By calling his company "The Un-Carrier" and mocking his rivals, Legere is telling customers that T-Mobile is different from those hated companies. 

In some ways, Legere is following the same blueprint that Southwest and JetBlue did in taking on the more-established airlines in another necessary industry that's not particularly beloved by consumers. It is looking to win over skeptical users by pledging to do things differently in a field where change has been hard to come by.

To succeed, it's important that consumers actually notice. So whether it's by attacking your competitors or running a lot of ads, you have to find ways to let the public know your company is not following industry norms. 

Legere is clearly trying to position T-Mobile as a big business that cares about people, charging less because the American public deserves a cheaper mobile phone plan.

"It infuriates me that they're selling this to hardworking families who could use that money for more important things," he wrote. "And they have the nerve to call it 'Best-Ever Pricing.' I just couldn't stand by without speaking up and calling them on their BS."

This Ralph Nader, man-of-the-people act may be laying it on a little thick, but Legere is making T-Mobile hard to ignore. This should benefit the company with continued subscriber growth, building on the 4.4 million new customers it added in 2013. It also will likely force competitors to either lower prices or at least answer T-Mobile's charges in some fashion.

One of the key ways to be seen as a legitimate alternative to a bigger competitor is to get that competitor to address you by name. T-Mobile is Clubber Lang showing up at the press conference to challenge Rocky Balboa. The fight is on.

 


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 31, 2014, at 12:11 PM, saulfguerrero wrote:

    T-Mobil can make all the changes and price cuts it wants. I for one will stay loyal to AT&T. In 2003 I was deployed to Iraq with the US Army while being a customer of t-mobil. After calling and explaining my situation I was assured that my contract would be cancelled with no penalties. To my surprise I return home after 1 year in combat and a total of 16 months deployed, I find out that t-mobil had sent my account into collections for $200.00 due to early contract termination fees.... After calling their customer service and explaining my situation to them their reply was simply "There is nothing we can do for you..." I firmly believe t-mobil is anti-American and choose to no longer use their services. I would much rather carry a Dixie cup with a string attached to it than to EVER do business with a shady company like this one!!!! S. Guerrero, U.S. Army M.P. 2001-2009

  • Report this Comment On August 01, 2014, at 4:12 AM, alphacueslowly wrote:

    Does this look like the place to complain about your personal experience 10 years ago? Tmobile is "anti-american"? Seriously...

    There are complaints like yours all over the internet for every cell phone company. All the carriers have policies that allow you to suspend service if you are deployed and have it resume when you return, but I don't know if they really cancel your contract without a termination fee. Sounds like you maybe got a bad customer service rep that told you the wrong information. These people are human and make mistakes, so it's just as much your responsibility to make sure your contract is canceled and ensure they are billing you correctly. Maybe if you contacted them before it went to collections they could have done something.

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