Gloves Are Off! AT&T Pitch To T-Mobile Customers, “Switch & We’ll Pay You $450”

Gloves Are Off! AT&T Pitch To T-Mobile Customers, “Switch & We’ll Pay You $450”
On Friday January 3, AT&T announced that it will pay up to $450 to T-Mobile customers ($200 per phone line, plus $250 when they trade in their current smartphones) if they switch providers. This is the latest in the fight between these two wireless competitors who back in 2011 made a $39 billion deal to “get into bed with each other”.

AT&T pulled the plug on the merger once it became clear that regulators, i.e. the U.S. Department of Justice and the Federal Communications Commission, were opposed to the deal.  AT&T also had to pay T-Mobile up to $4billion USD in fees once they decided to end their quest to acquire T-Mobile.

Ever since the merger went south, T-Mobile has worked hard to challenge the competition and lure their customers away from them.  First, in 2012, it hired CEO John Legere who is no stranger to trash talking the competition on social media.  Secondly, in 2013 it completely turned the industry on its head by doing three things.  It started by wiping out contractual agreements for phone plans so that customers and small business owners do not have to sign a 2-year contract to get a good deal on brand new phones in the marketplace.  Then, it made it cheaper for customers to take a smartphone abroad by eliminating roaming fees and pay per minute text charges.  And, finally, it announced the “Jump Program”, an early upgrade program that allows customers to upgrade twice a year. These initiatives are all part of T-Mobile’s ”Un-carrier” marketing strategy to solidify and expand its footprint in the wireless communications industry.  Recent quarter earnings for T-Mobile prove just how successful their strategy has been for their bottom line.  According to T-Mobile’s financial reports, the company closed out the second quarter of 2013 with a total of 44 million customers, an increase of more than 10 million customers from the prior quarter’s figures, of which more than a million were new-new acquisitions.

Now AT&T is fighting back with its own aggressive offer to buy back some of the customers they might have lost to T-Mobile. Though AT&T has not shared the length of time their $450 marketing offer will last, there is speculation that the indefinite nature of the promotion was done to preemptively counter the buzz T-Mobile is expected to receive when they announce their 2014 road-map at the International Consumer Electronics Show in Las Vegas next week.

After AT&T announced their offer on January 3, Legere’s response was “This is a desperate move by AT&T on the heels of what must have been a terrible Q4 and holiday for them. I’m flattered that we have made them so uncomfortable! We used AT&T’s cash to build a far superior network and added Un-carrier moves to take tons of their customers – and now they want to bribe them back! Consumers won’t be fooled…nothing has changed; customers will still feel the same old pain that AT&T is famous for. Just wait until CES to hear what pain points we are eliminating next. The competition is going to be toast!”

After the official statement was issued, Legere took to twitter to continue trash talking AT&T’s offer:

In most markets today where competition is king and consumers have the power to dictate to brands what they want out of the marketplace, coaxing a buyer to purchase from you rather than from the competition almost always means the following: first, you identify what consumers want and then, you fulfill that want or rather provide that thing that they value the most.  T-Mobile via Legere may have reached its sweet spot, with its “Un-carrier” marketing strategy with plans competitive enough to create uneasiness among competitors and attractive enough to encourage record number customer acquisition and profitability.

So, what are your thoughts?  Has AT&T  gone rouge? Or has T-Mobile gotten under their skin?   Feel free to share your insights via the comment section, or email me at managingeditor@innov8tiv.com. Also, follow me on Twitter @MUIPR so that you can be kept abreast of news stories percolating in the mobile and tech industry.