It seems anyone with a cell phone contract has had the thought, whether due to owning an antiquated phone, moving to an area with no service, or dealing with an umpteenth dropped call: “When is my contract up?!”
This week’s news that AT&T (T) is buying the smaller company brought another thought to many T-Mobile customers, namely, “Will I be able to escape my contract because of this merger?” After all, many of T-Mobile’s clientele chose the smaller provider specifically because they liked the lower costs available to them on the nation’s fourth-largest carrier (to be clear, it’s a distant fourth; it and #3 service Sprint are millions of users behind AT&T and Verizon (VZ) ).
Pending federal approval, there are those customers who wonder if they can get out of their contracts, stat, and without a dreaded early termination fee, which can run into the hundreds of dollars. Many of them are happy with T-Mobile, but fear that the merger with AT&T will lead to an increase in prices and a decrease in customer service.
Both companies know the question is out there. But they’re not answering, which means it’s hard for even those who know the business well to predict what the answer will be. “I don’t know whether they’ll allow people to cancel because of the merger,” said Paul Weiss of Freed & Weiss, a Chicago law firm that once litigated a class action suit challenging T-Mobile’s early termination fees. “I have a feeling they don’t know what they’re going to do yet.”
Customers aren’t waiting for the answer; they’re vocalizing their displeasure, and they’ve taken to Twitter to do so. Just click the hashtag #tmobile, or search for “t-mobile” and “contract,” and it’s all right there: “Since AT&T is buying T-Mobile does that mean I can get out of my contract with no fee? Technically they broke the contract first,” tweeted @TootiesLuv. @BluDivisionCEO had a similar complaint: “I signed up for T-Mobile not at&t.”
“Until this deal is closed,” T-Mobile said in a statement to Fortune, “we remain an independent competitor to AT&T. There is no change in service for our customers… Billing for our customers remains exactly the same… Customers will receive advance notice to any changes to their service.”
This, of course, didn’t directly address the question, so we called the company’s service line, just as any customer might, and asked if the merger would allow a cancellation of contract with no penalty. “As far as the merger taking place, that’s not going to happen for like another year,” said Wendy, who took our call. “Even once the merger does take place, now is the best time to get your T-Mobile service, because you will still get the awesome rates we have. Then once the merger happens, you’re still grandfathered into your other plan.” But what about those who want to get out of a T-Mobile contract, not in? “We’re not sure exactly how everything’s going to work yet,” she said.
Legally, any T-Mobile contract that was entered into before the merger would continue on the same terms until expiration. In other words, chances are good that a customer would still have to prove a “materially adverse” change (the legal requirement by most cell companies, including T-Mobile) in order to break their contract without any penalty. The question is whether T-Mobile will choose to accept that the merger is materially adverse to its clients.
Usually, the only example of a materially adverse modification is a price increase. For example, if T-Mobile increases text message rates as a result of the merger, customers could cancel their contract early. But that’s always the case, regardless of the AT&T deal, and it seems the companies wouldn’t be dumb enough to give millions of customers an easy reason to cancel, just because they wanted to.
“Seriously,” concluded service rep Wendy, “some people are worried, but now is the best time to jump on the T-Mobile wagon!” That’s a nice thought, but it seems that right now, some customers are more worried about how to jump off.
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