T-Mobile Is Going After Verizon’s iPhone Customers With a New Offer
T-Mobile is expanding its deals to entice switchers, offering to cover all of a defecting Verizon customer’s unpaid balance on his or her phone.
The offer, which starts May 31, is good for customers who own an Apple (AAPL) iPhone 6S, SE, or 7 model or one of Google’s (GOOGL) Pixel phones. Customers can keep the phone to use with T-Mobile and don’t have to trade it in or buy a new phone, as they did in the past to get the unpaid balance covered, the carrier says.
But the offer is not completely without strings: customers will have to enroll in T-Mobile’s $15-per-month phone insurance plan.
Current phones contain the capability to operate on almost any U.S. operator’s network, so it’s no problem for the owner of an iPhone 7 that ran on Verizon, for example, to use that same device on T-Mobile’s network, chief operating officer Mike Sievert says.
“There’s no such thing as a Verizon iPhone, there’s no such thing as a Verizon Google Pixel,” Sievert tells Fortune. “These are globally applicable technologies that work on all of the networks. People think they’re stuck because they have to switch phones when they switch carriers and it’s just not the case.”
The wireless wars have gotten quite fierce, with price cutting, proliferating unlimited data plans, and even free iPhone offers. Service plan revenue for the entire industry declined in the first quarter for the first time in 17 years, and Verizon suffered its greatest net loss of monthly phone subscribers ever.
T-Mobile was the first to do away with two-year contracts, but the latest offer strikes at a new form of customer lock-in: the monthly installment payment plans for phones.
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Most people prefer to pay $20 or $30 a month for a new phone rather than the whole $500 to $700 upfront. But that means they have to pay off the entire remaining balance if they switch carriers. And some recent free phone offers were contingent on staying with a carrier for two years or, again, having to pay off the pro-rated balance of the phone’s cost.
As T-Mobile (TMUS) often does, the new campaign also included healthy dose of attacking the competition by name. CEO John Legere, who has over 4 million followers on Twitter, kicked off the Verizon (VZ) bashing with a hashtag making fun of his rival’s nickname and logo color, Big Red.
“To kick off summer, we’re going BIG right out of the gate and throwing a lifeline to millions of Verizon customers,” Legere said in a statement. “So, now is the best time ever to #GetOutoftheRed!”
A Verizon spokeswoman rejected the criticism. “Hype from a Twitter-happy CEO needs to be fact-checked,” she said. “Research will tell you which network will give you the best experience, and we’re confident that network is the Verizon network.”
For subscribers of AT&T (T) and Sprint (S) who switch, T-Mobile said it would cover the cost of paying off the balance on their phones without a trade-in, as well, but would require the purchase of a new phone.
T-Mobile also raised the threshold on its unlimited data plan for when customers in busy areas might have their download rates slowed. Now the slowdown threshold won’t hit until a customer used 32 GB in one month, up from 30 GB and considerably higher than the 22 GB threshold at AT&T and Verizon and 23 Gb at Sprint. And T-Mobile added an offer to let customers with at least two lines add another two lines for the price of one, saving $25 a month on the carrier’s unlimited plan.