Competition is occasionally ugly. Some people think it’s bad for children, and it’s clearly doing a number on the psyche—or at least the public-relations department—of T-Mobile (TMUS). Chief Executive John Legere is spending his time engaging in attention-seeking behavior, such as getting kicked out of AT&T’s (T) party at the International Consumer Electronics Show and carrying around oversize checks with the words “bullshit charges” printed on them.
But competition is also energizing the notoriously monopolistic telecommunications market in the U.S. Soon after his antics at AT&T’s party, Legere announced that T-Mobile would pay the early termination fees for customers who wanted to switch to T-Mobile from another carrier. The company also gave an update on the progress in building its LTE network, saying it now reaches 209 million people in 273 U.S. cities. That move came just days after the company’s $3 billion deal to acquire licenses from Verizon Wireless to use spectrum that will help further expand its network, capping off a year of frantic activity that has turned T-Mobile from an also-ran into a lovable insurgent.
The activity isn’t just coming from T-Mobile. On Tuesday, Sprint (S) announced the novel (if awfully named) idea of group deals known as Framily plans. Sprint customers pay $55 a month for a plan that includes unlimited talking and text messages along with 1 GB of data. For each person added to the group, the cost per person drops by $5 until it gets to $25 per month. People have to pay full price for their phones, and if you already have a phone subsidized by Sprint, joining a “framily” will cost an additional $15 monthly until you’re eligible for your next upgrade.
AT&T has also been hustling in 2014, with a new plan of its own to pay T-Mobile customers to switch sides. (If you wanted evidence that T-Mobile in particular has gotten under AT&T’s skin, notice that it’s not offering a similar deal to Verizon Wireless or Sprint customers.) At CES, meanwhile, AT&T also said it would accept payments from companies so that customers could use their services without drawing down on their data plans.
It’s not quite a revolution. While AT&T is clearly responding to the pressure, the company has stopped short of doing anything that would lower average revenue per user, industry speak for how much it squeezes from each customer. Sure, AT&T will pay you to sign up for its network, but it isn’t feeling stressed enough to lower the prices of its actual services. In addition, some people see its “sponsored data” plans as actively anticompetitive.
And as for Verizon’s response to all this? Well, crickets.
Recent events should prove useful to anyone making the argument that keeping four carriers in the wireless market is an essential way to spur competition. And it just so happens that such people exist. When AT&T tried to acquire T-Mobile in 2011, the deal was shot down largely because federal regulators felt that three wasn’t such a magic number after all. The past year must be sweet vindication. If Sprint and T-Mobile are serious about their reported interest in merging, they didn’t do themselves any favors in Las Vegas this week.