T-Mobile is offering to pay off what consumers owe on their phone hardware in order to get them to come over to Magenta. T-Mobile will pay off “what you owe the carriers for your smartphone up to $1,000 when you switch.”
The deal starts tomorrow (October 22), and T-Mobile says customers can just bring their phone in along with a picture of their last bill, and T-Mobile will pay off the remaining eligible device payments up to $1,000 via virtual prepaid MasterCard.
T-Mobile boasts that it tends to do well in a heavy “switching” environment, where people are moving from one phone service provider to another. In its latest press release, the “un-carrier” says nearly 50% of U.S. consumers believe their smartphone won’t work with another provider. “At one time, that was true, but those days are long gone,” T-Mobile states.
Is that a reference to eSIM, which offers the ability to more easily move devices from one carrier to another? After all, that’s a key advantages of eSIM and one of the reasons incumbent wireless carriers have fought it so hard. However, T-Mobile told Fierce that the reference is not so much about eSIM but more about the days of 3G when switching from GSM to CDMA and vice versa was such a hassle.
Anshel Sag, principal analyst at Moor Insights & Strategy, doesn’t think this offer is necessarily about taking advantage of eSIM, although it could potentially streamline things. The eligible devices list includes the Samsung Galaxy S8, which doesn’t support eSIM.
“I definitely think that this is more geared towards iPhone users and that this may be yet another way for T-Mobile to expand its iPhone user base and further diversify beyond its Android and Samsung heavy base,” Sag told Fierce.
Both AT&T and Verizon have more iPhone users than T-Mobile does. Even though Android devices are on T-Mobile’s list of eligible devices, he doesn’t believe they’re the target users.
Indeed, last month T-Mobile CFO Peter Osvaldik publicly complained about the track record of leading Android device maker Samsung in dealing with the component shortage, saying the South Korean vendor has “really fallen behind the eight ball relative to other OEMs on the global supply chain issue."
Phone promotions traditionally are more aggressive in the fourth quarter, when a lot of folks are shopping for new devices around the holidays – and Apple is releasing its latest version of iPhone. But it’s arguably more interesting in a market that’s dominated by three national facilities-based carriers who are all threatened by cable operators that could or could not get a lot more aggressive in their wireless businesses via new spectrum. Dish Network also is preparing to enter the market as a fourth facilities-based carrier.
AT&T was consistently asked during investor events over the past year about the sustainability and/or profitability of its aggressive iPhone offer that it launched over a year ago. AT&T executives explained that it was an offer targeting both new and existing users, the latter of whom often get ignored in carriers’ best offers.
Verizon CEO Hans Vestberg commented on promos Wednesday during the carrier’s third-quarter earnings call, saying “we have been going back and forth on our promos… Right now, we feel very good on how we compete in the market.”