T-Mobile COO: AT&T's old Next handset upgrade program was a 'ripoff'

T-Mobile US (NYSE:TMUS) COO Jim Alling said AT&T Mobility's (NYSE:T) old "Next" handset upgrade program was a "ripoff" that shortchanged customers, which is why he thinks AT&T made changes to Next and its rate plans last week.

"AT&T making this move shows that customers are a lot smarter" than AT&T had given them credit for, Alling said at the UBS Global Media & Communications Conference. One of the biggest knocks against AT&T's Next handset upgrade program compared to T-Mobile US' (NYSE:TMUS) "Jump" or Sprint's (NYSE:S) "One Up" plans was that it did not give customers a discount on their service pricing for forgoing a contract and a subsidized device. The new plans from AT&T rectify that.

"It was a ripoff. And customers understood it," Alling said. He said he still thinks AT&T's new "Mobile Share Value" plans are too complicated for customers.

Previously, under AT&T's Mobile Share plans, there was a sliding scale of monthly fees per smartphone attached to the plans, ranging from $30 to $50 depending on the data plan. Under the new Mobile Share Value plans, with a no-contract smartphone--either through Next or if the phone is paid for upfront--the fee is $25 a month. That means a customer without a contract can get a 2 GB Mobile Share Value plan for $80 per month ($55 for the data plan and $25 for the smartphone fee), compared to $95 per month under the old Mobile Share plans. For customers on a contract, the smartphone fee per month is now a flat $40.

"Our Mobile Share Value plans couldn't be more straightforward: Decide how much data you need, consider how many mobile devices will share the data, and then choose how you will pay for your device: bring it, buy it, or finance it for no money down and no interest," AT&T spokesman Mark Siegel told FierceWireless. "And, unlimited talk and text are included."

Alling covered a wide range of issues during his talk. He said that T-Mobile's "uncarrier" message was clearly resonating with consumers; during its two most recent quarters, T-Mobile added 2.1 million new customers.

However, Alling said that T-Mobile would not have been able to capitalize on its new plans if it did not have a stronger network. The company's LTE network now covers 203 million POPs in 254 metro areas, compared to zero LTE coverage at the start of the year. "If we had not put ourselves in a position where we made the network improvements, we would have had dissatisfaction," Alling said.

The T-Mobile COO said AT&T's pending purchase of Leap Wireless (NASDAQ:LEAP) and Leap's Cricket prepaid brand will not have much of an impact on T-Mobile because T-Mobile competed "very effectively" in prepaid before merging with MetroPCS. And now, T-Mobile has taken the MetroPCS brand to 30 new markets since the deal closed in May.

Alling noted that T-Mobile has a portfolio of prepaid bands, from its own GoSmart Mobile brand to powering Target's Brightspot prepaid brand. Alling said T-Mobile "always taken competition seriously" but that "we are very aggressive in this space. And we will find ways to take share and grow."

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