T-Mobile Will Pay You to Dump Verizon, AT&T and Sprint

The self-styled “un-carrier” has unveiled its latest effort to reinvent the phone market, and it could be worth hundreds — if not thousands — of dollars, depending on the size of your family.

T-Mobile already has some unconventional strategies designed to attract frustrated consumers. It has no contracts. It separates the cost of the phone from the cost of the phone plan. It offers free international data roaming, free data tethering up to a couple gigs and free tablet data up to 200 MB per month. Individual plans all offer unlimited data. T-Mobile also revamped its insurance coverage, reducing the price to $10 a month and allowing those who pay that fee to upgrade their phones twice a year after a six-month cooling off period.

Some of these strategies have been imitated by competitors, but in a less consumer-friendly way. For example, AT&T and Verizon both offer variations of the Jump program (that’s the upgrade-insurance hybrid), but both are more expensive in the long run.

T-Mobile’s latest concept, announced Wednesday, is to pay the “early termination” fees for anyone looking to switch to the pink network. These are the penalties imposed by other carriers on subscribers who want to get out of their contracts. T-Mobile says it will cover up to $350 per line, which can really add up if you’re bringing your whole family over.

To get that credit, you have to trade in your existing phone for a new T-Mobile phone and you have to port your number (transfer your actual phone number from your old carrier, a process that is typically painless). T-Mobile promises to pay a credit of up to $300 per device, depending on how much it’s worth.

Here’s how it works, in theory: You walk into a T-Mobile store and tell the workers you want to switch. They give you a credit for your phone (for an iPhone 5 it’s something like $200) and you pick a new device. An iPhone 5C for T-Mobile costs $500 or $0 down and $20.83 over 24 months. Porting your number over should force your existing carrier, say Verizon, to cancel your plan. Verizon sends you your final bill, including an early termination fee. You send that to T-Mobile, and they reimburse you. Tada!

Sounds like a pretty great plan — the two biggest factors that tend to keep people feeling trapped with their service providers are ETFs and family plans, both of which become non-issues here. There are two major hurdles. One, in this blogger’s experience, the people who work in T-Mobile stores tend to be completely uninformed and light years behind customer service and T-Mobile headquarters. Good luck trying to explain a brave new plan just announced at the Consumer Electronics Show to a wage slave at the Timo store on your corner. Two, T-Mobile doesn’t have the best service. Verizon is able to charge more because its coverage is just better. Here, T-Mobile promises things will improve. The company just bought $3 billion worth of spectrum, which it promises will penetrate buildings and go places its signal has had trouble reaching.

It needs to be noted that AT&T tried to pre-empt T-Mobile’s announcement by offering up to $200 in credit to any T-Mobile customer who switched to the bell network. I like T-Mobile and its incentives a lot better. But I’m curious if it’s possible to switch endlessly back and forth between the two, with each doling out cash every time. I suspect not.

You can read T-Mobile’s press release here.

— Posted by Peter Z. Scheer