T-Mobile challenges competitors on roaming charges

T-Mobile CEO John Legere says of the high roaming charges: "You can't leave the country without coming home to bill shock."
T-Mobile CEO John Legere says of the high roaming charges: "You can't leave the country without coming home to bill shock." (STEPHEN BRASHEAR / AP)
Posted: October 28, 2013

If you didn't see any reason for high-fives two years ago when the Justice Department and Federal Communications Commission blocked AT&T's $39 billion plan to acquire T-Mobile USA, chances are you had plenty of company.

The agencies warned that the merger would weaken competition and hurt consumers - arguments that can seem abstract to people outside the antitrust realm. Sure, T-Mobile was a price leader among the four national carriers that survive earlier consolidation. But, as merger partners always do, the companies claimed their marriage would help consumers, too. Who's to say who's right?

Well, guess what? In a series of recent moves, T-Mobile has proved the regulators' wisdom - albeit with help from the carrier's iconoclastic CEO, John Legere, dubbed by CNET this summer "the most dangerous man in wireless" for his willingness to take on the competition.

This month, T-Mobile is taking aim at one of its own industry's worst "gotchas": the unexpectedly high charges, often hundreds or thousands of dollars, that pop up in Americans' phone bills if they travel overseas.

I could explain what's at stake, having written repeatedly about Philadelphia-area residents hit with outrageous bills from leading carriers such as Verizon and AT&T - in two cases approaching $20,000 - for unexpected "data roaming" charges. With data-roaming rates as high as $20 per megabyte, and a typical movie download requiring 1,000 to 1,500 megabytes, it's easy to see how those charges can pile up.

But I'll let Legere do it - and give kudos to a telecom CEO willing to call out his industry for what the FCC has come to label "wireless bill shock."

"The cost of staying connected across borders is completely crazy," Legere (pronounced ledger) said this month. "Today's phones are designed to work around the world, but we're forced to pay insanely inflated international connectivity fees to actually use them. You can't leave the country without coming home to bill shock."

What's T-Mobile doing about it?

Since the spring, it has pitched itself as "the un-carrier" and revamped its pricing under the "Simple Choice" rubric. Calling it simple is a bit of an exaggeration - that would be a genuine revolution in wireless pricing. But it's fair to say it's more transparent and rational than the competition, especially for world travelers.

Starting Thursday, for example, customers on all its non-prepaid plans will get unlimited data and texting while in 115 countries, including Canada, Mexico, and most of Europe, Asia, and Latin America. In the same countries, customers will pay no more than 20 cents a minute for calls.

To be clear, T-Mobile isn't promising swift 4G speeds, of the type it advertises for its LTE network in the United States. But it says that 2G data speeds are adequate for e-mail, texting, and some simple Web searches.

Last week, T-Mobile sweetened its data offerings by pitching 200 megabytes a month of free high-speed data to tablet users - even to non-customers with compatible, cellular-enabled tablets, for the cost of a $10 SIM card.

Data fees have discouraged 9 of 10 tablet owners from connecting via cell networks, marketing vice president Jason Young said.

T-Mobile hopes to raise that fraction with pricing that forgoes overage charges - instead, customers' speeds are throttled - and sells extra doses of speedy data at users' requests.

Young says T-Mobile is finally allowing customers to "use tablets the way they're meant to be used, which is mobile and connected."

It remains to be seen how other carriers answer T-Mobile's moves. Analyst Roger Entner expects the leading carriers to at least match T-Mobile's data-roaming shift "on a case-by-case basis" for business travelers. Kevin Werbach, of the University of Pennsylvania's Wharton School, suggests they might resist, since they could "lose more in data roaming revenues than they gained in new or retained customers."

Still, sooner or later consumers are bound to benefit even if they don't switch carriers. In essence, T-Mobile has publicly criticized its competitors for price gouging - and shown the value of keeping it in the market.

Says Entner: "It vindicates the position that competition is alive and well - if a carrier wants to compete."


215-854-2776 @jeffgelles


comments powered by Disqus