This Crazy Man Will Pay You Hundreds of Dollars to Break Your Cellphone Contract

The Citizen's Guide to the Future
Jan. 8 2014 5:36 PM

Is This the End of Horrible Long-Term Cellphone Contracts?

T-Mobile CEO John Legere
T-Mobile's profanity-spewing CEO, John Legere.

Photo by John Moore/Getty Images

T-Mobile just fired the loudest shot yet in the suddenly frenzied battle than is shaking the U.S. wireless-carrier industry.

Will Oremus Will Oremus

Will Oremus is Slate's senior technology writer.

In a brash and almost comically profane press conference at the Consumer Electronics Show in Las Vegas on Wednesday, bad-boy CEO John Legere urged customers of the other three major carriers to break their contracts and switch to T-Mobile—and offered to pay their termination fees in full if they trade in their phones and buy a new one. The company did not immediately provide all the fine print, but said it would pay customers' fees, up to $350 per line, on top of a credit of up to $300 for trading in their phone. That's a potential total reimbursement of $650.

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The idea of dangling a wad of Benjamins at customers who switch carriers isn’t entirely new. Perhaps in anticipation of T-Mobile’s move, AT&T last week began offering up to $450 specifically to T-Mobile customers who trade in their phones and switch to AT&T’s “Next” installment plan.

On closer inspection, neither company is exactly giving away free money. Both deals require customers to buy new phones at full price—that is, without the deep subsidies you usually get when you sign up for a two-year contract. Still, it’s easy to imagine circumstances in which both T-Mobile’s and AT&T’s offers make a lot of sense for certain customers.

But Legere insisted that this is more than just a battle of one-time promotions. Unlike AT&T’s “limited-time offer,” T-Mobile’s offer does not just apply to customers of one rival, and Legere said it’s intended to be permanent.

“What we’re doing is ending contracts, forever, for everybody,” Legere said, in one of his few statements that did not contain a curse word or a reference to bodily functions. “We’re trying to change the industry completely.”

T-Mobile offer to pay ETFs
A slide from T-Mobile's presentation.

Screenshot

It's fair to point out that T-Mobile is to some extent just shifting costs around—they’ll pay your early termination fee, but then you have to buy a new phone at full price. In general, the wisest move in wireless service is to choose the provider with the best coverage for your needs, not the one offering the splashiest discount.

But there's a deeper change at stake here. Almost from the start of his tenure at the company, Legere has made it his goal to upset the convoluted yet longstanding U.S. status quo of subsidized phones, long-term contracts, and termination fees. At this point, it’s pretty clear that he’s achieved that. Moreover, he has succeeded in goading a rival nearly twice T-Mobile’s size into a down-and-dirty dogfight for customers. And the numbers suggest T-Mobile is winning—it has added more wireless customers than any of its main competitors over the past three quarters.

It’s clear Legere is relishing the competition. “It’s fun to win,” he said in response to a reporter’s question about his confrontational approach. “It’s even more fun when somebody loses and hurts while you’re doing it.”

Perhaps the lowest blow of all, for AT&T, was Legere’s suggestion that customers use AT&T’s own $450 promotion as an insurance policy when they make the switch to T-Mobile. “AT&T has given us almost like a no-fault guarantee,” he boasted. “Come over, try (our) network, and these pricks will pay you to come back if it doesn’t work.”

Future Tense is a partnership of SlateNew America, and Arizona State University.

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