T-Mobile Challenges Industry to Abolish Overage Fees

by Matt Klassen on April 15, 2014

For its next act the self-proclaimed UnCarrier T-Mobile wants to once again shake up the wireless world, this time challenging the mobile industry to abolish overage fees. As eccentric T-Mobile CEO John Legere explains, America’s fourth largest wireless carrier is “capping off several days of major announcements by launching a broad social campaign to abolish domestic overage penalties and begin a national conversation.”

In a blog post yesterday Legere said that he was committing his company to ending overage fees for all of its customers currently on a T-Mobile plan, and although this switch was made significantly easier on T-Mobile given its previous adoption of its Simple Choice plans—which all but eliminated such overages anyways—Legere noted that customers on older plans will be positively affected by the change as well.

But Legere’s attempt to right what he considers a grave injustice in the mobile world didn’t stop with his own company, as he has used this as an opportunity to drop the gauntlet against his competitors as well, challenging the likes of Verizon, AT&T, and Sprint to similarly abolish overage fees and embrace the freedom of the UnCarrier lifestyle.

T-Mobile’s latest shakeup of the conventional wireless wisdom comes after several days of announcements and product rollouts. Earlier in the week T-Mobile unveiled its all-new Simple Starter plan, a value option for budget-conscious consumers, and then launched Operation Tablet, offering LTE equipped tablets for the price of Wi-Fi only models and allowing subscribers to bundle that tablet into their existing plan free for the rest of this year, all with a nice data increase to go with it. The company then launched the Samsung Galaxy S5 and HTC One (M8) and delivered them “only the Un-carrier can – for nothing down, with no annual service contract, no overages and no hidden device costs.”

While I would guess that T-Mobile’s UnCarrier antics over the last year are of little concern for established incumbents Verizon and AT&T, it’s clear that the country’s fourth largest provider is becoming an annoying bee in their collective bonnet. You see, while being in fourth place means you aren’t as big as your rivals or don’t make as much money, it does mean that you’re more responsive, adaptable, and, of course, more willing to embrace change as you seek our differentiation from your competition. Now that T-Mobile has laid down a challenge in this David and Goliath battle, it’ll be interesting to see how Goliath responds.

The added problem for the larger companies, it would seem to me, is that overage fees are a huge cash cow in the wireless industry, as penalties on consumers for exceeding their data, text, and voice allotments are a vital source of revenue, particularly for these larger companies where more subscribers statistically translates directly into more overages paid. So will the wireless market accept Legere’s challenge? I doubt it, at least not in the way that T-Mobile has framed its abolishment of overage fees.

In fact, I would guess that the response by Verizon, AT&T, and Sprint will be not to abolish overage fees, but to launch some sort of smear campaign against T-Mobile, explaining to all of us why the grass is really greener in their pastures and helping us understand (hopefully with small enough words) that overage fees are truly good for us all.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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