T-Mobile Ends Employer Discounts

Engadget frames T-Mobile’s latest move as a cost-saving measure:

Over the past year, T-Mobile’s new policies have ushered in a new wave of changes to the way the US wireless industry works. It was the first national operator to introduce phone-financing plans, early upgrades and free international roaming; additionally, it also offers to pay your cancellation fee if you break another carrier’s contract to move over. It appears that such practices must come at a cost: CEO John Legere announced that beginning April 1st, T-Mobile will no longer offer its Advantage Program, which features monthly employer rate plan discounts, to new customers. Existing beneficiaries will see the deduction removed from their accounts on April 25th. As a consolation, affected subscribers will now receive a $25 reward card every time they get a new phone.

On one level that makes sense, but I think there might be something more sophisticated going on here. T-Mobile almost certainly has fewer corporate contracts than do AT&T and Verizon especially; on the flipside, these discounts are yet another form of carrier lock-in. Once you get a discount, you basically have it forever – the carriers never re-verify – but if you switch carriers, you need to re-apply.

Given this, it would be better for T-Mobile if these discounts went away everywhere. It’s not clear, though, how T-Mobile’s actions will put pressure on their competitors like their other actions, which had a clear benefit to potential customers.