• Google Buzz

As a writer specializing in the telecommunications industry, I’ve heard it all. The industry as a whole is honestly one of the most consumer-stifling ones in America, and it’s actually somewhat empowered to do so by the U.S. government. As has been discussed, the cell phone contract is wholly lopsided in favor of the company, many times leaving the customer out to dry.

But we willfully sign these contracts — though many of us have no idea what’s contained in them — in order to receive a generous discount on a new phone. A subsidy, they term it, that allows you to have a cutting edge phone that won’t break your bank account. Once your two years is up, it’s time to sign a new agreement, which in turn means a new phone subsidy.

Not for T-Mobile users. Or, at least, not a full subsidy.

When your T-Mobile contract is up and you want a new phone, they company is now charging you an $18 “upgrade fee,” according to inside sources of Consumerist. The reason, according to the leaked e-mail, is to help offset the subsidies offered to brand new customers. Oh, the flawed logic of T-Mobile.

True, they remain the nation’s fourth largest carrier by a significant margin. Even as Sprint tumbles, T-Mobile is still 15 or 20 million subscribers behind, a margin that won’t be made up in a year. So T-Mobile’s idea is to attract new customers with shiny new subsidies. Ostensibly, these will be Sprint customers defecting from the downtrodden carrier. But T-Mobile is ignoring what most people now intuitively know.

It’s pretty well known and accepted that your best customers are your existing ones. This goes especially in the telecommunications industry. Customer acquisition costs are high, so you lose doubly when a customer bolts. First you lose her business until you replace her, and then you lose the cost of acquiring that new customer.

I wonder how this will all play out in reality. Theoretically, existing T-Mobile customers will have their contracts expire, seek a new phone, and balk at the $18 upgrade fee. They’ll realize that they’re in a position of power; with no contract, they can move to any provider they wish. And guess what? That new provider won’t charge them an $18 fee to purchase a new phone.

Of course, in reality many people will simply acquiesce to T-Mobile’s fee. That’s just wrong. Companies should not be able to get away with frivolous fees like this, especially when they’re aimed at their bread and butter: their existing, loyal customers.

If you have T-Mobile, don’t succumb to their demands. If they won’t waive the fee, use the one advantage you have in any sales situation: The ability to walk away. There are other services out there for you.



 Related Content: