CU: Loss of T-Mobile would cost consumers

Like many of us, Consumers Unions has been skeptical from the start about the wisdom of allowing AT&T to swallow up T-Mobile, reducing the number of national wireless carriers from four to three. In a letter to Congress, the consumer group is urging close scrutiny of the proposed $39 billion deal.

Citing its own recent price and customer-satisfaction surveys, Consumers Union told Congress:

A price analysis survey of the voice and data plans available from AT&T and T-Mobile demonstrates that T-Mobile wireless plans typically cost $15 to $50 less per month than comparable plans from AT&T. That finding supports anecdotal observations that T-Mobile is generally a lower-priced carrier than AT&T. It also validates concerns that T-Mobile subscribers eventually migrating to AT&T plans could pay more for service than they would have under a T-Mobile plan—and that T-Mobile’s departure from the wireless market would eliminate a relatively low-cost carrier as an option for consumers.

For example, the letter says:

T-Mobile charges $50 per month for its basic 1,000-minute individual “Even More Talk” two-year contract plan, while AT&T charges $60 per month for its nearest equivalent Nation contract plan, which includes only 900 minutes. Adjusting for the difference in voice minutes, AT&T costs $16.67 more per month or $200 more per year for a comparable monthly allocation of minutes.

The more you buy, the bigger the price disparity. T-Mobile’s two-line 3,000-minute “Even More Talk + Text” (unlimited messaging) + 200MB data two-year contract plan for smart phones costs $140 per month. The closest AT&T “FamilyTalk Nation” plan costs $170 per month, after you add data and messaging to the base price, but delivers only 2,100 voice minutes. Adjusted for the 900-voice-minute shortchange, this AT&T plan costs $50 more per month or $600 more per year.

On the customer-satisfaction front, T-Mobile scored better than customers of the market leaders might expect - in both the postpaid (contract) and prepaid categories.

According to results from a survey of 50,000 consumers, CU said, T-Mobile "was meaningfully better than AT&T at providing service with a contract plan. ... AT&T got lower marks than T-Mobile on almost every attribute rated, suggesting the proposed merger would be a setback to T-Mobile customers if it lead to service more resembling AT&T’s than T-Mobile’s.

And when it comes to the prepaid, non-contract niche, T-Mobile did better than AT&T "on almost every attribute respondents rated, save for problems with texting." CU told Congress:

There, T-Mobile was more satisfying overall than Verizon, Virgin, and AT&T (with its Go Phone prepaid brand). Only Tracfone and Consumer Cellular ranked higher than T-Mobile’s “prepaid” service.

Overall, "for both contract and no-contract service, T-Mobile was meaningfully more satisfying than AT&T in 20 of the 21 cities in which there was sufficient data to rate both carriers," CU said. "T-Mobile also had notably fewer problems with dropped calls than AT&T."

It remains hard to see any benefit for consumers in T-Mobile's disappearance.

 

Though ranked lower than Verizon and Sprint, T-Mobile was still meaningfully better than AT&T at providing service without a contract plan. AT&T got lower marks than T-Mobile on almost every attribute respondents rated, save for problems with texting, where it was comparable with T-Mobile.

The gap between AT&T and T-Mobile was larger still for service without a contract, via so-called “prepaid” plans. There, T-Mobile was more satisfying overall than Verizon, Virgin, and AT&T (with its Go Phone prepaid brand). Only Tracfone and Consumer Cellular ranked higher than T-Mobile’s “prepaid” service.

City by city, for both contract and no-contract service, T-Mobile was meaningfully more satisfying than AT&T in 20 of the 21 cities in which there was sufficient data to rate both carriers. T-Mobile also had notably fewer problems with dropped calls than AT&T.

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