Verizon Wireless Tells 'Price Sensitive' Customers It Doesn't Want Them, Declares It Doesn't Need To Truly Compete
from the nah-nah-I-can't-hear-you dept
We've noted how AT&T and Verizon investors and executives have been terrified for some time that they would have to (gasp) compete on price as T-Mobile continues to disrupt the market with its consumer-friendly, faux-punk rock behavior. Ever since the AT&T deal was blocked by regulators, T-Mobile has been mercilessly (but entertainingly) mocking both companies, offering a bevy of promotions while eliminating a lot of "pain points" for consumers (like overage fees). It's working: T-Mobile's now signing up more subscribers each quarter than Sprint, AT&T or Verizon -- just by treating consumers well.So far, outside of a few very time-limited promotions, Verizon's been unwilling to compete on price, insisting the company's high prices are justified by a "premium network experience." Verizon also recently tried to shoot down the appeal of T-Mobile's unlimited data offerings by insisting that nobody really wants unlimited data plans, they're just being driven by "gut feelings." With T-Mobile just having one of its most successful quarters ever, Verizon's increasingly under pressure to compete on price, yet the telco continues to proclaim it doesn't have to:
The company reported on Tuesday that it had lost 138,000 postpaid customers in the last three months. Francis Shammo, Verizon’s chief financial officer, apparently won't be missing customers who, he says, value price over quality. "If the customer who is just price-sensitive and does not care about the quality of the network—or is sufficient with just paying a lower price—that’s probably the customer we’re not going to be able to keep," he said in the company’s quarterly earnings call."It shows you just what kind of competition Verizon's historically used to if the company honestly believes you have a choice of when you get to compete on price. And while the company is busy telling investors that it's not feeling any heat from T-Mobile, the growing, magenta-hued (TM) threat has Verizon simultaneously testing a number of new price promotions it hopes will help tip the subscriber scales back in its favor. Smelling blood, T-Mobile this week launched a new promotion that specifically takes aim at these "price sensitive" customers Verizon apparently doesn't want any more:
1/ #NeverSettle for @VerizonWireless’ ridiculous, costly, slower-than-@TMobile LTE network! Higher price does not equal faster network.
— John Legere (@JohnLegere) May 5, 2015
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Filed Under: competition, mobile phones, price sensitive, pricing, value shopping
Companies: at&t, sprint, t-mobile, verizon, verizon wireless
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Re:
About 6 months later, they installed another tower and we had the best phone service ever in our house. Also, internet was improving everywhere.
But service was going in the toilet. Sprint actually won best service for several years straight, but they crammed an extra line on my account and it took 5 phone calls, a threat to send me to collections, a call to the state PUC and a threat to call the FCC for it to get removed.
I switched to T-Mobile in a heartbeat once I heard they were doing Wi-Fi Calling and I pay less for 4 new phones on T-Mobile than 4 old phones on Sprint. Also, the internet seems faster overall and they sent me a free $200 Asus WiFi router for home use which is really powerful and covers my whole house.
So far, I'm happy with T-Mobile after having Sprint for over 13 years.
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And it's not a gut-reaction either. It's logical thinking. I don't always use a lot of data, but when I do I don't want to pay outrageous overage fees. I'd rather have it and not need it than not have it and suddenly need it.
It's also a statement against the carrier. This wireless data war is the same one waged against home internet in the past, just replace megabytes with minutes. The customers won that battle and they're going to win this one too.
Lastly, when you have something good and take it away to replace with something less good, that's the opposite of progress and advancement. That's regression and for them to claim it's better for people is hollow.
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Republic Wireless had it years ago.
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For those wondering, Republic Wireless is this small-fries operation trying to sell people on the idea of a wifi-first phone, and failing miserably at it.
With Google Hangouts, you can place FREE wifi calls all day long. Or, just download a few free wifi dialer apps and connect for free that way. Plus, Google Fi is going to set the standard on how the wifi thing is to be done. RW has been trying for almost four years and just can't get it right. Yeah, just read the past 30 days of complaints they have on their forums and you'll be running for the hills. RW is very much a frankenstein, pieced-together service that is not ready for prime time. Wayyyy too many problems.
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Fan Letter
I used to be a Verizon customer, but now I am a T-Mobile customer. Can ya hear me now?
Former Customer
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Re: Fan Letter
We can't hear you from the top of our Govt induced, regulatorily captured monopoly.
Please fuck off.
Your former carrier
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Re: Fan Letter
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Premium network... yeah right
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hahahahaha
What they mean is the other way around.
Unlimited data is the only thing that reflects on their quality.
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Shammo is both right and wrong
I have the same attitude as my facility. If all you want is the cheapest price possible for this valve, go to Amazon. But if you want the 20 years of professional experience that I bring to the table as well as free troubleshooting, training, technical support, engineering and easy warranty replacements, spend a few more bucks and buy it from me. Yeah, I sell parts, but I sell service more than anything else.
Although if I'm in Shammo's position, I'm not certain that type of attitude would be immensely successful. Wireless service is so ubiquitous that it might as well be water. I don't need engineering or warranty support with water, either it works when I open the tap or it doesn't.
These wireless carriers can claim all the speeds and coverages that they want. When you really take a step back, for most of us, all the major players are very similar in their product offering. In this type of marketplace, the only way to compete is through price and not making me rip my hair out when I do have to call you because of a billing error.
Look Verizon, if you REALLY want to break T-Mobile and keep your price where it's at, have 5,000 of your employees go get customer service jobs at T-Mobile and tell them to make life a living hell for anyone who calls in.
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Re: Shammo is both right and wrong
I could pay literally double for Verizon and get nothing in return.
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Re: Re: Shammo is both right and wrong
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All those damned customers.
Remember: peasants need internet too... but not too much.
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Don't Agree
Let's abstract it, and not talk about VZW and Tmo at all.
Businesses do NOT have to compete on price. Not at all. Apple doesn't, Faberge doesn't, Nike doesn't, LL Bean doesn't, etc.
You can compete on a number of qualities depending on the product. Yes, price will always play a role, but customers have proven that they will choose a higher priced product if other factors are considered superior. Quality, differentiation, new features, exclusivity, location, speed, service, cachet, brand, accessibility, privacy...these are all features that could affect the price consumers are willing to pay for a product.
Harvard's Michael Porter, a leading authority on competitive strategy and competitiveness, pretty much laid out my point in 1980:
https://en.wikipedia.org/wiki/Porter%27s_generic_strategies
He outlined three specific concepts for companies to succeed, only one of these was price. While I don't accept his argument as 100% law, his arguments are pretty useful to disabuse the notion that competition MUST always be on price.
Frankly, the entire economy would be a race to the bottom if it were so. There would be little differentiation, no innovation, and little quality if your hypothesis from this article were correct. It would be a sad, sad outcome.
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Re: Re: Don't Agree
You're example is a fixed broadband. That is relatively commoditized, but this article is wireless. I'm not clear if we're on the same page or not. But there is more to wireless competition (and fixed) than just price.
Some key differentiators for wireless:
- network coverage footprint
- speeds across that footprint
- customer service quality
- customer service wait times
- retail, brick and mortar presence
- device availability, exclusivity
- Free included apps, or even better, lack of those apps
- Faster OS updates for Android phones
- SIM locking phones or not
- Offer subsidized model, or not with discount (like T-Mo)
- content exclusivity (VZW has NFL)
- international roaming inclusion
- wifi offload inclusion
- better, simpler billing
- better bundles, family plan
- integration with IoT
- etc, etc.
If a carrier got all the above right for me, I'd gladly pay them multiples of the cheapest offer. Heck, I pay AT&T about 3X for my AT&T lines versus what I pay Republic for my 1 line there. There's a reason.
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Re: Don't Agree
Two, Verizon doesn't have to compete on price because of their domination of the special access market, which allows it control over the prices companies like Sprint and T-Mobile is charging. That just can't be ignored in suggesting they don't have to compete on price.
Three, I note at the end that I don't entirely disagree with Verizon's premise, give they really do have the best network coverage, performance, and customer service metrics. But what happens when T-Mobile and Sprint networks catch up? Last quarter showed they are now losing customers and the quality argument may not be enough.
Still though, I return to point two, and the fact Verizon enjoys regulatory capture and all but owns state legislatures. That tends to pollute free market analysis of their incentive toward real price competition.
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Quality Network
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Until last month, when I used 6 gigs. And I have legacy unlimited, unthrottled data.
And I didn't pay a dime over what I intended, and I didn't get inconvenienced in the slightest.
And that's why I care about unlimited, unthrottled data.
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Simile? Or is it Allegory?
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Re: Simile? Or is it Allegory?
Moral of the story? Don't compares knives to guns. In certain areas under specific circumstances, it might not be relevant. But otherwise....
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What happens when...
Firstly, they ignore almost all customers outside a large metropolitan area. I would have to drive nearly 40 minutes to get to a T Mobile signal above 2x on the west coast of Michigan.
Secondly, they claim most 4G bandwidth per customer. Because they have no customers (compared to Verizon and ATT). Does anyone really think they can sustain unlimited data with a real customer base, at the prices they charge? Of course not. They won't have the spectrum, they won't have the network infrastructure.
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Watch out Verizon and AT&T
Savvy smartphone users are already using the built-in wifi antenna and options built into their phones to cut down on mobile data when on the move; and you DON'T need a wifi phone service or subscription to get that sweet, free wifi data connection or place wifi calls. Just use Google Hangouts or another freely downloadable wifi dialer app and 'boom', you're good to go.
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Re: Watch out Verizon and AT&T
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worst customer service
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propaganda
Verizon Wireless is very good at propaganda (synonymous with advertising).
Mac
Maybe more later.
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Verizon is not better
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Apple wanabe's
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Great Post
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