T-Mobile USA Inc. again is trying to crack down on independent dealers that sell service from multiple carriers and mobile virtual network operators, allegedly threatening to pull T-Mobile USA products from distributors who want to carry products from new market entrants such as Amp’d Mobile Inc., Helio L.L.C. and Leap Wireless International Inc.’s Cricket Communications brand.
Multiple dealers around the country contacted by RCR Wireless News confirmed that T-Mobile USA has upped the pressure on them in recent months, and representatives of the competing service providers protested the tactics.
“We want distributors to choose who they want to put on their shelves,” said Bill Stone, newly appointed chief operating officer for Amp’d. “It’s really unfortunate that T-Mobile is not letting … the marketplace decide who should win.”
Stone confirmed that Amp’d had heard concerns from distributors about T-Mobile USA’s reaction to dealers wanting to sell the MVNO’s products. He called T-Mobile USA’s actions “strong-arm tactics” and said the scope of the issue was national.
T-Mobile USA has a history of pressuring independent dealers not to sell competitors’ services in their stores, including clashes with dealers over the sales of products from larger rival Cingular Wireless L.L.C. and smaller regional player MetroPCS Communications Inc.
Dealers report that T-Mobile USA’s tactics have included increasingly frequent, “intimidating” store visits by the carrier’s representatives to police dealers and make sure they’re not adding new products.
In Houston, where Leap launched service last month, dealers report that the pressure has been particularly intense and focused on the Cricket service—to the point that some said they were offered T-shirts featuring a “dead cricket” on the back of the shirt and T-Mobile USA’s logo on the front. T-Mobile USA says that it “did not authorize, develop nor distribute any shirt like this.”
In two letters from T-Mobile USA divisional directors of indirect sales obtained by RCR Wireless News, dealers are warned specifically that their sub-dealers may be approached by Amp’d, Helio and Cricket about selling service and phones.
In the case of Cricket, one letter states that dealers should inform their sub-dealers that “T-Mobile will withdraw its approval and/or terminate any sub-dealer that agrees to sell Cricket equipment and service.”
Dealers reported that the carrier had modified its stance somewhat and now may allow them to sell both its service and Cricket’s—so long as both aren’t being sold under the same roof. At the same time, they said, some dealers have had their T-Mobile USA inventory pulled. T-Mobile USA and Cricket both target value-conscious consumers.
“T-Mobile is the only one that has reacted so actively against this,” said one Houston dealer, who asked to remain anonymous. He added that independent dealers wanted to carry Cricket and some had signed up to do so, “but they are not actively bringing in any inventory because they’re afraid to lose the [T-Mobile] business.”
Another Houston dealer indicated that distributors are selling Cricket under the table—but warily keep an eye out for T-Mobile USA “mystery shoppers.” He said he doesn’t want to lose his T-Mobile USA clientele, but he’d be able to make “crazy extra money” if he could openly sell Cricket service at all of his stores.
“It’s like we are losing money right now,” the dealer said, and added that T-Mobile USA’s strong reaction actually may have made dealers more interested in Cricket.
Regarding Amp’d and Helio, T-Mobile USA’s message to dealers was tempered somewhat.
“We ask that [sub-dealers] keep in mind T-Mobile’s focus on increasing per door productivity and minimizing any more dilution of sales efforts on behalf of T-Mobile,” a letter about the MVNOs said, then reminded the dealer that the carrier could yank the sub-dealer’s authorization to sell T-Mobile USA products and service.
T-Mobile USA responded to RCR Wireless News’ questions about its activities with a prepared statement.
“Thousands of independent wireless dealers across the country have chosen to offer T-Mobile service because of our popular-selling handsets and value-based service,” the company said. “In order to help ensure the T-Mobile products and services are best represented to the consumer, T-Mobile regularly communicates with independent dealers on issues that help advance a full understanding of, and support for, T-Mobile’s innovative products and services.”
Cricket, for its part, released a prepared statement that acknowledged the problem while naming no names.
“We are aware that a competitor in Houston has engaged in activities that could be considered `over the line’ in an attempt to disrupt the launch of our Cricket service in Houston,” said Matt Stoiber, area vice president of Texas for Cricket. Stoiber went on to say that “the value of Cricket service to consumers is highlighted by the actions of at least one competitor who has attempted to impede our ability to offer Cricket service” and that “based on the reaction that we have seen from our Houstonian customers and business partners, we believe that our competitor’s actions are unlikely to have any of the intended effects over the long-term.”
Ali Zanjani, executive vice president of sales and distribution for Helio, said his company began touting its products to dealers about a year ago, with a six-city “Helio World Tour” that introduced Helio’s offering and was designed to stir up distribution interest.
Helio began taking purchase orders and sending out trainers about 45 days before its May 2 launch, Zanjani said, and began “hearing murmurs early on, particularly in the Korean channel, about some of the carriers coming in and applying strong-arm tactics to prevent the people who had expressed interest in carrying our services from actually carrying our services.
“The level of the hum became a little bit higher and higher and higher, the closer we got to launch,” Zanjani said. That hum involved reactions primarily from existing network operators, Zanjani said, but T-Mobile USA in particular.
An owner of a national multi-carrier retail store chain that opted to carry Amp’d and Helio even after being pressured by T-Mobile USA not to do so described the carrier’s tactics as “about the most ridiculous thing ever. … I’ve never seen it before, and it should never happen again. Not in America. Not in a free country.
“It’s a very easy choice to carry any new carrier that makes sense,” he added, speaking on condition of anonymity. “The hard decision is, now our relationship with T-Mobile is on the rocks.”
According to Zanjani, Helio has hired legal counsel to help advise dealers on the problem and has been corresponding with T-Mobile USA on the issue, “but we actually still continue to see it in the general market.
“We’re hungry. We’re ready for a fight,” said Zanjani. “We want a fair fight—we want the customer to decide.”
