Just in time for the holiday season, New York area T-Mobile USA Inc. sub-dealers claim the wireless carrier has increased pressure prohibiting the independent agents from selling both T-Mobile USA and Cingular Wireless L.L.C. products and services in the same location. The increased pressure included a letter titled, “T-Mobile Continues Enforcement of its Sub-Dealer Sales Policies” sent to area sub-dealer locations and obtained by RCR Wireless News from several sources.
In the letter dated Dec. 8, T-Mobile USA said it was “continuing to enforce its policy of restricting the sale of T-Mobile equipment and services in any sub-dealer location that chooses to offer Cingular Wireless in the New York and New Jersey markets.”
The letter notes that “any T-Mobile sub-dealer that elects to promote, market, sell or represent Cingular Wireless in any way, including but not limited to, displaying Cingular Wireless point-of-sale materials, banners, or other merchandising, or participating in or sponsoring advertising showing an affiliation with Cingular Wireless will be subject to termination of their sub-dealer agreement with T-Mobile, and will no longer be authorized to promote, market or sell T-Mobile equipment or services.”
A similar enforcement policy was brought up earlier this year by a number of dealers who claimed T-Mobile USA threatened to pull their products out of stores if the agents were found to be selling Cingular service. At the time, sub-dealers noted T-Mobile USA representatives told them the carrier did not want competing GSM services to be offered in the same locations despite the fact many dealers said they were selling AT&T Wireless Services Inc.’s GSM products next to their T-Mobile USA offerings.
The letter adds that T-Mobile USA has hired an outside company to “perform competitive selling and integrity shops on any and all T-Mobile authorized dealers,” and that T-Mobile USA is “currently planning a second Cingular N.Y. metro swarm event sometime during the [second] or [third] week of December.”
Dealers explained that while they don’t want to lose T-Mobile USA’s business, which accounts for a substantial part of their activations, Cingular’s commission structure is more lucrative than T-Mobile USA’s. Many also reported that Cingular’s credit checks are less stringent than T-Mobile USA’s, allowing the agents to sign up customers not approved by T-Mobile USA to Cingular service.
One sub-dealer said he has been able to work around the policy by selling Cingular products “behind the counter like a drug dealer.”
Cingular, which relies on T-Mobile USA to provide network infrastructure in the New York market as part of a network-sharing agreement that in turns allows T-Mobile USA to use Cingular’s network infrastructure in California and parts of Nevada, said it objected to T-Mobile USA’s policy, but that it did not expect it to deter customers from choosing its services.
“Cingular objects to T-Mobile’s tactics of coercing New York agents to not sell Cingular Wireless service,” Cingular said in a statement. “Rather than use threats, Cingular will allow its services and customer focus to convince unrestricted agents to sell Cingular service. This will allow Cingular to introduce more New Yorkers to the benefits of Cingular. Restricting a customer’s access to distributors selling Cingular will not benefit consumers, or keep them from choosing Cingular.”
T-Mobile USA did not return requests for comment on the matter by RCR Wireless News press time, but the carrier previously said the enforcement policy was a way for it to monitor the quality of service its sub-dealers offered to customers. The carrier also previously denied that singling out Cingular was an attempt to keep Cingular customers from clogging its New York-area network.
The carrier noted in its letter to sub-dealers that “this program will promote an increased response time on mystery shopping locations, minimize unauthorized locations and will assist with the promotion of T-Mobile confidently, more effectively and overall make each of you more profitable!”
Gartner wireless telecommunications analyst Tole Hart noted that T-Mobile USA’s tactics highlight the increasingly competitive nature of the wireless industry.
“I think the main reason for the policy is for competitive reasons,” Hart said.
Others stated T-Mobile USA may be going too far in its attempt to control the distribution channels.
“These are mob tactics,” said independent telecommunications industry analyst Jeff Kagan, who added it looked to be an act of desperation by T-Mobile USA. “Instead of trying to compete with compelling offerings, they are looking to strong arm dealers, who customers rely on to provide more choices.”
Citing continued industry rumblings about a possible merger between Cingular and AT&T Wireless Services that would provide Cingular with another alternative to offering service in New York using AT&T Wireless’ network and leave T-Mobile USA few options in California, Kagan noted T-Mobile USA’s tactics could come back to haunt the carrier as T-Mobile USA is looked at as needing Cingular’s California footprint more than Cingular needs T-Mobile USA’s New York network.
“Spitting on your partner is not a warm and fuzzy way of endearing yourself to them,” Kagan added.
