A number of New York area sub-dealers said they received notice last week from T-Mobile USA Inc. telling the dealers that if they began selling wireless products or services from Cingular Wireless L.L.C., T-Mobile USA would terminate their sub-dealer contracts. The dealers said T-Mobile USA representatives told them that if they did not sign T-Mobile contracts within a week, they would lose their ability to sell T-Mobile USA products and services.
“I have been a T-Mobile dealer for five years beginning back when they were Omnipoint, and now they are coming to me to tell me they are going to pull their products if I sell Cingular,” said one dealer who asked not to be named.
The dealer said he signed the contract for fear of losing T-Mobile USA, which accounts for a substantial portion of his business, but added he continues to sell Cingular products and services “behind the counter.”
“I feel like a drug dealer,” the dealer explained. “People come in asking about Cingular, and I have to quietly bring them behind the counter.”
The dealer explained that shortly after he signed an agreement with Cingular in mid-April to begin selling the carrier’s service in his stores, a local T-Mobile USA representative berated one of his employees during a store visit after finding Cingular literature on the counter.
The dealer added that the T-Mobile USA representatives told the store owner that the agreement with T-Mobile USA forbid the store from selling another GSM-based carrier’s service and he would have to remove Cingular’s products or face losing the ability to sell T-Mobile USA service. The dealer noted that the T-Mobile USA representative did not mention anything about the store’s AT&T Wireless Services Inc.’s GSM products and services that the store was also selling.
Pressure from T-Mobile USA ratcheted up earlier this month when Cingular ran an advertisement in local newspapers highlighting their dealer presence in the New York area, including a number of sub-dealers that also sold T-Mobile USA.
The sub-dealers said following the advertisement, they were revisited by T-Mobile USA representatives and again were told about the contract forbidding them from selling services of another GSM carrier in their stores. In addition, the sub-dealers said they received a contract from T-Mobile USA that reminded them about T-Mobile USA’s policy regarding the “promotion, marketing and/or selling both Cingular and T-Mobile equipment and service in Sub-Dealer locations.”
The contract, a copy of which one dealer sent to RCR Wireless News, noted that if the dealer “commences promoting and/or selling Cingular Wireless service and equipment, T-Mobile has the right, in its discretion, to terminate my Sub-Dealer Agreement.”
One dealer added that even though he activated nearly as many Cingular accounts as T-Mobile USA accounts, he was afraid if T-Mobile USA found out he was still selling Cingular, it would hold back commissions from previous activations.
Others noted that even though T-Mobile USA represented a substantial part of their business, Cingular’s superior commission structure made it worth the risk.
“I make more money from Cingular than any of the other carriers,” he said, adding if T-Mobile USA pulled its products and services from his store he knew a number of other T-Mobile USA dealers who would provide him with inventory so he could sell T-Mobile USA products and services “behind the counter.”
T-Mobile USA spokeswoman Kim Thompson said the carrier did not provide details of its contracts with sub-dealers, but that it was enforcing the contracts because it wanted to maintain a high customer service experience for T-Mobile USA customers who visit the sub-dealer locations.
“It’s a very competitive industry and we feel our difference in the market is through our customer service,” said Thompson. “We constantly monitor our retail outlets and feel that it’s difficult for the outlets to offer the level of customer service that we expect if they are also trying to sell other services.”
While Cingular did not return calls for comment before RCR Wireless News press time, a Cingular master agent who deals with a number of sub-dealers in the New York area noted T-Mobile USA was being aggressive and arbitrary in trying to keep Cingular products out of the stores.
“They are using strong-arm tactics to stop the dealers from selling Cingular products,” said the Cingular master agent, who asked not to be named. The master agent noted that “big box” retailers were still selling both Cingular and T-Mobile USA products and that T-Mobile USA was being selective in its contract enforcement.
Further complicating the issue is Cingular’s reliance on T-Mobile USA for its coverage in New York following a network-sharing agreement between the two carriers in late 2001 that allowed Cingular to launch service in New York using T-Mobile USA’s GSM network in exchange for Cingular allowing T-Mobile USA to launch service in California and Nevada using Cingular’s GSM network.
T-Mobile USA’s Thompson denied charges by sub-dealers that the carrier was trying to keep Cingular customers from clogging its network, saying the carrier has upheld its portion of the network-sharing agreement.
