T-Mobile looks to quietly introduce new fees for prepaid users

  • It looks like T-Mobile Prepaid customers are in for some fee increases

  • T-Mobile Prepaid is a much smaller entity than T-Mobile’s Metro PCS prepaid brand

  • Metro PCS is the biggest prepaid entity in the U.S. while Verizon is struggling to right its prepaid ship

Reports are circulating online about fee increases for T-Mobile Prepaid customers. An image surfaced on Reddit showing a new phone activation fee called the “Device Connection Charge.” The charge appears to take effect March 21 and replaces the SIM activation fee.

Interestingly, T-Mobile appears to be giving sales associates a little advice on the lingo they use to communicate the new charge. Under the heading “How to talk about the changes to customers,” the flier posted on Reddit advises service reps to say something like this: “The Device Connection Charge is a one-time charge for connecting a new phone device to the network when activating or upgrading with T-Mobile Prepaid.”

That sounds innocuous enough, but will it appease cash-strapped prepaid customers?

The timing isn’t great considering the Affordable Connectivity Program (ACP) is no longer taking enrollments and looks likely to be going away unless last-ditch efforts to save it are successful.

Fierce reached out to T-Mobile for comment on the prepaid charges but did not hear back.

The Mobile Report points out that the new charge amounts to a $25 fee, which is a pretty steep increase. There’s another new charge in the form of a “Payment Support Charge,” which means if someone wants to refill their prepaid services in a store, they’re going to get charged an additional $5 to top off their balance starting April 25.

The reports suggest that some of the “un-carrier” sizzle that T-Mobile became known for is wearing off.

But Jeff Moore, principal of Wave7 Research, said he doesn’t believe that’s the case. T-Mobile recently launched its Magenta Status loyalty program, and overall its pricing initiatives indicate T-Mobile wants to be seen as undercutting Verizon and AT&T. “I do not think that the glow is gone from their original initiatives,” he told Fierce.

T-Mobile’s biggest prepaid brand, Metro by T-Mobile, has about 21 million customers whereas Moore estimates the T-Mobile Prepaid brand probably has somewhere in the neighborhood of 1 million. “It’s a brand that’s out there,” but Metro by T-Mobile is by far the largest prepaid brand in the U.S., he said.

Verizon’s prepaid brands total about 21 million, but in the third quarter of 2023, T-Mobile surpassed Verizon on total prepaid subs. AT&T has about 19 million prepaid customers.

Upheaval at Verizon

The prepaid story is most dramatic at Verizon, which has been losing customers at an alarming rate after acquiring TracFone in 2021. At an investor conference last week, Verizon Consumer Group CEO Sowmyanarayan Sampath said his team is “laser focused” on getting back to growth in the prepaid space.

One thing they’re doing is expanding the number of Total by Verizon stores. They were at almost zero stores at the beginning of 2023 and now they’re at about 700 Total by Verizon stores across the country. Another thing they’re doing is scaling up the digital-only Visible brand. Verizon has made it clear that Total by Verizon and Visible are the prepaid brands it’s especially trying to shore up.

“We’ve got a lot of work going on in that space. I have a couple more quarters of hard work there to get back, but it’s exactly the same playbook we followed in the postpaid space,” Sampath said.

Shake it up

He didn’t mention the management shake-up that’s been happening at Verizon Value. In January 2023, Angie Klein was named president of the Verizon Value organization, overseeing multiple prepaid brands. But she’s no longer in that role. In a LinkedIn post about a month ago, Klein said she was taking on a newly created role leading Growth Marketing and Content for the Verizon Consumer Group.

She handed over the Verizon Value reins to Nancy Clark, who most recently was SVP of Global Customer Success for the Verizon Consumer Group. Last week, Clark outlined a new organizational structure that includes David Kim as Verizon Value’s first chief revenue officer.

Kim most recently was general manager of High-Speed Internet at T-Mobile; he also spent several years at Boost Mobile and previously held executive positions at Clearwire. Clark also announced several other members of her team.

Will the shake-up work? Let’s just say that’s the $7 billion question, since that’s about what Verizon paid to acquire TracFone. If Verizon doesn’t get its prepaid house in order soon, it’s going to be one expensive boo-boo.