In a heated rivalry within the wireless industry, Verizon and T-Mobile are embroiled in a dispute over advertising practices. Verizon has accused T-Mobile of misleading consumers by overstating the savings they could realize by switching to the Un-carrier. The conflict escalated when attempts by the BBB National Programs’ National Advertising Review Board (NARB) to mediate the situation proved unsuccessful, prompting Verizon to explore legal avenues.
Verizon Takes Legal Action
T-Mobile has been called out for not adhering to NARB's recommendations to amend the way it presents its savings claims. According to Verizon, T-Mobile's advertisements imply that customers can save substantial amounts based solely on plan pricing without adequately factoring in the additional benefits and perks provided by other carriers. NARB found T-Mobile's disclaimers to be insufficient in clarifying that their savings claims included benefits beyond just the price of the plan. Recently, T-Mobile attempted to buy time, claiming to have new evidence that supports its position. In response, Verizon filed a lawsuit against T-Mobile on Wednesday, alleging false advertising that entices consumers with promises of over $1,000 in potential annual savings if they switch to T-Mobile.
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Verizon further alleges that T-Mobile's savings claims are greatly exaggerated—by as much as double—when comparing T-Mobile's promotional rates to Verizon's standard pricing. The lawsuit also contends that T-Mobile downplays the benefits that come with Verizon's bundled digital services while reiterating past savings claims that NARB had previously flagged as misleading. As part of this legal challenge, Verizon is seeking a halt to these misleading ads and is pursuing damages for false advertising, which it argues has harmed competition.
Striving to Retain Market Position
Once the largest carrier in the U.S. with 146.9 million subscribers, Verizon is facing increasing competition from T-Mobile, which has grown its base to 139.9 million customers as of September 30. Meanwhile, AT&T ranks third, having 120.1 million subscribers as of December 31. Although Verizon added 616,000 new customers in Q4, it did so amidst pressure on its financial performance.
Despite announcing intentions to enhance value for customers, Verizon has ruled out engaging in a price war. In this environment, T-Mobile's aggressive marketing around savings poses a challenge to Verizon's strategy to stabilize its market position.
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The Era of Implied Value
The wireless industry trend of including the value of optional extras in savings claims can often exaggerate perceived savings, allowing carriers to market themselves as the less expensive choice. While T-Mobile may genuinely seek to have customers benefit from perks that other carriers don’t offer, its lack of clear communication has fallen short to date.
