The rapid growth of the subscriber base of T-Mobile US Inc. (NASDAQ: TMUS) almost certainly has relied on its claim that it is the fastest among the nation’s four largest carriers. That assertion was publicly challenged by an organization that tracks advertising claims.
The challenge is a blow to one of T-Mobile’s most important brand building blocks.
The National Advertising Division, an arm of the Better Business Bureau, tracks ad claims. It:
… recommended that T-Mobile USA, Inc., discontinue certain advertising claims made in television, print and internet advertisements, but found the company could support a modified claim about the number of people covered by its network.
T-Mobile got the message early on in the review:
During the course of NAD’s review, T-Mobile discontinued the commercial that featured the “fastest” claim, described Verizon’s LTE network as “older,” “slower,” and “they limit you,” and asked the question “Why doesn’t Verizon offer unlimited data like T-Mobile?” The challenged advertising further claimed that T-Mobile’s LTE network was newer, faster and unlimited.
In the end, T-Mobile said it “agrees to comply with NAD’s recommendations.”
T-Mobile has been extremely aggressive in its service quality claims. It has been equally aggressive as it introduces new wireless packages that it claims are better than those of its competitors. If its service quality claims are exaggerations, the attractiveness of these wireless promotions gets eroded.
T-Mobile may merge with Sprint Corp. (NYSE: S), the weakest of America’s large carriers. Sprint usually is considered the weakest in terms of the size and reliability of its network as well. T-Mobile will have to improve Sprint’s service if it wants the Sprint user base to grow. In the meantime, the controversy brought to light by the the National Advertising Division means T-Mobile may have to increase the quality of its own network.