ALTHOUGH BEN FRANKLIN NEVER SAID, “A penny saved is a penny earned,” Adam Smith did popularize in 1776 the market theory of supply and demand, and under the leadership of T-Mobile CEO Michael Sievert, for 2024, the carrier is insisting its contractors take up to a 50% cut in driver pricing due to “supply and demand,” plus they said in a bridled statement that contractors made too much profit during the 5G buildout.
In mid-November, T-Mobile began contacting construction contractors nationwide to submit their pricing for a proposal in 63 markets to agree with catalog pricing, ranging from a sector frame installation in Arkansas at $692 to $1,196 in California, according to documents viewed by Wireless Estimator.
The variables in pricing make sense based on states or locations with higher pricing due to operational costs, such as in California or the New England market, where an installation costs is tagged at $1,106.
According to six irate contractors that Wireless Estimator spoke to, what doesn’t make sense is the pricing that is now being offered. They state that many of T-Mobile’s target service prices are between 20% and 50% lower than they received in their previous contract.
“Although we were walloped by inflation during the past two years, this is a three-year contract that provides no outlet for increases if inflation continues, fuel prices go higher, or there are other events out of our control,” said a Midwest contractor who is considering walking away from T-Mobile’s offer after three years of providing installations for the carrier.
Although contractors can provide higher pricing for the services than the proposed target prices, and some state that T-Mobile has accommodated some increases in the past, supply and demand may take precedence. They’re concerned that they will no longer be able to benefit from the increased service pricing that was accorded them due to their capabilities and market relationships. They also know that some companies will take on unprofitable projects, but the toll will eventually put them out of business.
T-Mobile agrees and appears to be unconcerned.
In a national question-and-answer template regarding catalog scopes of work and bid questions, one submitter asked T-Mobile management: “Please provide which economic cost elements have decreased in price that would warrant a decrease in our current pricing to the proposed target prices. Labor, Insurance, taxes, cost of living, rents, interest rates etc. have all increased in price over the last 2 years. The average reduction in target prices provided in this updated pricing are over 50% each.”
T-Mobile’s troubling reply: “We know we have been paying premium pricing during our recent 5G rollouts. We now expect to pay fair market value based on supply and demand.”
An owner of a two-decade-old contracting firm with 185 employees disagreed: “Well, it’s quite fascinating how T-Mobile has suddenly become a champion of Adam Smith’s supply and demand theory. I guess they must have dug out their old economics textbook and decided to put it to good use. And let’s not forget the small contractors who were profitable during the 5G buildout – heaven forbid they make a decent profit – only carriers should. It’s heartwarming to see a company so committed to the principles of economics, especially when it conveniently aligns with its bottom line. Who knew T-Mobile was such a beacon of economic wisdom?”
