T-Mobile to End Smartphone Subsidies, Offer Cheaper Value Plans
December 7, 2012 8:40 AM
comment(s) - last by
T-Mobile won't subsidize the cost of the iPhone
Deutsche Telekom announced yesterday that T-Mobile would
begin selling Apple devices next year
. T-Mobile CEO John Legere went on to confirm that the iPhone would be among the Apple products the wireless company will sell next year. However, he is warning that T-Mobile will offer the iPhone in a drastically different way than other carriers. T-Mobile is ending subsidies on all of its phones.
What that means is if you want the iPhone on the T-Mobile network, you'll pay for the entire purchase price of the phone upfront rather than getting a discount in exchange for signing up for a contract. T-Mobile is planning to shift to unsubsidized Value Plans offering customers cheaper rates for voice and data.
T-Mobile has already stated that 80% of the activations it had last quarter were customers choosing its new Value Plans. The plans are so successful that T-Mobile believes there's a huge demand for the pay up front and get a discounted plan sales model.
It remains to be seen if T-Mobile customers are willing to pay full price for the iPhone when other carriers are offering them a significant discounts.
Pricing for the iPhone ranges between $650 to $850 for unlocked devices. However, it appears that T-Mobile has a plan to help offset the huge upfront cost for expensive devices such as the iPhone 5. Legere has hinted that T-Mobile will sell the iPhone for $99 upfront and in charge subscribers $15 - $20 a month in payments over the following 20 months.
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12/7/2012 9:18:09 AM
[quote]That, however, sounds a lot like to subsidized contract to us.[/quote]
where is it subsidized? you are paying in full the cost of the phone, and when you finish paying it off, you stop paying for it.
RE: subsidized where?
12/7/2012 9:18:46 AM
well, that was a failed attempt at trying to quote. And I didnt notice the button up top that would let me quote correctly.
RE: subsidized where?
12/7/2012 9:36:18 AM
Yes, your are right. It's not a subsidy for a phone. It's a short term loan that ends when the phone is paid off, probably plus a little interest. Compare this to a subsidized phone where the phone is more than paid off by the time the two year contract ends and if the customer doesn't get a new device at the end of the contract it's all gravy. Good for the carrier, bad for the customer.
The key to this is customer education, since even some tech reporter's don't seem to completely get it.
"It's okay. The scenarios aren't that clear. But it's good looking. [Steve Jobs] does good design, and [the iPad] is absolutely a good example of that." -- Bill Gates on the Apple iPad
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