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 9:39:42 AM
I think that there is going to be a key difference between what T-mobile plans on doing and what the other carriers do. It is possible that the 'credit' will not be extended by T-Mobile, but by some other lending establishment. That will allow T-mobile to mitigate the risk and hassle of trying to collect from people that stop making payments (break their contract).
There is also a hidden purpose to this action too. A great deal of T-mobile's activations have been stolen devices. If you have an AT&T iPhone stolen it can't go back to AT&T once it has been reported as stolen, but T-mobile has been activating them. An agreement between all carriers has been made and they are going to build a common database that all stolen phones are recorded in - preventing the domestic use of stolen phones. This will dry-up T-mobile's main source of new customers, so they chose this action to replace it.
12/7/2012 10:02:26 AM
I'm sure there are some stolen iPhone's on T-Mobile, but there is also an entire black market export industry for unlocking and selling them outside of the US.
"It looks like the iPhone 4 might be their Vista, and I'm okay with that." -- Microsoft COO Kevin Turner
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