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.
"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007
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