T-Mobile to End Smartphone Subsidies, Offer Cheaper Value Plans
December 7, 2012 8:40 AM
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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 10:19:05 AM
I have said for a very long time that this is the way things should be done. Subsidizing the phone cost into a long-term contract just obfuscates the true cost of the phone...and consumers, sadly, are far too daft to figure out what's going on.
Selling the phone outright and then providing whatever service you want at affordable service-only prices is a vastly more transparent and honest system.
In an ideal world, the cell phone system would work exactly the same way the landline phone system works. You buy a phone at a store...any phone you want. Then you contact a phone service provider...any provider...and set up service. If you decide later you don't like that provider and want to switch...you just switch.
No strings attached, no penalties, no nothing. That is the way it should be.
12/7/2012 11:20:44 AM
I figured this out the first time I went to the UK back in 2008, it cost me less to call the US on my cellphone (that I bought for 10 pounds (20 Dollars)) than it did for my plan in america(it was 3/pence a min, the exchange rate was 2x at the time).
Also, they didn't charge for anything incoming i.e. you weren't charged for incoming calls or texts. The next time I went I had my Nexus one and was able to just get a sim card, very cheap and effective and I still had my smartphone. We are definitely getting royally screwed here.
"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer
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