T-Mobile Frees U.S. Customers of Subsidies, Provides Appealing Flexibility, Price
March 25, 2013 1:58 PM
comment(s) - last by
Downsides include up-front costs and sometimes patchy network
T-Mobile USA -- invigorated by a
merger with MetroPCS
Communications Inc. (
), courtesy of the partial acquisition of MetroPCS by parent Deutsche Telekom AG's (
) -- is looking to
rock the U.S. cellular market
by switching to a
I. The Rollout
Traditionally smartphones in the U.S. cost anywhere from nothing (free) to a couple hundred dollars. The true cost of these smartphone devices can be $600 USD or more. But carriers have transferred that cost to customers over the life of the plan via higher service bills.
It's long seemed a clever psychological gambit; tricking customers into thinking they're paying less. But it's not one that everyone is happy with. Of late opposition to the subsidy model has been mounting. And T-Mobile USA is
leading the critics
you'll be able to buy an unsubsidized handset from the carrier or elsewhere and then build a service package buffet-style that works for you.
T-Mobile rolls out its new unsubsidized pricing scheme today.
[Image Source: T-Mobile USA via TMONews]
Pricing varies based on the amount of data you select (500 MB, 2 GB, 4 GB, 6 GB, 8 GB, 10 GB, 12 GB, and unlimited options are possible). For the 500 MB option you get that, plus unlimited talk and text for $50 USD/month. For $20 USD you get "unlimited" data (no overages), while for each $10 USD more, you get 2 GB of unthrottled data.
II. What Do You Gain? What Do You Lose?
So how does this stack up to other carriers? You have to remember; you're not getting your handset subsidized.
With that in mind let's consider a 1 GB data contract with unlimited talk and text. On the
nation's largest network
-- Verizon Communications Inc. (
) and Vodafone Group Plc.'s (
) joint-subsidiary Verizon Wireless -- you get this for $90 USD/month on a two-year contract. The same contract is $60 USD/month on T-Mobile. So you save $720 USD over the course of the two-year contract by picking T-Mobile.
Most premium smartphones on T-Mobile fall in the $400-500 USD range, so even with the cost of the phone, you'll still come out a couple hundred dollars ahead. Plus T-Mobile USA does offer financing to essentially lessen the blow of paying for your new phone up front. There's (of course) a small fee (interest) involved, but overall it's not as bad as a subsidized plan.
Also recall that T-Mobile subscribers are now "free" and can leave at any time -- versus subsidized contract customers on other networks who face incremental cancellation fee penalties for jumping ship before the contract's 2 years are up.
Buying handsets like the HTC One may be expensive unsubsidized, but T-Mobile's pricing scheme will save you significantly over the course of your contract.
So the upsides are being contract free, saving money, and having a more clear perspective on what you're paying for service versus what you're paying for hardware.
About the only downsides are that you do have to pay up-front, and more importantly that T-Mobile's HSPA+ 3.5G network leaves something to be desired in terms of coverage and speed. T-Mobile has promised
an aggressive LTE rollout
this year to catch up with rivals Verizon, Sprint Nextel Corp. (
), and AT&T, Inc. (
), but it's premature to assume it will achieve its ambitious goals for that push.
Regardless, if you want the best contract price-wise T-Mobile is the place to be (or possibly one of Sprint's various pre-paid brands). With handsets like the
by HTC Corp. (
the Galaxy S IV
by Samsung Electronics Comp., Ltd (
) incoming, T-Mobile may see a strong pickup if it can properly advertise just how good a deal it's giving U.S. customers.
This article is over a month old, voting and posting comments is disabled
RE: What about existing contracts?
3/25/2013 5:40:35 PM
T-mobile already automatically cuts your monthly service fee $15-$20 (depending on type of service) once you're out of contract.
RE: What about existing contracts?
3/26/2013 12:27:49 PM
They've never done that on my plan.
I'm currently on T-Mobile with 500 minutes/unlimited text/2GB data for $70, with a subsidized phone (SIII for $200 deal)
Under the new plans it’s Unlimited Voice/text/2.5Gb data for $60, or .5GB data for $50
Don’t need unlimited voice, as I don’t even come close to the 500 minutes due to the free night and weekends.
If I wanted to get the SIII under the new plan I would have to pay $549 up front or $70+$20/month.
Total cost for my old subsidized plan over 24 months $200+($70*24)=$1880 (not including taxes)
New plan, buying the phone up front $550+($60*24)=$1990
New plan making payments on the phone $70+(80*24)=$1990
So, at least in the case of the S3, you might as well pay monthly
In either case, the new plan is $110 MORE expensive than the old subsidized plan. Not a deal.
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