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Downsides include up-front costs and sometimes patchy network

T-Mobile USA -- invigorated by a merger with MetroPCS Communications Inc. (PCS), courtesy of the partial acquisition of MetroPCS by parent Deutsche Telekom AG's (ETR:DTE) -- is looking to rock the U.S. cellular market by switching to a mostly subsidy-free "UNcarrier" model.

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.

Starting today 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.

Unsubsidized plans
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. (VZ) and Vodafone Group Plc.'s (LON:VOD) 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.

HTC One
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. (S), and AT&T, Inc. (T), 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 HTC One by HTC Corp. (TPE:2498) and the Galaxy S IV by Samsung Electronics Comp., Ltd (KSC:005930) incoming, T-Mobile may see a strong pickup if it can properly advertise just how good a deal it's giving U.S. customers.

Source: TMONews



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RE: Forgot
By DT_Reader on 3/26/2013 12:43:02 AM , Rating: 2
I don't want or need an unlimited plan. Can I get a voice-only plan? I want a phone with wi-fi (lots have it), in which case I don't need 4G. The only time I'm out of range of wi-fi is when I'm driving, and I don't use my phone when I'm driving.


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