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T-Mobile to Kill Subsidies Next Year
Will Attack AT&T in Ads, Offer iPhone Payment Plans
by Karl Bode Friday 07-Dec-2012 tags: business · wireless · alternatives · content · TMobile · T-Mobile US · wireless
In addition to T-Mobile announcing that they'll start selling Apple products in 2013, is the potentially more interesting fact that they'll stop selling subsidized phones. Speaking at Deutsche Telekom's annual investor conference, T-Mobile CEO John Legere confirmed that subsidized phones will no longer be a part of the company's business model next year, with consumers either paying full price for devices, or choosing to pay the device off in installments.

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T-Mobile will offer the iPhone to consumers, for example, if they pay an up front $99 and then pay off the remaining cost of the device through $15 to $20 monthly payments tacked on to their existing bill. T-Mobile hopes that this helps differentiate them in the market moving forward.

"We think there is a huge room for a carrier to change in a way that the larger players will choose to or will not be able to respond to," said Legere.

Legere also insisted that while their value (non-subsidized phone) plans earn them less revenue, they'll make up the difference by not having to subsidize devices. The CEO also noted that Value customers tend to stay on board an average of two months longer than Classic customers do.

It remains unclear when T-Mobile will launch the iPhone or LTE, but the company made it clear a core part of their strategy will be picking on AT&T. The CEO announced that a core marketing slogan for the company will be: "you love you iPhone, you hate AT&T." "I want you to get used to that tone because that is the way we're going to play," insisted a CEO whose company just a few months ago was eager to merge with AT&T.

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tc1uscg

join:2005-03-09
Saint Clair Shores, MI

Whats the catch?

So, pay off in installments? Got to wonder if you will have to sign on for a 2 year agreement to get that choice. There will be 2 pricing plans. 1 for those slipping them the plastic and those who opt for the monthly payments. Hmm.. gotta wonder whats going on in T-MO land.

OSUGoose

join:2007-12-27
Columbus, OH

Re: Whats the catch?

Yes you will, just like the More & Even More plans a few years ago.
jagged

join:2003-07-01
Boynton Beach, FL
What's going on is phone subsidies are killing everyone. T-Mobile introed non-subsidized plans and their costs fell by about 3%.

In a subsidized plan the cell phone carrier doesn't break even until 7-8 months into a customer's contract. Sometime it's a year.

Besides, if you were to get two GSIII phones on a family T-Mobile Value plan vs AT&T you'd be paying about $600 less over 2 years, get more minutes, and not have any data overage fees

dnoyeB
Ferrous Phallus

join:2000-10-09
Southfield, MI
Reviews:
·Comcast

Re: Whats the catch?

true. And probably they can start an arm of tmobile for loans much like GM has GMAC for car loans. Then they can differentiate the two companies. One making profits like a loan company does and competing on that level, and one making profits like a phone company does and competing on that level.

Recent moves by tmobile have been so intelligent as to make me want to invest in that company. How long can it last though before they try to flog and deceive the customers for extra pennies again!?
--
dnoyeB
"Then said I, Wisdom [is] better than strength: nevertheless the poor man's wisdom [is] despised, and his words are not heard. " Ecclesiastes 9:16

ReturnToTmo

@173.227.18.x
The only difference between the Classic and the Value plan with the installments is you don't have to keep on paying extra for your phone after you have paid it off. Your bill goes down $10-$20 a month.
pcme2000

join:2008-01-17
Bangor, ME
That would be interesting to find out. I am wondering if T-Mobile just wants to go out of service in the USA?

OSUGoose

join:2007-12-27
Columbus, OH

Hey

It's easy to be that cocky now that your flush with AT&T cash and spectrum.

carpetshark3
Premium
join:2004-02-12
Colorado Springs, CO

Re: Hey

Always got my own phones anyway. Had more choice and didn't have to use TMO's offerings. Plus feeling no compunction about rooting the phone. I don't care about speed, so I was using phones from Europe bought unlocked. Now since TMO is fiddling with 1900 band, they would have been just fine.

I'll probably get a Nexus 4 from Google next year. Not TMO.

BlueMagic

join:2008-03-30
Riverside, IL
What planet are you living on? AT&T has absolutely nothing to do with t-mobile and certainly does not have access to AT&T cash or spectrum. You are way behind the curve, my friend.
--
"A 3.4KHz bandwidth is more than sufficient to convey the messages." Mazillo August 1, 2009

OSUGoose

join:2007-12-27
Columbus, OH
Reviews:
·Insight Communic..

Re: Hey

No you are the one that is behind the curve, friend.

After the failed AT&T/T-Mobile merger, AT&T was required to give T-Mobile spectrum and cash.......so do you wanna take back the BS you said?

»bgr.com/2012/08/23/att-t-mobile-···nalysis/
sqinky
Premium
join:2001-01-24
Fernley, NV
Reviews:
·Charter

Re: Hey

Something in the area of 3 Billion dollars CASH & 1 Billion in wireless assets (spectrum) according to reports from sources like C-Net
»news.cnet.com/8301-30686_3-57345···for-you/

n2jtx

join:2001-01-13
Glen Head, NY

Contract

So if you opt to pay the full price for the device up front will it be unlocked AND will you get to forgo a contract? If not, why? It would appear that the reason traditionally given for being locked into a contract and being SIM locked (recovering the device subsidy) would not apply.

It will be interesting to see how this plays out.
--
I support the right to keep and arm bears.
LostInWoods

join:2004-04-14

Re: Contract

The Value plan still requires a 2-year contract. I'm really not sure why, other than that they feel like they can. The main reason I'm with TMO is that my Even More Plus plan did not require a contract.

gerick

join:2001-01-17
San Antonio, TX

Re: Contract

said by LostInWoods:

The Value plan still requires a 2-year contract. I'm really not sure why

It is my understanding that the contract is only required if you are buying the phone with the installment plan. Pay for the phone up front or BYOD, no contract. Want to take advantage of 20-month free financing, need contract.

dnoyeB
Ferrous Phallus

join:2000-10-09
Southfield, MI
Reviews:
·Comcast
I don't know what you mean by 'value' but T-Mobile's most inexpensive plans come without a contract. contract plans are more expensive presumably because they mostly carry subsidies.
--
dnoyeB
"Then said I, Wisdom [is] better than strength: nevertheless the poor man's wisdom [is] despised, and his words are not heard. " Ecclesiastes 9:16
xrobertcmx
Premium
join:2001-06-18
Sterling, VA
Right now the contract lock in provides a decent discount vs off contract. The only problem I have with T-Mo right now is coverage in my neighborhood is non-existant, but then AT&T is the only one with decent coverage there. Verizon and Sprint are worse then T-Mo. Odd given that it is a highly developed suburb of DC.
--
I voted for Snoopy!

IPPlanMan
Holy Cable Modem Batman

join:2000-09-20
Washington, DC
kudos:1

What about Sprint or Verizon?

Why isn't T-Mobile saying: "You love your iPhone, but you hate Verizon (or Sprint)"?

Goober
Premium
join:2000-12-17
Naperville, IL
kudos:5
Reviews:
·Dish Network

Re: What about Sprint or Verizon?

said by IPPlanMan:

Why isn't T-Mobile saying: "You love your iPhone, but you hate Verizon (or Sprint)"?

GSM/CDMA
--
How nice. This country is being run by a broken record repeating the same two words over and over. Cretin.

tiger72
SexaT duorP
Premium
join:2001-03-28
Saint Louis, MO
kudos:1
During his speech announcing this, Legere accidentally said "Sprint" before correcting himself to say "ATT". He excused himself saying that Sprint would be the easy one to go after.
xmarklive

join:2012-07-10
Lansing, MI

t-mobile current value plan customer

I've been on tmobile value plan a year , and I was wondering If I go to a mobile store and get a phone on the installment plan and I pay it off in two months will my contract still be less than a year ?

tc1uscg

join:2005-03-09
Saint Clair Shores, MI

Re: t-mobile current value plan customer

said by xmarklive:

I've been on tmobile value plan a year , and I was wondering If I go to a mobile store and get a phone on the installment plan and I pay it off in two months will my contract still be less than a year ?

Good point. There could be a EPF (Early Payoff Fee) penalty . I'm sure they will think of ways to make you "pay" one way or the other.
jagged

join:2003-07-01
Boynton Beach, FL

Re: t-mobile current value plan customer

no such thing as a free ride

Alakar
Facts do not cease to exist when ignored

join:2001-03-23
Milwaukee, WI

Re: t-mobile current value plan customer

It's actually a very good deal. I've bought a couple of phones using T-Mobiles installment plan. It's interest free and you can pay it off early without penalty.
--
"Necessity is the plea for every infringement of human freedom; it is the argument of tyrants; it is the creed of slaves." William Pitt the Younger

ReturnToTmo

@173.227.18.x
I got a Note 2 on installment, and the sales rep that did my paperwork said that I can buy the phone, put it in $20/month installments, or just pay it off whenever I like. No penalties. Plus I get a $100 mail-in rebate from Samsung/T-mo. Once I get that $100 in the bank, I'll be using that in addition to the difference I haven't paid yet to pay off my phone completely.

bobjohnson
Premium
join:2007-02-03
Orlando, FL
You pay the extra $20 for 20 months but if you give them the $400 two months into the contract they will take the additional $20 off but you will still be in contract for the rest of the two years.

tc1uscg

join:2005-03-09
Saint Clair Shores, MI

Re: t-mobile current value plan customer

They are going to get you one way or another. You have to pay for your phones over an extended period of time or up front but, your monthly service plan will cost the same regardless so even if they don't need to make up for shelling out full price to the manufacture for the equipment, they won't lower the service plans? So, other then fudging the numbers to make them look good to the investors (less money going out to pay for the phones), I don't see the point of all this. Americans love credit as much as some like their crack so some who kick the habit will see there is no benefit to them (the customer) to pay monthly installments on the phone. Over time, what may happen is people who would normally get a high end phone will drop back down to those 10 key flip phones. Then the likes of HTC, Motorola, Apple will turn the screws on TMO to get more highend product out the door or provide a cheaper smart phone that people seem to be addicted to (which we will never see that happen with apple). JMO but it sounded good in my head.

cdru
Go Colts
Premium,MVM
join:2003-05-14
Fort Wayne, IN
kudos:7
said by xmarklive:

I've been on tmobile value plan a year , and I was wondering If I go to a mobile store and get a phone on the installment plan and I pay it off in two months will my contract still be less than a year ?

No. Value plans are still bound by a 2-year contract. There is no penalty to pay off a EIP (equipment installment plan) early, however you must pay off the entire plan for all devices purchased under that plan at the same time. (e.g. you and your spouse both get a SGIII, you have to pay off the balance on both at the same time). Any amount more than the monthly payment but less than a complete payoff is just applied as a credit to your account and would be applied towards your next bill.

If you want no contract then you'll have to buy your phone with a credit card or cash straight up and go with a Monthly4G or other prepaid plan.
Skippy25

join:2000-09-13
Hazelwood, MO

They way it should be...

And this is exactly how it should be. Buy the device you want and then get the service you want.

Let the subsidies stop across the board then let the true market value of these phones start settling in. The days of a $500 phone will be done.

Linklist
Premium
join:2002-03-03
Longport, NJ
kudos:5

Re: They way it should be...

said by Skippy25:

And this is exactly how it should be. Buy the device you want and then get the service you want.

Let the subsidies stop across the board then let the true market value of these phones start settling in. The days of a $500 phone will be done.

It definitely would reduce the price, over time, for all these overpriced smartphones. And people would stop upgrading every 2 yrs like clockwork as well.
--
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasury.

bobjohnson
Premium
join:2007-02-03
Orlando, FL

Re: They way it should be...

I upgrade about every 6 months and resell my old phone for a good portion of the cost of the new one. It would kill my hustle...
axus

join:2001-06-18
Washington, DC
I think it's great that different businesses can offer different plans. People might have different ideas about "the way it should be".

These phones really do cost a lot to produce and repair. I think T-mobile is taking a good approach here, they can make more money making loans for equipment than they can subsidizing it. And people like me can buy a Nexus 4 outright without feeling that I lost out on subsidy savings.
Skippy25

join:2000-09-13
Hazelwood, MO

Re: They way it should be...

said by axus:

These phones really do cost a lot to produce and repair.

No they don't.

gwhall007

join:2001-11-12
Niles, MI

Re: They way it should be...

Then start building the phones yourself, since it isn't expensive. Problem solved.

jchambers28

join:2007-05-12
Alma, AR

Getting out of the postpaid market

What it sounds like to me they are getting out of the post a market and moving over to prepaid.
TBusiness

join:2012-10-26
Toledo, OH
Reviews:
·AT&T U-Verse
·MegaPath

Re: Getting out of the postpaid market

They've been making more $$$ on their prepaid side. They don't lose on the equipment when its paid for up front. Unlike you get a post-paid customer, pays 3 or 4 bills, runs 5-6 up and never pays, got a great phone basically FREE and took it else where. TMO is sitting with the debt. I don't blame them.

ArrayList
Premium
join:2005-03-19
Evanston, IL
Reviews:
·Comcast
·T-Mobile US

Re: Getting out of the postpaid market

said by TBusiness:

Unlike you get a post-paid customer, pays 3 or 4 bills, runs 5-6 up and never pays, got a great phone basically FREE and took it else where.

how does this work? subsidized phones are usually locked to the carrier.

Anon555

@level3.net

?

Keeping the same price for plans and dropping the subsidy while locking in a contract seems like a lose lose to the customer.

Shouldn't customers demand lower plan prices in exchange for the loss of subsidy or am I missing something?...

MovieLover76

join:2009-09-11
kudos:1

Re: ?

Read the article or check out t-mobile's value plans, they are about $20 cheaper than the subsidized classic plans, the value plans actually save you money in the long run.
Network Guy
Premium
join:2000-08-25
New York
Reviews:
·Optimum Online

Prepaid

I think Tmo is starting to realize the value behind focusing their costs in running the network and leaving the handset nitpicking up to the consumer, following on the European wireless industry model. Since the advent of Android and rooting, the add-ons most carriers have gotten used to cashing in on (ringtones, music download, etc) have all but dried up.

buddahbless

join:2005-03-21
Premium
Reviews:
·AT&T DSL Service
·Verizon Online DSL
·Comcast
·T-Mobile US

Re: Prepaid

Network guy you are pretty much on point, as the trend in the US has shifted there are more prepaid phones activated than postpaid and TMO is on to this. Give them a good network that works where they want and they will happily purchase there own phone at whatever retail price is or where ever they can find the phone they want for the price they want.

We do similar in America with our automobiles, we can purchase them from anywhere and anyone, as we will still have the option to chose whatever road we want to drive on ( local road, highways, or tollways) and purchase gas from whatever fueling station we prefer, and chose any repair station we like after our manufacture warranty is up. Imagine if cars where sold like cell phones. "Buy this make and model of car you can only drive on these roads and fill up @ BP stations only ",what a nightmare that would be.

Lone Wolf
Independent Voter, Buy Gold and Guns
Premium
join:2001-12-30
USA
kudos:1
Reviews:
·Verizon Online DSL
·Comcast
said by Network Guy:

I think Tmo is starting to realize the value behind focusing their costs in running the network and leaving the handset nitpicking up to the consumer, following on the European wireless industry model. Since the advent of Android and rooting, the add-ons most carriers have gotten used to cashing in on (ringtones, music download, etc) have all but dried up.

+1

Bingo, you hit the nail on the head.
--
Another 4 years of Hope and Change.
The rich will still get richer and the poor get an Obamaphone and Food Stamps. lol

Couch Potato
What?
Premium
join:2004-08-29
Statesville, NC
Reviews:
·Insight Communic..
·WOW Internet and..

T-Mobile is lame

They only offer 2G service where I live. Verizon has LTE, AT&T has HSPA+ with plans to offer LTE (it's live about 15 minutes away), and Sprint has 3G with plans to offer LTE "in the coming months" (officially on the list). Come on T-Mobile, quit living in the past and step it up.
--
My posts are of my own opinion, not my employer's.
TBusiness

join:2012-10-26
Toledo, OH

Re: T-Mobile is lame

"months coming" could be 1month to years with Sprint's time table. They still have not deployed in major cities where they should be focused.

tiger72
SexaT duorP
Premium
join:2001-03-28
Saint Louis, MO
kudos:1

Re: T-Mobile is lame

Yeah I find it humorous complaining about T-Mobile and then advocating for Sprint in the same sentence.
NYGiants

join:2012-08-31
Bowling Green, VA
Same as me, spotty 2G (T-Mobile) as Verizon and AT&T both have a form of 4G in my area. Even in the cities around me (Richmond) (Fredericksburg) are 3G. They are also behind on LTE deployment by 90, 100, and 440 markets (t-mobile has zero).
jagged

join:2003-07-01
Boynton Beach, FL
if you're in the boonies don't expect much from T-Mobile

C0deZer0
Oc'D To Rhythm And Police
Premium
join:2001-10-03
Tempe, AZ

Good idea, but not that great for end users

Particularly if you've yet to have a phone that has actually remained useful after that first year. Pretty much every phone I've ever had from every carrier I've ever had just seemed to fall apart after that first year. Either its ability to retain a signal would deteriorate, or it would drop calls constantly. So this wouldn't really benefit me any more than a subsidized phone on a contract either.
--
Because, f*ck Sony

See 9 replies to this post

aztr0

join:2007-10-28
Brooklyn, NY
Reviews:
·Optimum Online
·DIRECTV

T-Mobile hopes that this helps differentiate them in ...

"T-Mobile hopes that this helps differentiate them in the market moving forward."

What separated them was that they offered cheap/free devices at a cheap monthly rate albeit 2 year contracts.... was I wrong in that train of thought about this carrier?

jsolo1
Premium
join:2001-07-01

Reduced MRC???

So since the cost of the device is no longer subsidized, does that mean the rate plan rates will go down too? After all, if i need to pay for the entire device amount my self, the MRC should be less.....
--
Insanity is living in a state of illusion.

BlueMagic

join:2008-03-30
Riverside, IL

Re: Reduced MRC???

Duh, of course.

Lone Wolf
Independent Voter, Buy Gold and Guns
Premium
join:2001-12-30
USA
kudos:1
Reviews:
·Verizon Online DSL
·Comcast

What Will They Do?

I mean the people that think they are getting a deal by buying subsidized phones but are paying up to $3000 over 2 years for their $400 phone and service when they can buy a new unlocked phone and get full, unlimited service for about $40 monthly. Some people say can't afford to lay out $400 to $800 for a new phone so they get subsidized phones. These must be the same people that use Rent-A-Center for their furniture and appliances.

»www.engadget.com/2010/02/23/edit···-of-thi/

Most American carriers partly recoup deeper subsidies on higher-end devices by requiring lucrative data plans, and as annoying as that is, I think that it's the closest we've come to nailing the real fix. The next step is to come to terms with the fact that, for all practical purposes, $0 and $100 are the same thing -- over the course of a two-year contract, the upfront sticker price you pay for a phone is trivial. Seriously, it's a drop in the bucket: total cost of ownership for a smartphone on any of the US nationals can run beyond $3,000 by the time your 24 months is up.

European wireless companies began to halt subsidies a while ago. See »online.wsj.com/article/SB1000142···618.html
--
Another 4 years of Hope and Change.
The rich will still get richer and the poor get an Obamaphone and Food Stamps. lol


EGeezer
Go Cats
Premium
join:2002-08-04
Midwest
kudos:8

Sounds like a good idea - if ...

If they offer unlocked phones or allow BYO phones and reduce their monthly rate, it sounds great!

I'd mentioned the idea of offering a BYO phone - or buying from Verizon outright at list - to a Verizon manager who claimed they have to pay full retail for iPhones. My proposal was simple - if the phone costs $400, knock off all the price of the phone except $50 in the two year contract. That way they make $50 more than they would have made by subsidizing the phone to get a two year contract.

The response? "We're not in business to be a charity".

Strange comment indeed considering Verizon would make $50 more than under their present subsidy contract.
--
Buckle Up. It makes it harder for the aliens to suck you out of your car.

C0deZer0
Oc'D To Rhythm And Police
Premium
join:2001-10-03
Tempe, AZ

Re: Sounds like a good idea - if ...

I think the point is that if you have an unlocked or bring your own phone to use on their network, then you wouldn't have to pay that initial deposit,etc. So you'll be starting off at the rate of the plan.
--
Because, f*ck Sony

DSLucky
Premium
join:2002-04-23
Maud, OK

Good thing in the long run..

I think this will be a good thing, as it will now show the true costs of the handsets, and will force manufacturers to lower handset prices. When the cost of the handset is hidden, mfg's can get away with charging 6-700 for a phone..That won't be the case if all carriers start going like T-Mobile.

Can't happen soon enough for me.

monchis
Premium
join:2002-12-09
Los Angeles, CA
kudos:1

More straightforward.

In my opinion, their value plans are more straightforward to their customers.

Basically, they tell you, you are going to pay an extra 15-20/month that goes towards paying off your phone.

Or feel free to pay it off now or whenever you're ready. 0 finance charges.

Value plans are cheaper than their classic plans as well by 20 bucks.

--
dslreports.com
BiggA

join:2005-11-23
EARTH

The larger carriers don't need to respond

AT&T and Verizon have the networks. T-Mobile could be free, and most users wouldn't want it.

See 7 replies to this post

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