I'm fine with it as well since I usually buy and sell phones every 2-3 months. Everyone else I know gets the subsidy every 18 months and has no clue how much the phone actually costs.
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T-Mobile USA Planning to Offer iPhone and End Subsidies Within 3-4 Months
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I'm fine with it as well since I usually buy and sell phones every 2-3 months. Everyone else I know gets the subsidy every 18 months and has no clue how much the phone actually costs.
Internaut
macrumors 65816
That's about the best way of looking at it I've seen. I would add though that if you look around, especially if buying a none iPhone phone, the subsidy can work in your favour. Always take the total cost of ownership over the minimum term of the contract into account.
As for T-Mobile's move, my spider senses are telling me they will both want their cake and eat it! So, don't be too surprised if, in the future, the carriers expect the full cost of the phone from you, plus a $50+ per month contract over a minimum 24 month period....... I love capitalism
.That's about the best way of looking at it I've seen. I would add though that if you look around, especially if buying a none iPhone phone, the subsidy can work in your favour. Always take the total cost of ownership over the minimum term of the contract into account.
As for T-Mobile's move, my spider senses are telling me they will both want their cake and eat it! So, don't be too surprised if, in the future, the carriers expect the full cost of the phone from you, plus a $50+ per month contract over a minimum 24 month period....... I love capitalism
$50 would not be bad at all compared to the minimum $110-120 plan that ATT forces you into w/ an iPhone
Why would T-Mobile discount plans by the same amount that you finance the phone for? From a business standpoint, that makes no sense. Just using nice, round numbers, you have this:
$200 subsidized phone + $100 a month service bill. The carrier is initially -$450 if they paid $650 for the phone. If $20 of your service bill was used to pay off that loss, the $450 is recouped once you pay the 23rd month of your contract. All in all, in 24 months, they collect $2600 from you. Subtract the $650 and they are left with a net $1950.
Now let's say you finance the phone for $25 a month for 20 months. Your plan is now down to $80 a month, but you add $25 for the financing = $105 a month. $25 * 20 months is $500. So, you'll need a $150 down payment for a $650 phone (Essentially you're paying a subsidized price and paying via financing to make up the cost). In 20 months, T-Mobile has collected $2250 from you. For comparison's sake, let's say you stay on for 4 more months with your newly discounted $80 plan. In 24 months, T-Mobile has collected $2570. Minus the $650 they paid for the phone initially, they are left with a net $1920 over 2 years. That's a 1.5% profit loss for T-Mobile.
I used an iPhone as an example because this is MacRumors and all.
As I said, the sole benefit would be not being tied to a contract if you pay 100% upfront. I guess being stuck in a 20-month financing contract is better than 24 months. Ultimately, even though the plan is discounted, you'll be paying the same once the financing is added in, which makes me question, 'What's the point'?
People who upgrade every 20-24 months would see their bill remain the same or increase by a few dollars depending on their down payment and type of phone as they'd probably upgrade as soon as possible. Carriers would see their profits remain the same or actually decrease a little.
The only way this makes business sense is for plans to stay right where they are with financing additional. Otherwise, it's like paying with $100 bill or 5 $20 bills. The end result is essentially the same.
If AT&T and VW follow these footsteps, they are not going to take a hit on their profits. T-Mobile's plan is great if you like their service and don't mind a few (temporary?) sacrifices and don't upgrade every few years.
I'm not guessing a T-mobile ad is going to say "We have iPhones for $649".
I think the marketing will look similar to now....It will say upfront cost of $200, then pay $X per month for plan and phone for 20 months or whatever.
There will then be a bunch of fine print at the bottom that will state the actual terms that most people won't read. Only there would anyone discover that you could actually pay for your phone up front and have a lower monthly cost, etc. Instead of an ETF if you cancel service, you would pay the balance of your loan.
I'd bet they've done their market research on how to position this attractively.
I think the marketing will look similar to now....It will say upfront cost of $200, then pay $X per month for plan and phone for 20 months or whatever.
There will then be a bunch of fine print at the bottom that will state the actual terms that most people won't read. Only there would anyone discover that you could actually pay for your phone up front and have a lower monthly cost, etc. Instead of an ETF if you cancel service, you would pay the balance of your loan.
I'd bet they've done their market research on how to position this attractively.
Exactly! No sticker shock. No one paying full price for the phone upfront (unless they prefer to). The big change is after those 20-24 months: consumers would now have the choice of getting a new phone or paying $20-$25 less per phone per month if they keep their old phone longer.
I'm currently on T-Mobile's $30/month plan with my iPhone 3GS - it's only 100 minutes of talk a month, but I use 20 of that at most, so it's not an issue. But with that 100 minutes I get 5GB of fast data (above that it'll drop to EDGE) and unlimited texting.
If T-Mobile starts selling the new iPhone with time payments, I'll be one of the first to buy it. That'd be, what, a total of $720 + $649 = $1369 for two years of phone service plus the cost of the phone? It certainly beats $2200 or whatever you end up paying with AT&T and Verizon.
If T-Mobile starts selling the new iPhone with time payments, I'll be one of the first to buy it.
That'd be, what, a total of $720 + $649 = $1369 for two years of phone service plus the cost of the phone? It certainly beats $2200 or whatever you end up paying with AT&T and Verizon.I can see ATT ending or nearly ending subsidies whilst still increasing data prices. WORST COMPANY EVER!!!
That's why if you keep a phone over 2 years you are a fool.
What you need to do to get your money's worth.. Is every 2 years when your contract is up.. get a new subsidized phone and sell your unlocked 2 year old phone on ebay for cash.
Actually the IDEAL scenario would be get on a family plan.. and have your wife or you upgrade on alternating years. So say.. the first year.. you get the IPHONE 5.. then the next year your wife gets the IPHONE 5S... then the next year YOU get the IPHONE 6... sell the IPHONE 5... and make $200-300 on EBAY.... which you use the next year to buy an IPHONE 6S.... then sell the IPHONE 5S.. and so on.....
Smart people would do the above.. unfortunately i have a wife that drops and breaks phones.. so it doesn't always work out as planned.
What you need to do to get your money's worth.. Is every 2 years when your contract is up.. get a new subsidized phone and sell your unlocked 2 year old phone on ebay for cash.
Actually the IDEAL scenario would be get on a family plan.. and have your wife or you upgrade on alternating years. So say.. the first year.. you get the IPHONE 5.. then the next year your wife gets the IPHONE 5S... then the next year YOU get the IPHONE 6... sell the IPHONE 5... and make $200-300 on EBAY.... which you use the next year to buy an IPHONE 6S.... then sell the IPHONE 5S.. and so on.....
Smart people would do the above.. unfortunately i have a wife that drops and breaks phones.. so it doesn't always work out as planned.
Or... smart people might opt to just keep your phones for 3 years and pocket the savings of not paying off the cost of the phones in that third year (without the hassle of trying to time things right to sell on eBay)!
We all love the latest Apple shiny object, but most of us don't trade in our iMacs and MacBook Pros every two years for the latest and greatest. We wouldn't think about doing it with our phones, either, if the big carriers hadn't put the current system in place. I'd love to see T-Mobile change the model.
But you're still paying $150+ a month for you phone service.... that's the point. These "savings" of a hundred here or there doesn't amount to much w/ the thousands you spend over 2 years on you plan.
so pay $100 for Straight TAlk and get crappy data speeds and them bothering the heck out of you to renew your minutes. you don't even get LTE either. it's not equal service. i tried several and just not worth it.. YET
Any idea if there will be a T-Mobile-specific iPhone, or if they'll be selling the unlocked versions?
This could drastically affect sales since, even though their network is being "refarmed" to support 3G on the iPhone, that 3G coverage is very minimal and spotty (at least where I am), and leaves the iPhone users on Edge 80% of the time (just a rough percentage right there).
However, when I am on 3G, speeds are more than acceptable. Its simply a coverage issue.
Let's hope T-Mobile has a specific iPhone
This could drastically affect sales since, even though their network is being "refarmed" to support 3G on the iPhone, that 3G coverage is very minimal and spotty (at least where I am), and leaves the iPhone users on Edge 80% of the time (just a rough percentage right there).
However, when I am on 3G, speeds are more than acceptable. Its simply a coverage issue.
Let's hope T-Mobile has a specific iPhone
Is there not an option (C)? - Cancel your contract and take out a SIM only deal which allows you to keep your existing phone and only pay the carrier for the minutes, texts and data that you want.
Maybe you can't get that in the US but in the UK it's commonplace.
I had an 18 month contract on my iPhone 3G and kept it for another 2 years after that paying half as much per month for the same service - win
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macrumors 65816
Sorry, I was writing dollars and thinking in pounds. That $110-120 minimum you quoted is absurd BTW, even when you convert back to pounds. In the UK, you can get an iPhone at a reasonable price with a £30-40 month contract.
Oddly, it was the UK that invented "The Plan" in the early 90s when Orange did plans for as little as £15+VAT for a whopping 15 minutes. When the US started this (when PCS services launched), I was somewhat bemused by the high minimum costs and more minutes than most people could possibly ever use. It looks to me like this has continued.
Incidentally, you can buy an 32GB iPhone 5 for about £600 in the UK and stick it on a rolling bring your own phone contract (about £10 per month minimum for 3G and a little north of £20 for LTE, if you're lucky enough to have LTE coverage). The networks here tend to be generous with minutes and texts, and mean with data though.
T-Mobile, Straight Talk, SIMple Mobile (SIMple, get it?), offer exactly this in the US. However, I think the minute/text/data bundles are pretty limited in choices, as most of them will try to push you to an all-or-nothing $50 a month bundle. Also, HSPA+ only, no LTE
T-Mobile ending subsidies is going to align it right exactly where you guys have it in the UK, after you "Pay off" your phone, your bill will go down by $20 (or whatever your financing rate was for your device)
I agree that carriers should reduce prices after contract up but I wouldn't switch to T-Mobile just for that.
You should check how their coverage is in your area. In the DC area it's quite poor. Frequently goes out of network and data is on Edge most of the time rather than 4G.
My roommate has a T Mobile contract and just got the HTC One S. The phone loses it's network connection when navigating. It's not a phone issue because previously he had a 3G capable Nokia dumb-phone, and the same network loss was there, never navigated using that because the phone isn't capable.
Rates maybe higher with AT&T and Verizon, but at least their service is much more consistent. I for now hope that this doesn't take off, not everyone can pay $650 outright. Maybe if monthly rates were substantially lower (like $20 1000 minutes, 2GB data) then I'd consider.
Yeah, and tmobiles coverage for my iphone4 is about as spotty as those markers show. Tmobile announced Denver as a new refarmed market yesterday, but I still only get 3G in small portions of Denver. Seems hardly ready for iphone traffic to me, even in 3 to 4 months. Unless, a new iphone brings more spectrum coverage with it.
Curious to see what the rest of the providers will do. If ATT and Verizon were to get rid of subsidies, I still don't foresee them lowering their plan prices, they'll look at it is as a way to get more money out of their customers!
if they don't lower their plan prices, they will lose customers.
If it's $100 at AT&T and Verizon but $60 at T-Mobile........some customers will switch.
And where exactly was that statement from the CEO because it sure wasn't in the MR article. His comment was so vague it could have been about anything
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Nope. The other way would make more money.
Their way the cost of the iPhone and the service are two line items. But with every other carrier, the plan is the plan. Once 'the iPhone' is paid off you don't get a discount. Even if you buy full price, you don't get a discount. That makes the carriers way more money.