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Old Jan 9, 2013, 08:36 AM   #1
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T-Mobile USA Planning to Offer iPhone and End Subsidies Within 3-4 Months




Following up on yesterday's report about T-Mobile USA already having 1.9 million iPhones operating on its network as it moves toward a launch of official sales later this year, Reuters reports that the carrier should begin selling the device within the next 3-4 months. T-Mobile is planning a similar timeframe for its move to end device subsidies in favor of installment plans and lower monthly plan costs.
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"They're all, I would call them, in three to four months as opposed to six to nine months, [T-Mobile USA CEO John] Legere told Reuters in an interview at the Consumer Electronics Show in Las Vegas.
T-Mobile is also remaining aggressive on the acquisition and partnership front, with Legere noting that the carrier is looking to close its pending acquisition of MetroPCS in the second quarter of this year and is exploring deals with satellite TV provider Dish Network and prepaid carrier Cricket's parent company Leap Wireless.

As for T-Mobile's plans to end subsidies, it may not be the only major U.S. carrier to make the shift, as The Wall Street Journal reports that both AT&T and Verizon will be watching how things play out. Both carriers do, however, acknowledge that customers are so conditioned to low upfront device costs that it may prove a significant hurdle to overcome.

Article Link: T-Mobile USA Planning to Offer iPhone and End Subsidies Within 3-4 Months
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Old Jan 9, 2013, 08:38 AM   #2
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Ultimately, they'll slant it towards the customer paying more.
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Old Jan 9, 2013, 08:40 AM   #3
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Can someone explain what "subsidies" are and how they can exist?
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Old Jan 9, 2013, 08:45 AM   #4
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Originally Posted by gregwyattjr View Post
Can someone explain what "subsidies" are and how they can exist?
Ever notice how iPhones cost $199, but if you buy it off contract it will cost like $649? The carrier pays the difference to Apple and they make it up over the life of the contract. The amount that the carrier pays is a subsidy

So T-Mo is planning on you paying full price on your devices, but then can charge significantly less monthy. It's just a different way of getting your money
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Old Jan 9, 2013, 08:46 AM   #5
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Originally Posted by Mad Mac Maniac View Post
Ever notice how iPhones cost $199, but if you buy it off contract it will costs like $649? The carrier pays the difference to Apple and make it up over the life of the contract. The amount that the carrier pays is a subsidy

Technically you still end up paying $649 - its included in the contract over several months. Apple and the mobile network just get a bit more cash out of you.

Think of it as a loan.
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Old Jan 9, 2013, 08:50 AM   #6
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This will be VERY interesting. T-Mobile tried something similar a few years ago called Even More Plus, where they knocked $20 off the monthly bill in exchange for no subsidy on the phone. It wasn't popular then, but that was partly because they offered subsidies greater than $240 on their other plans.

Apple is very much a company who has benefited from carrier subsidies. iPhone adoption rates in the US are significantly higher than in Europe, where subsidies are less common and Android phones sell for less. I wonder if this is why we are suddenly hearing all the chatter about a cheaper iPhone (first Digitimes, then the more reputable WSJ and today Bloomberg). Perhaps part of it could be for emerging markets like China, but maybe Apple is also preparing for the days when it won't be able to rely on AT&T and Verizon paying them an extra $100 for their phones.
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Old Jan 9, 2013, 02:43 PM   #7
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Technically you still end up paying $649 - its included in the contract over several months. Apple and the mobile network just get a bit more cash out of you.

Think of it as a loan.
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 .
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Old Jan 9, 2013, 08:48 AM   #8
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Quote:
Originally Posted by Mad Mac Maniac View Post
Ever notice how iPhones cost $199, but if you buy it off contract it will cost like $649? The carrier pays the difference to Apple and they make it up over the life of the contract. The amount that the carrier pays is a subsidy

So T-Mo is planning on you paying full price on your devices, but then can charge significantly less monthy. It's just a different way of getting your money
Yea but after 2 years, I'm not getting screwed (as bad) just because I think my iPhone 4 is still perfectly serviceable but ATT still gets my subsidy money through the full price of the plan.

I'm milling about switching to T-Mobile, but their coverage here in Iowa is spotty. Though I don't know that it's any more spotty than my ATT coverage right now.
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Old Jan 9, 2013, 09:00 AM   #9
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Yea but after 2 years, I'm not getting screwed (as bad) just because I think my iPhone 4 is still perfectly serviceable but ATT still gets my subsidy money through the full price of the plan.

I'm milling about switching to T-Mobile, but their coverage here in Iowa is spotty. Though I don't know that it's any more spotty than my ATT coverage right now.
Depending on which part of Iowa, TMo is actually more reliable than AT&T. Iowa City and Des Moines, for instance, are better with TMo. Unless your data plan means more than your voice plan, which it might.

In Iowa, Verizon is the clear winner for network choices with their near-perfect voice coverage and LTE in both DSM and IC.

However, if you're looking to switch to save money... Look into Straight Talk. My buddy has it and pays $45/month for EVERYTHING unlimited, and they now are offering the iPhone officially with a no-interest payment plan from Wal-Mart.
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Old Jan 9, 2013, 10:17 AM   #10
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Originally Posted by kaltsasa View Post
Yea but after 2 years, I'm not getting screwed (as bad) just because I think my iPhone 4 is still perfectly serviceable but ATT still gets my subsidy money through the full price of the plan.

I'm milling about switching to T-Mobile, but their coverage here in Iowa is spotty. Though I don't know that it's any more spotty than my ATT coverage right now.
I'm looking at doing the same thing. My out-of-contract AT&T iPhone4 works just fine, but I'm still paying for it every month. Since AT&T doesn't offer just-voice-and-data plans (only voice-and-data-and-1/24-of-a-phone plans), T-Mobile's value plans are looking attractive.
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Old Jan 9, 2013, 10:31 AM   #11
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Sooo... Right about the time the 5S comes out?

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Quote:
Originally Posted by kaltsasa View Post
Yea but after 2 years, I'm not getting screwed (as bad) just because I think my iPhone 4 is still perfectly serviceable but ATT still gets my subsidy money through the full price of the plan.

I'm milling about switching to T-Mobile, but their coverage here in Iowa is spotty. Though I don't know that it's any more spotty than my ATT coverage right now.
FWIW I'll be taking T-mobil's bait. Wife & I had T-mob for years & it was pretty great. Service wan't the best, but dollar for dollar, the plans were. I waited and waited for iPhone to come to T-mob, then when I heard ATT might buy out the T-mob branch of DT I was like well, "F it" cause it'll probably happen anyway. Then it didn't. So here I am stuck on ATT. Which admittedly, hasn't been as bad as the collective interwebs made it out to be, but then again, I live in ATTland. But of course I'm getting shafted by the crappy plan. I'll take slightly sub-par area coverage with unlimited at a good price and pay upfront for the product, thanks. Although I'm not a big enough sucker to go run to StraightTalk. I'm going to save in the scheme of things too cause I don't upgrade every year or even every other year. I go to ifixit.com and take care of my belongings.

I'll probably save even more (well, not spend as much...) because I'm suspecting this is going to be synced with the release of 5S, and I'll just get the 5 (& wife will get the 4). I can't imagine the 5S is going to have any killer feature that I'll just have to have. So that's my plan, and I'm... eh never mind. We'll see what happens.
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Old Jan 9, 2013, 11:38 PM   #12
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Originally Posted by kaltsasa View Post
Yea but after 2 years, I'm not getting screwed (as bad) just because I think my iPhone 4 is still perfectly serviceable but ATT still gets my subsidy money through the full price of the plan.

I'm milling about switching to T-Mobile, but their coverage here in Iowa is spotty. Though I don't know that it's any more spotty than my ATT coverage right now.
This kind of sums the issue up nicely. T-Mobile's way of doing it is more honest. First, I can get a better plan then AT&T or Verizon offers for far less money. For instance, for fifty dollars on T-Mobile I can get unlimited everything. AT&T doesn't offer unlimited anymore, and the closest comparable plan costs $130.

The catch is you need to either bring your own phone, or have T-Mobile buy it for you. If T-Mobile buys it for you, you will have to make a down payment (e.g. $199), and then pay the rest in monthly installments. You can pay it off at anytime. However, the monthly payment for an iPhone would probably be about $20 extra dollars a month. So for about $70 a month you'd get a better plan then what costs $130 on AT&T. Once the iPhone is paid off the bill drops back down to $50.

T-Mobile doesn't have very good LTE right now, but so what? What is the point of super fast data when the plans are both capped and tethered? T-Mobile's data is considered 4G, which is quite fast. The iPhone 5 will support T-Mobile's 4G.
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Old Jan 9, 2013, 10:48 AM   #13
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Originally Posted by Mad Mac Maniac View Post
Ever notice how iPhones cost $199, but if you buy it off contract it will cost like $649? The carrier pays the difference to Apple and they make it up over the life of the contract. The amount that the carrier pays is a subsidy

So T-Mo is planning on you paying full price on your devices, but then can charge significantly less monthy. It's just a different way of getting your money
Ok, then why is it that when you buy an iPhone off contract your monthly bill is no less than someone who bought on contract? I have NO problem paying for an iPhone 5 at full price from at&t but I want my monthly bills LOWER to go along with it. I sold phones for Cingluar and I remember selling great plans for 39.99 a month.

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Old Jan 9, 2013, 11:13 AM   #14
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Originally Posted by intothepolis View Post
Ok, then why is it that when you buy an iPhone off contract your monthly bill is no less than someone who bought on contract? I have NO problem paying for an iPhone 5 at full price from at&t but I want my monthly bills LOWER to go along with it. I sold phones for Cingluar and I remember selling great plans for 39.99 a month.
Not sure if someone answered you already but...

Well that's the problem with AT&T they won't lower the price just because you didn't use a subsidy. You are basically just giving at&t free money or paying for other peoples subsidies. That's why T-mo is trying the idea of no subsidies, but lower monthly prices. It's more realistic that way.

The only advantage that I could see buying off contract with AT&T is that you wouldn't be locked in for as long. I'm pretty sure at&t still requires a contract though... probably just shorter term would be possible.
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Old Jan 9, 2013, 08:46 AM   #15
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Originally Posted by gregwyattjr View Post
Can someone explain what "subsidies" are and how they can exist?
Phones are expensive. The cell service providers (AT&T, Verizon, etc) typically pay the majority of the price of the phone for you, in exchange for signing a two year service contract. They can do this because of the massive profits they make on the service itself, which you are now obligated to pay for.
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Old Jan 9, 2013, 08:49 AM   #16
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I was just talking to T-Mobile tech support in connection with an unrelated issue. During the call the agent stated that they were just told yesterday that they would be selling iPhones with full support by "the end of this month"; that is January 2013.

While I had seen previous announcements, such as the "3 - 4" months, this is the first time I heard a specific statement of a closer timeframe.

I asked about LTE support and the agent said that will not be rolled out as soon, but is expected "within 6 months".
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Old Jan 9, 2013, 08:57 AM   #17
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This would be a big change in how I purchase my phones, but if in the end I am paying less, I could make it work.
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Old Jan 9, 2013, 09:23 AM   #18
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I don't see this as a bad thing. This means there will be increased competition among phone manufacturers, and increased competition among carriers. How could this be a bad thing?
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Old Jan 9, 2013, 09:36 AM   #19
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Net reduction

The big difference I see is that right now, if you go with AT&T or Verizon, their monthly rates are the same regardless of whether you are on a contract or not. That is, you are paying the device subsidy regardless of whether you have a subsidized device or not.

My mom and dad still each have an iPhone 3G. Their contract ended eons ago, but their rates haven't come down.

My reading of this is that by splitting out the device subsidy from the service cost, the carriers would be obliged not to charge people the device subsidy once their "contract" term is over. That is, the "device subsidy" gets turned into an installment purchase deal, but once the device is paid for, you, well, stop paying for it!

Quite frankly, I think this is the way it ought to be. Those who want cheap up-front device purchases can have them, and will have transparency in what the device actually *costs*.
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Old Jan 9, 2013, 09:44 AM   #20
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But still with contract

If I am not mistaken, they will offer plans for a bit less, but you are still committed to a 2 year contract. I don't see a reason to pay full price, and still commit to a contract. Which probably means there will be ETF if you decide to leave.

Anyway T-Mo is only 3 years later then the other providers to offer iPhone.
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Old Jan 9, 2013, 09:38 AM   #21
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visual voice mail, mms

Will visual voice mail, mms, LTE, 4G, 3G, work correctly with t-mobile? Will everything work as expected without hacks or 3rd party apps?

A few months ago t-mobile was advertising "iphone conversion to t-mobile", I went into the store and the sales staff was under trained in this area. They tried to assure me visual voice mail worked as expected, this wasn't true at the time. After that I didn't really trust anything they said.
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Old Jan 9, 2013, 09:39 AM   #22
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AT&T is thinking, "We can end subsidies AND keep plan prices exactly the same! Win/win!"
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Old Jan 9, 2013, 11:17 PM   #23
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AT&T is thinking, "We can end subsidies AND keep plan prices exactly the same! Win/win!"
Exactly, which means unless Apple delivers so,etching truly revolutionary with their iPhones if this happens to take hold, my upgrade timeline will be a long one. My phone upgrades as it is are more "wants" than "needs" which I can do without if need be.
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Old Jan 9, 2013, 12:12 PM   #24
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Both carriers do, however, acknowledge that customers are so conditioned to low upfront device costs that it may prove a significant hurdle to overcome.
Conditioned? Please.

The correct term is 'stupid'...sorry but it's true.

If coverage is the same and you aren't one of these individuals that HAS to have data at lightning speeds at all times, then you are just throwing your money away on AT&T and Verizon plans.

And if you can afford those monthly plans of $100+, then you sure as heck can afford an upfront payment of $650. But most people are just clueless about saving money over time vs that day.

For me and many others, it's just simple math that we buy upfront and take it to T-Mobile or other paygo carriers to save us $700+ over 2 years easily.
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Old Jan 9, 2013, 12:22 PM   #25
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Conditioned? Please.

The correct term is 'stupid'...sorry but it's true.

If coverage is the same and you aren't one of these individuals that HAS to have data at lightning speeds at all times, then you are just throwing your money away on AT&T and Verizon plans.

And if you can afford those monthly plans of $100+, then you sure as heck can afford an upfront payment of $650. But most people are just clueless about saving money over time vs that day.

For me and many others, it's just simple math that we buy upfront and take it to T-Mobile or other paygo carriers to save us $700+ over 2 years easily.
It's not that simple. A lot of us get our phones using employer-negotiated discounts, and some of us have grandfathered unlimited plans. I'm paying about $60/month (tax included) for an old AT&T plan with unlimited data. While the $70 Unlimited T-Mobile plan sounds good compared to new AT&T plans, I'm better off right now staying with AT&T. Plus, if they will pay $450 toward my next iPhone while T-Mobile won't, why not just take the subsidy?
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