T-Mobile USA Planning to Offer iPhone and End Subsidies Within 3-4 Months

[MacRumors]

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.

"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

[AustinIllini]

Ultimately, they'll slant it towards the customer paying more.

[gregwyattjr]

Can someone explain what "subsidies" are and how they can exist?

[Mad Mac Maniac]

Originally Posted by gregwyattjr

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

[swarmster]

Originally Posted by gregwyattjr

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.

[rmwebs]

Originally Posted by Mad Mac Maniac

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.

[kaltsasa]

Originally Posted by Mad Mac Maniac

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.

[jasimon9]

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".

[KPOM]

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.

[smithrh]

Also remember that carrier subsidies mean carrier control of features, as it's the carrier actually buying the phone from the manufacturer.

If "all" the carriers are doing is certifying a phone for use on a network, then one would tend to figure that their sway over the manufacturers (Apple included) would diminish.

However, I just don't see them giving up that sort of control easily.

[KdParker]

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.

[chrisbru]

Originally Posted by kaltsasa

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.

[drewyboy]

1. Up yours ATT, you didn't drop my plan price after my contract was up saying the benefit was I could leave at any time... and that was after I had explained to them why it should be cheaper after the contract was up.

2. T-Mo I'm coming your way. I'm sick of this crap the others pull over on us.

3. As far as being subsidized, T-Mo has explained you can get financing... i think it's 0% paying $20 a month until the phone is paid off, with a down payment of $200 (for an iphone). So basically it's the same thing, but they keep things separate so you know what goes where and when it's paid off, it's paid off.

Edit: I'm on straight talk and looking forward to leaving it. Yeah it's cheap, but i've had my fill of problems, more than I've had when I'm on a "name brand" network.

[TheHateMachine]

In the end they will all get rid of subsidies in the US, give you the option to pay over the course of your contract with an additional monthly equipment charge and not change their base monthly rate at all. More money that way.

[Snowy_River]

Originally Posted by drewyboy

1. Up yours ATT, you didn't drop my plan price after my contract was up saying the benefit was I could leave at any time... and that was after I had explained to them why it should be cheaper after the contract was up.

2. T-Mo I'm coming your way. I'm sick of this crap the others pull over on us.

3. As far as being subsidized, T-Mo has explained you can get financing... i think it's 0% paying $20 a month until the phone is paid off, with a down payment of $200 (for an iphone). So basically it's the same thing, but they keep things separate so you know what goes where and when it's paid off, it's paid off.

Edit: I'm on straight talk and looking forward to leaving it. Yeah it's cheap, but i've had my fill of problems, more than I've had when I'm on a "name brand" network.

I believe that the iPhone will be $250 down, and 20 months of $20 per month.

Also, my local TMo is already offering these kinds of plans. Their less expensive family plan with data is $45 per month per line for 1000 shared minutes, unlimited texts, and unlimited data with a 2GB slowdown cap. My wife and I have just switched from AT&T. Our monthly rate didn't change from what we had before, but now we both have data and unlimited texting and more minutes. We are pretty happy about it. The crowning glory will be when we can buy new iPhones so that we can put our data to best use.

[kcamfork]

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?

[kaltsasa]

Originally Posted by chrisbru

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.

Rural Iowa, for sheer coverage Verizon and US Cellular are best around here.

I had Straight Talk once, when it works it's great, but when it doesn't essshh getting their support to get anything done was a chore. I'm lazy, I'd rather stick with one of the Major carriers. I'm relatively happy with ATT, I'm not willing to pay more for Verizon but I would be willing to pay less for T-Mobile if my coverage is roughly the same. I tend to keep devices for many years, not running them through the wash and such.

[SDAVE]

GO TMobile.

I'm still on AT&T, probably because I get a pretty fantastic deal from my workplace on a family plan.

However, I think the U.S. should have more of the European (British, preferably) model when it comes to mobile devices.

I lived in London for a year and was using the cheap 3 Network and for $25 I got unlimited 3G and was able to tether all the time without any issues.

[kaltsasa]

Originally Posted by drewyboy

Edit: I'm on straight talk and looking forward to leaving it. Yeah it's cheap, but i've had my fill of problems, more than I've had when I'm on a "name brand" network.

Agree'd, I've had Straight talk. When it works it was great, if you had problems. Say hello to your worst telco nightmare.

[nsayer]

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*.

[G4DP]

Originally Posted by drewyboy

1. Up yours ATT, you didn't drop my plan price after my contract was up saying the benefit was I could leave at any time... and that was after I had explained to them why it should be cheaper after the contract was up.

2. T-Mo I'm coming your way. I'm sick of this crap the others pull over on us.

3. As far as being subsidized, T-Mo has explained you can get financing... i think it's 0% paying $20 a month until the phone is paid off, with a down payment of $200 (for an iphone). So basically it's the same thing, but they keep things separate so you know what goes where and when it's paid off, it's paid off.

Edit: I'm on straight talk and looking forward to leaving it. Yeah it's cheap, but i've had my fill of problems, more than I've had when I'm on a "name brand" network.

What horshhit! Why should you pay less because you are out of contract. You are receiving the same service and package. Talk about self-importance syndrome.

[edwurtle]

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.

[jclardy]

AT&T is thinking, "We can end subsidies AND keep plan prices exactly the same! Win/win!"

[jonnymo5]

As long as the plans get cheaper as well I think the model could work. The reason I never buy a phone out of contract now is because you pay the same price either way. Thanks to this, every two years I sell my iphone for $250 and get a new one for $200. If I have to start paying 6-700 then I'm more likely to hold onto the phone 4-5 years

[djrod]

Here in Span the same thing has happened, 2 of the three mayor carries are no longer subsidizing phones, so they sell then by a monthly plan, just as you buy a car.

The 16GB iPhone 5 costs 27,5 € + 21% taxes / month (over two years) and to that amount you have to add your voice and data plan, for example:

16GB iPhone 5 + 500min voice + 1 GB 3G data + unlimited text + 100mb /10 fiber = 105€ / month taxes included