T-Mobile USA to Cease Offering Subsidized Device Pricing Options in 2013

[terraphantm]

Originally Posted by mrelwood

The math is not that hard. A $200 phone with a 2 year contract of $30 a month is quite a bit more expensive than a $700 phone and no contract.

I guess the reason they use the contract model in US is just this, most people don't seem to calculate how much it actually ends up costing.

Not really. You still need to pay for the service if you don't have a contract. And in the US, no carriers (besides T-mobile apparently) give you a lower monthly rate if your subsidy is paid off. So you end up spending more money if you bring your own device, assuming you keep your service.

[hudson1]

Originally Posted by osaga

A major carrier in spain tried a no-subsidy plan recently, and it backfired big time.

Maybe this t-mobile variety is genius, but bad news for apple because it encourages people not to upgrade after two years.

Option 1:
$650 iphone 5
+ $70 unlimited voice/data
= $70/month

Option 2:
$99 iphone 5
+ $70 unlimited voice/data
+ $20 device financing for 28 months
=$90/month


How does t-mobile benefit?
1. They avoid a huge contract with apple? (not sure how)
2: Because they believe that the lower monthly rate will attract value minded customers who are ONLY comparing rate plans between other carriers.

The advantage to T-Mobile under this new scheme is they don't need the cash to pay Apple up front... the customer does. You run a business on cash and I think most feel T-Mobile doesn't have a lot of it. My hunch is this is the real reason T-Mobile is moving to this model.

[osaga]

Originally Posted by TOYSTER17

I have an unlocked iPhone 4S on T-Mobile, which cost me $300 on Craigslist. If I were on a single line plan with unlimited everything, I'd pay about $60 I believe.

T-Mobile: $60X24= 1,440 + 300 (cost of iPhone)= 1740

AT&T: $90 (and this is for 450min + 3GB web + unlimited text) X24= 2,160 + 100 (cost of iPhone 4S)= 2260

A T-Mobile plan comparable to the AT&T one with 500 min cost $50 a month.

It looks like unlimited everything is actually $70. So...

T-Mobile: $70X24= 1,440 + 300 (cost of iPhone)= 1980

AT&T: $100 (unlimited voice + 3GB data) X24= 2,160 + 100 (cost of iPhone 4S)= 2400

Still a savings of $420. But at least with AT&T you don't have to get a used phone, hassle with craigslist, and you get apple's 1year warenty.

http://www.t-mobile.com/shop/Package...ePackages.aspx

[RotaryP7]

Originally Posted by gkarris

What will the Interest Rate be on an non-subsidized iPhone?

A contract-free 16Gig iPhone 5 is $649...

Any ideas?

$249.00 down and $20/month for 20 months. No interest. It would be contract.

[swingerofbirch]

I like this idea. I have never purchased a smartphone because of the course of a couple of years it's a couple thousand dollars, which makes no sense for a homebody.

But if the cost of the device is upfront, handset manufacturers might start competing on price more of the actual device. I think there are some healthy margins in there that could be cut! It never ceases to amaze me that some people still don't get that the price of the phone is built into the contract you're forced to sign up for.

[gotluck]

Originally Posted by osaga

It looks like unlimited everything is actually $70. So...

T-Mobile: $70X24= 1,440 + 300 (cost of iPhone)= 1980

AT&T: $90 (and this is for 450min + 3GB web + unlimited text) X24= 2,160 + 100 (cost of iPhone 4S)= 2260

Still a savings of $180. But at least with AT&T you don't have to get a used phone, hassle with craigslist, and you get apple's 1year warenty.

http://www.t-mobile.com/shop/Package...ePackages.aspx

Tmobile's $30 100 minute 5 gig data will certainly attract customers.
http://prepaid-phones.t-mobile.com/monthly-4g-plans

[TouchMint.com]

seems pretty legit to me!

[Technarchy]

If the price of the plans drops because I either bring or buy my own device outright, then this works great.

[jayducharme]

Originally Posted by notjustjay

They tried. The first iPhone was supposed to be (I think) $699 and not offered on a contract with subsidies.

It was. The first iPhone was offered at full cost. AT&T didn't begin "subsidizing" it until a few years later.

[TOYSTER17]

Originally Posted by osaga

It looks like unlimited everything is actually $70. So...

T-Mobile: $70X24= 1,440 + 300 (cost of iPhone)= 1980

AT&T: $100 (unlimited voice + 3GB data) X24= 2,160 + 100 (cost of iPhone 4S)= 2400

Still a savings of $420. But at least with AT&T you don't have to get a used phone, hassle with craigslist, and you get apple's 1year warenty.

http://www.t-mobile.com/shop/Package...ePackages.aspx

It's actually 2400 +100= 2500

So a $520 difference. But the real big savings is for those in family plans, as well as the single plans with 100, 500, 1000 minutes.

So say we compare the 450 minutes plan to the T-mobile 500 minute plan:

AT&T: $90X24=2160+100=2260
T-Mobile: $50x24=1200 + 300= 1500

Difference of $760. I'll deal with Craigslist. Heck, I'll just buy one on Amazon or ebay, have it shipped to me...can find some there for $350-$400.


EDIT: Actually, looking at the AT&T plans, a plan with unlimited minutes, 3GB of web, and unlimited text is $120 a month.

About a $1000 savings over 24 months.

[RexTraverse]

Originally Posted by hudson1

The $500 up front savings for the subsidized model spread out over 2 years comes to $21/month. Therefore, I'm not sure it's that big a deal money-wise one way or the other unless you plan on keeping the phone for quite a bit more than 2 years (which most don't do, I'm told).

I'd agree that most people on forums like these probably don't keep their phones past 2 years, but I have to believe a lot of people just don't care that much and keep their phones for much longer so long as they continue to work and do the basic stuff they need it to do - make calls, send texts, check twitter and facebook, etc. It's not as though the subsidized prices on the newest and flashiest iPhones/WP7/Android phones are insignificant either - $200-400 is still a lot of money for most people.

And with Apple still selling the iPhone 4 as it's super-value model, I have to believe these devices will continue to be supported for awhile, so the negatives are really just missing features - some of which people might not even care about.

[osaga]

Originally Posted by gotluck

Tmobile's $30 100 minute 5 gig data will certainly attract customers.
http://prepaid-phones.t-mobile.com/monthly-4g-plans

Gosh the $50/month unlimited voice and data pre-paid plan seems awfully good.

$50/mo X 24 + $200 craigslist iphone 4 = $1400

a $1000 savings vs. at&t w/ refurbished iphone 4

[unlimitedx]

YES YES YES!! this is the best news from tmobile. lower monthly rates, here we come!

[tekmoe]

I have been with T-Mobile for years and this does not surprise me. I bought my Note 2 at retail so that I could use it on the value plan. Ended up getting 500 whenever minutes, 2GB 4G data and unlimited 3G data, unlimited txt, unlimited nights/weekends for $49/mo plus tax. With the way they are pushing their new phones, it seemed inevitable that they would ditch the classic plan. Subsidized pricing is so last decade.

[Mr Hill]

Originally Posted by osaga

It looks like unlimited everything is actually $70. So...

T-Mobile: $70X24= 1,440 + 300 (cost of iPhone)= 1980

AT&T: $100 (unlimited voice + 3GB data) X24= 2,160 + 100 (cost of iPhone 4S)= 2400

Still a savings of $420. But at least with AT&T you don't have to get a used phone, hassle with craigslist, and you get apple's 1year warenty.

http://www.t-mobile.com/shop/Package...ePackages.aspx

Don't forget to add the $20 per month for unlimited text on AT&T. That's an addition $480 over 2yrs.

[stevaroo01]

I am very interested to see how this pans out! I wonder if it will encourage the big three (or, at especially the big two) to change to, or at least offer, a similar plan? I can see pro's and con's to both ways of doing it.

[unlimitedx]

Originally Posted by tekmoe

I have been with T-Mobile for years and this does not surprise me. I bought my Note 2 at retail so that I could use it on the value plan. Ended up getting 500 whenever minutes, 2GB 4G data and unlimited 3G data, unlimited txt, unlimited nights/weekends for $49/mo plus tax. With the way they are pushing their new phones, it seemed inevitable that they would ditch the classic plan. Subsidized pricing is so last decade.

I think the big carriers are scared now. They've been padding their profits with the subsidy model. Hopefully tmobile will come out on top!

[Wicked1]

Originally Posted by nickn

Hopefully they keep the current prepaid prices! As it is they have unlimited everything prepaid for $50 a month, which is a decent deal.

That will never work on an iPhone any model

Imagine all you can eat data voice and text for $50 per month, there is no way they can survive that hit to their network

Personally if AT&T did this it would me make me keep my device a little longer than a year or two, do not need a new device every year especially if I had to pay full price. I also think the iPhone is a tad over priced at $650 for the 16 gb model. If it were same price for the say the 32gb model maybe every two years I would do it.

I just do not think they will gain that many new customers because of it, a lot of folks are solid with AT&T and VZ, their networks are stronger and they offer a lot more, T-Mobile's 4G is like 3G on roods, not much more then a 3G service.

[rjohnstone]

Originally Posted by jayducharme

It was. The first iPhone was offered at full cost. AT&T didn't begin "subsidizing" it until a few years later.

Months later, not years.

[JoeG4]

Originally Posted by gkarris

What will the Interest Rate be on an non-subsidized iPhone?

There is no interest, you put a down payment and pay the monthly rate (Commonly, something like $100 down and $20/mo for 20 months). However, you have to have a contract, and you're required to stay on your monthly service plan or you'll get charged the remainder of the full price of the phone, I think.

Originally Posted by osaga

Maybe this t-mobile variety is genius, but bad news for apple because it encourages people not to upgrade after two years.

On the contrary, I think it is great news for Apple, because people who really want that new iPhone will just sell theirs and then buy a new one. They won't necessarily feel obligated to keep the phone for the remainder of the 2 year contract.

However, T-mobile is not pushing prepaid plans, they're pushing "Value Plans" that require 2 year contracts. It doesn't matter if you buy the phone outright and sign up for service, or if you purchase through a payment plan, you still have a 2 year contract.

The value plans are cheaper than the equivalent subsidized phone plans from t-mobile, at&t, verizon, or sprint, but they aren't any cheaper than the ones from MetroPCS, Cricket, Straight Talk, Virgin, or others (that I know of). However, value plans have free mobile-to-mobile and at&t roaming, which the other companies never give you.

That said, it's a 2 year contract with no phone subsidy. On the plus side, you only have to have that contract once, from then on you're good to go (unless they give you an incentive to renew the contract).

From experience, they do give incentives to renew contracts, EVEN with value plans. It's not a $300 phone subsidy (which these days is trending down towards a $150-200 subsidy, see Nexus 4s! OUCH!) - sometimes it's a free month of service or something small like that.

However, their loyalty department has been really good to long time (and not so long time) customers with renewal subsidies. Many times you can (almost) match good AT&T/sprint/vzw deals for new customers, and have a service plan that costs a hell of a lot less.

So I'm going to miss the subsidized plans! My last 2 renewals were good, and I'm paying the same as a value plan would cost - not including monthly payments for the phones lol. On the other hand, their coverage is nowhere near as good as Verizon (although, not necessarily any worse than AT&T or Sprint, sometimes better depending on your region) but you know, you get what you pay for! Their customer service can be hit or miss as well, but again.. I'd rather deal with them than AT&T lol.

[Chupa Chupa]

In terms of $ out of ones pocket it's gonna be six of one, half dozen of the other.

But if it's no contract then it will help those who must have the latest and greatest every year. I don't see huge annual changes in the iPhone to warrant this but I realize some people have nothing else to get excited about.

But unless T-Mob ups it's network who cares. You'll have the latest phone that works hardly anywhere outside the inside of metro areas.

[Xenomorph]

I'm tempted to buy a 1 Month prepaid T-Mobile SIM to test them.

All my iPhones are unlocked, and if they provide decent coverage at Home and Work, I just may switch.

I pay ~$145 a month for three phones (one smartphone, two regular phones), and I expect that to jump to ~$195 if I switched to AT&T's shared data plan (three smartphones).

[gotluck]

Originally Posted by osaga

Gosh the $50/month unlimited voice and data pre-paid plan seems awfully good.

$50/mo X 24 + $200 craigslist iphone 4 = $1400

a $1000 savings vs. at&t w/ refurbished iphone 4

The problem with the $50 plan is *First 100MB at up to 4G speeds. I'm not sure what speeds are given beyond 100MB

Tmobile is the best deal if you dont need many minutes. $45 Straight talk beats Tmobiles current offerings if you need more than 100 minutes and can deal with ~2gb /mo.

Individual plans here, I haven't done family plan research.

[Karma*Police]

Originally Posted by mrelwood

The math is not that hard. A $200 phone with a 2 year contract of $30 a month is quite a bit more expensive than a $700 phone and no contract.

I guess the reason they use the contract model in US is just this, most people don't seem to calculate how much it actually ends up costing.

Possibly, but I don't think so cos like you said, the math is very easy. If anything, most people don't have the extra $500 up front and/or it's easier to budget the subsidized way... People generally don't have the discipline to sock away an extra $20 a year for their future phone purchase so by having a carrier bill them the extra $20 per month, it becomes built into their monthly budget.

[milo]

The deals are even better for family plans.

Tmobile has two lines with 1000 shared minutes, unlimited texts, and 2 gigs data per line (throttled after that) for $79. That's what I'm on, and with the unlimited texts and free calls between the two lines, we never even come close to using all the minutes. Looking at the ATT site, it looks like they only offer plans with unlimited talk now? If that's the case they're way less competitive than when we got our phones.