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

[LSUtigers03]

Originally Posted by cheezeit

I'm up for cheaper plan rates and bringing your own phone. Most of the market will be in shock though...

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]

Originally Posted by rmwebs

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 .

[drewyboy]

Originally Posted by Internaut

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

[SVTVenom]

Originally Posted by Snowy_River

Uh... Well, that's not what's happening right now. TMo is offering rates that are better than $20 less per month, with an explicit financing option of $20 or $25 per month for 20 months, plus the balance as a down payment. For my wife and I, to have data and texting on both our lines, plus 700 shared minutes, we were spending $160 a month. Switching to TMo, our plan has dropped to $90 a month. When they come out with iPhones, we'll probably get them on financing, which will bring our monthly bill to $130.

Given the nature of the telecom industry, I can understand being a bit pessimistic, but I see this as a positive. Over the past ten years, my wife and I have had subsidized phones for exactly two years. The rest of the time we either were using the phones that we had, or we bought unlocked phones because we weren't satisfied with the features on the phones available from AT&T. So, effectively, we've paid for ten phones, but only received two. If we assume that the cost is about $20 per month per line, then the eight years that we've been out of contract with AT&T has represented paying them $3840 more than their services actually cost. That's a chunk of change. So, as I said, I'm optimistic about this, at least for now...

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.

[BruiserB]

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.

[Toops]

I don't think people actually like to save money. With the money you save with the lower rates, you practically are pocketing the money towards th next phone release if you do decide to upgrade phones. Or use it on other stuff

[jacobseric]

Originally Posted by SVTVenom

People who upgrade every 20-24 months would see their bill remain the same...

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.

[Westside guy]

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.

[lobster68w]

I can see ATT ending or nearly ending subsidies whilst still increasing data prices. WORST COMPANY EVER!!!

[NocturnalEdit]

Originally Posted by Bear

Because being out of contract means that the subsidy for you phone has been fully covered.
The monthly cost of US plans tends to include money to cover that subsidy for the phone. And usually winds up costing you more than the phone would.

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.

[jacobseric]

Originally Posted by NocturnalEdit

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..

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.

[rmhop81]

Originally Posted by NocturnalEdit

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.

otterbox defender!

[drewyboy]

Originally Posted by NocturnalEdit

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.

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.

[rmhop81]

Originally Posted by drewyboy

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

[randomguyishere]

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

[F1 Fan]

Originally Posted by gnasher729

Consider this: You could (A) continue using your iPhone 5 for another two years. Or (B) cancel the contract, put your iPhone 5 into a drawer, get an iPhone 6 or 7 for "free" and start a new two year contract. Since (B) is $649 more expensive for the carrier, why should they charge the same amount for (A)?

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

[Internaut]

Originally Posted by drewyboy

$50 would not be bad at all compared to the minimum $110-120 plan that ATT forces you into w/ an iPhone

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.

[dontwalkhand]

Originally Posted by F1 Fan

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.

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)

[cheezeit]

Interested to see how this pans out.

[buddybd]

Originally Posted by drewyboy

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

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.

[smitty303]

Originally Posted by atsang

Map of Tmobile 1900mhz refarming progress: http://www.airportal.de/

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.

[calderone]

If I can pay for my iPhone up front and the monthly rates are lower, I will be considering shifting over to T-Mobile.

[fiddlestyx]

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!

[EbookReader]

Originally Posted by fiddlestyx

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.

[charlituna]

Originally Posted by Snowy_River

The CEO of TMo is hardly "some t-mobile rep"

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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Originally Posted by rmhop81

this isn't going to fix the overall monthly cost. just be another way to make more cash for themselves. take away subsidies and they don't have to pay that $400 to apple and keep rates the same. it's a win win for them.

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.