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.
"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.
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Top Rated Comments
Because part of your contract is a phone subsidy, around $25 each month. They bundle it inside your plan.
So once you pay off your phone, your bills should go down, but that's common sense, it doesn't work this way with either of the big 3
You and I could sit and have a long, long talk. I feel the exact same way because I'm in the exact same position. My first few bills were upwards of $85... When I had AT&T, they thought I was privileged to be staying with them post-contract.
I talked them down to $65 with two discounts shortly in to my contract, but I only had 200mb of Data, 200 texts, and 450 minutes a month. After 2 and a half years with an iPhone 2G, I signed up with another contract when I got a launch day iPhone 4. (I wouldn't have even done that if my iPhone 2G's Wifi didn't stop working, but it was impossible to keep on that plan.)
After a very lengthy debate about overage text charges through using the AIM app (I still don't know how they got my AIM message-exchange data) I got them to drop a bill, and my contract went down to $62. (OOH!!!)
When that contract was up, I immediately got Straight Talk. It was a huge fiasco to get MMS to work after 3 months without it, I had to switch over to YouMail because there is no native Visual Voicemail support, and I still constantly have to toggle Airplane mode on and off at least once a month because it errors out when connecting to cell data. At least that was $45 for unlimited everything.
The only reason I'm not on T-Mobile yet is no Visual Voicemail support. Not even YouMail works on a relative's T-Mobile iPhone 4. At this point, I don't care at all. For $30 a month, I can get 100 minutes, unlimited text, and unlimited web. If they carry the iPhone, they will either implement Visual Voicemail or provide a solution for those that have the iPhone on a prepaid plan. Until then, for $30, I can call my voicemail like I used to.
This major contract bull with AT&T / Verizon / Sprint is for the birds. My parents got Virgin Mobile long ago and have been happy. When I call them, the quality of their $20-$40 flip phones is no different than if they had a $200 smart phones, and they aren't paying an arm and a leg each month. Heck, they don't even have a bill each month - it's $20 every 3 months.
T-Mobile has me as a customer as of February 1st. No more contracts, no more major carrier games, no more obscene fees. Each year the new iPhone comes out, I get the previous year's iPhone at half the price, and put it on a cheap prepaid plan. No headache switching over to the Lightning connector when I have a collection of 30-Pin docks and cables, and no huge upfront cost or marked up high-demand in the Marketplace here. A year old phone on a prepaid plan, upgraded to the next phone each year. Suck it, carriers.
Holy crap, my posts are always long-winded. :)
An iPhone 5 costs $649 from Apple.
You enter a 24 month contract and you are told that you get a free iPhone 5.
In reality, the carrier pays $649 to Apple, and the bill for the service is $27 higher than it should be, so that other 24 months you pay $649 to the carrier.
Actually, your bill is $40 higher than it should be, and 24 x $40 - $649 is profit for the carrier.
After 24 months, you have paid for your iPhone. There is no reason why you should continue paying the high rate. 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)?
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.
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.
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