T-Mobile Introducing iPhone and Moving Away From Subsidies in Next 3-4 Months

[Phillip Swanson]

Reuters is reporting T-Mobile could begin offering the iPhone within the next 3-4 months.

The report comes on the heels of a report claiming T-Mobile USA already having nearly 2 million iPhones running on their network while averaging close to 100,000 new iPhone activations a month. The official sale of the iPhone appears to mimic T-Mobile’s plan to end traditional phone subsidies and move toward installment plans and lower monthly payments. Both of which are viewed as incredible hurdles in an market where consumers have grown accustomed to $200 smartphones.

"They're all, I would call them, in three to four months as opposed to six to nine months.” — T-Mobile USA CEO John Leger

Leger also mentioned to Reuters that T-Mobile is looking to close its acquisition of MetroPCS in the second quarter of this year as well as explore deals with Dish Network and Leap Wireless. Verizon, AT&T and the rest of the wireless industry, while interested in T-Mobile’s acquisitions, is more interested in how customers react to the company’s transition to subsidy-less cell phone sales.

Hopefully customers can figure out that lower month-to-month costs actually benefit them, instead of the upfront savings of a phone subsidy that they will pay back over the lifetime of their contract.

Source: Reuters [via MacRumors]

[jbardi]

Without subsidies, users are less likely to upgrade their phone every year, so un-subsidized phones are good for cellular companies to convince consumers on monthly savings, but bad for phone manufacturers and consumers as a whole, regardless of the long term consumer savings. I think un-subsidized phones are a detriment to technology as it will slow down the adoption of new features, faster hardware and new technological breakthroughs as the time frame between upgrades with consumers will grow from 1-2 years to even 3, 4 and 5 years, thus removing the incentive for R&D and pushing for new technologies that no one will be willing to buy as quickly. Bad idea T-Mobile... lets hope other cellular companies do not follow suit, otherwise it will be long term detrimental.

[rashad1]

Without subsidies, users are less likely to upgrade their phone every year, so un-subsidized phones are good for cellular companies to convince consumers on monthly savings, but bad for phone manufacturers and consumers as a whole, regardless of the long term consumer savings. I think un-subsidized phones are a detriment to technology as it will slow down the adoption of new features, faster hardware and new technological breakthroughs as the time frame between upgrades with consumers will grow from 1-2 years to even 3, 4 and 5 years, thus removing the incentive for R&D and pushing for new technologies that no one will be willing to buy as quickly. Bad idea T-Mobile... lets hope other cellular companies do not follow suit, otherwise it will be long term detrimental.

They do offer an Equipment Installment Plan (EIP) which allows T-Mobile customers who qualify to break up payments in 24 smaller payments, which can be paid off completely at any time. This is a good alternative to a subsidy since it separates the price of your phone from the price of your plan.

[kraziebone]

That is very interesting. I hope this works out. Does it require a 2 year contract still?

[RokeSmoreMeefer]

Without subsidies, users are less likely to upgrade their phone every year, so un-subsidized phones are good for cellular companies to convince consumers on monthly savings, but bad for phone manufacturers and consumers as a whole, regardless of the long term consumer savings. I think un-subsidized phones are a detriment to technology as it will slow down the adoption of new features, faster hardware and new technological breakthroughs as the time frame between upgrades with consumers will grow from 1-2 years to even 3, 4 and 5 years, thus removing the incentive for R&D and pushing for new technologies that no one will be willing to buy as quickly. Bad idea T-Mobile... lets hope other cellular companies do not follow suit, otherwise it will be long term detrimental.

With subsidies, users are just as unlikely to upgrade their phone every year since subsidies typically come with 2-year contracts. Buying a new phone every year means that every other phone you buy is at the full retail price or at a partial discount.

As for being a detriment to technology, I totally disagree. It will make it really difficult for, say, Apple to fool people into buying the next iPhone for $699 when the only improvements are a marginally better camera, a marginally faster processor, marginally better battery life, etc... It will force phone manufacturers to make greater improvements in each revision to justify the ridiculous price tags. However, I think it will also cause Apple to lock out more and more devices from iOS updates even though those devices will run the new version just fine.

[GenesisDH]

That is very interesting. I hope this works out. Does it require a 2 year contract still?

It doesn't appear so, as the current transition is to month-to-month plans.
However EIP will in essence lock you down for two years, so keep that in mind.

[moveandstore]

But what about the people who usually upgrade to the newest phone? Most contracts are two years, but the handset makers will be making new phones in six month increments. (Which Apple is doing with the iPhone 5s). So how will this work if someone wants to upgrade to a newer phone? At least with an iPhone, the resale value is quite good, and most people subsidize their upgrade purchase by selling their old phones.

[HeliPilot]

It is just a chance to give consumers a real choice as opposed to the only choice right now being 2 years with VZ or 2 years with ATT using a subsidized contract.
I for one will jump at the chance to pay full price for my iPhone and be given the choice to go month to month with TM or jump carries as I wish without penalty.
I also agree with the comment about making the manufactures acheive bigger leaps and bounds in hardware instead of these measly, pathetic "hardware upgrades" we've been seeing every 6 months.

[RoloDiva13]

It is just a chance to give consumers a real choice as opposed to the only choice right now being 2 years with VZ or 2 years with ATT using a subsidized contract.
I for one will jump at the chance to pay full price for my iPhone and be given the choice to go month to month with TM or jump carries as I wish without penalty.
I also agree with the comment about making the manufactures acheive bigger leaps and bounds in hardware instead of these measly, pathetic "hardware upgrades" we've been seeing every 6 months.

You can pay full retail for an iPhone with either carrier without contract now, so what's stopping you?

Personally, I can't wait for this to go mainstream in the U.S. I think many people blow hot air with the "don't 'trap' me in a contract" b.s. (knowing they aren't going anywhere for two yrs anyway) so if VZ and AT&T drop the subsidies I expect some action a la chickens coming home to roost for those who have never appreciated the discount and always seemed to think a subsidy was an entitlement.

[HeliPilot]

You can pay full retail for an iPhone with either carrier without contract now, so what's stopping you?

Personally, I can't wait for this to go mainstream in the U.S. I think many people blow hot air with the "don't 'trap' me in a contract" b.s. (knowing they aren't going anywhere for two yrs anyway) so if VZ and AT&T drop the subsidies I expect some action a la chickens coming home to roost for those who have never appreciated the discount and always seemed to think a subsidy was an entitlement.

Yes, I know it's possible now. I should have made it more clear that a large telecom like TM doing this will open the idea up to more people.

[iBwizzle]

Every phone I brought has been at retail price. The only reason I was in a contact at first was because Cingular (now AT&T) forced me when I brought the original iPhone. If Carriers don't want to provide subsidies then they need to lower month rates, remove their branding/bloatware, and discontinue contracts all together. As for the OEM (Original Equipment Manufacture), they need to offer unlocked supporting multi-band phones. One model that can be updated all at once.

[thevmax]

I thought about this before it ever happened.
I was going to buy an Iphone 5 at full retail and go to T-Mobile because they offered the unlimited data to customers for $70 a month.
I didn't do it because they didn't have LTE ior 3G in my area at the time I purchased, (Sept 21, 2012). PLUS they didn't have visual voicemail for the iphone. So I finally came to the conclusion that since I needed a carrier for my service, at least ATT had 3G and LTE, and believe me once you have LTE you don't want to go back to 3G, much less 2G!

[Greatbiguns]

This is both a great idea and a terrible idea all in one.....
Who doesn't like the lower monthly payments, and would I would LOVE to see someone show AT&T what "Customer Service" is all about, since they don't have a clue
But 600-700 or more for a phone is CrAzY!!