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T-Mobile to end smart phone subsidies next year


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FierceWireless reports that T-Mobile will formally kill off its smartphone subsidies in 2013 and will replace them with a new system where customers “pay an upfront fee for their devices and then pay the balance of the device in affordable monthly installments.”

 

http://bgr.com/2012/12/06/t-mobile-smartphone-subsidies-end/

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Ideally, all the carriers should do this. No more cross-subsidization of expensive devices and upgrades from people who don't upgrade or buy cheaper devices. Most European carriers sell plans this way.

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Ideally, all the carriers should do this. No more cross-subsidization of expensive devices and upgrades from people who don't upgrade or buy cheaper devices. Most European carriers sell plans this way.

 

This might prompt Samsung and Apple to become their own MVNO.

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I am completely in favor of this. When people know how much their devices cost, it will likely lead to more competitive device pricing. It will also bring more competition in wireless service pricing and more transparency. It's all positives in my mind. I hope Sprint follows suit. And leave the duopoly at a further disadvantage.

 

Robert via Samsung Note II via Tapatalk

 

 

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I am completely in favor of this. When people know how much their devices cost, it will likely lead to more competitive device pricing. It will also bring more competition in wireless service pricing and more transparency. It's all positives in my mind. I hope Sprint follows suit. And leave the duopoly at a further disadvantage.

 

I, too, am in favor of eliminating device subsidies. In fact, I would like to see the carriers shutter their retail stores and get completely out of the consumer electronics business. Leave that to actual retailers.

 

But I do not see T-Mobile alone having the scale to enact a sea change on the industry. In its Value plans, T-Mobile is really just divvying up device subsidies into monthly installments. The inflated costs of the devices remain the same. I mean, really, the idea that a smartphone costs $600 is just ridiculous. And as long as the carriers themselves continue to sell devices, the prices of those devices will remain inflated.

 

AJ

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But I do not see T-Mobile alone having the scale to enact a sea change on the industry. In its Value plans, T-Mobile is really just divvying up device subsidies into monthly installments. The inflated costs of the devices remain the same. I mean, really, the idea that a smartphone costs $600 is just ridiculous. And as long as the carriers themselves continue to sell devices, the prices of those devices will remain inflated.

 

AJ

 

I agree that it will take another carrier to jump on the bandwagon for Tmo to be successful in this.

 

Also, seeing the monthly subsidy on your bill frequently will help demonstrate the actual cost and drive it into peoples minds. It is a step in the right direction.

 

Robert via Samsung Note II via Tapatalk

 

 

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Does the monthly bill for cell/data service go down commensurately? And is there still a two-year contract?

 

The bill goes down. I believe with Tmo you are on contract if you take the payment plan. However, if you buy your device you can be off contract. I presume you can pay it off early and get off contract too.

 

Robert via Samsung Note II via Tapatalk

 

 

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The bill goes down. I believe with Tmo you are on contract if you take the payment plan. However, if you buy your device you can be off contract. I presume you can pay it off early and get off contract too.

 

T-Mobile's Value plans certainly benefit those people who keep their handsets for longer than two years or procure them from outside sources, especially those who buy used phones. But I am not sure that those benefits would extend to typical S4GRU members, who tend to upgrade to the latest and greatest devices right on schedule.

 

AJ

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T-Mobile's Value plans certainly benefit those people who keep their handsets for longer than two years or procure them from outside sources, especially those who buy used phones. But I am not sure that those benefits would extend to typical S4GRU members, who tend to upgrade to the latest and greatest devices right on schedule.

 

AJ

 

Unless they buy phones at a greater rate than their contract expirations. I wonder if any us do that? ;)

 

Robert via Samsung Note II via Tapatalk

 

 

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I too agree with this, in theory, as a move in the right direction.

 

The biggest question I have is if tmobile will be able to pass on their actual cost for the phone on to the customer, or if we will see the full retail price used in the math. I suspect the latter and as stated, tmo doesnt have the scale to effect competition between manufacturers.

 

Will tmo and its 3rd party retailers host temporary full retail discounts? Or do they already? Example: black friday. Thousands of GS3's were sold for an average price of 49.99 and as little as 96cents.

 

The GS3 is a 549 phone. I browsed tmobiles website today and found an individual unlimited data plan for 59.99. If I put 100 down on the phone and financed 449 for 20 months at 0% interest, you are looking at 22.45 a month. Add that to the 59.99 plan and its 82.44 a month for 20 months and back to 59.99 for the final 4. 24 month cost of 1888.76. Add 100 back to that and youre at 1988.76.

 

With sprint, 79.99 * 24 months gets us 1919.76. Add 100 back and you get to 2019.76.

 

The good? Tmobiles plan would be equivalent or better than the best contract prices you could find on the gs3. You get away from the contract completely at 20 months. Of course, this model is fantastic for basic non smartphone users or budget users. Eventually, adoption of a model like this would force apple to come down on its full retail price a bit, maybe. As well, for a user willing to keep a device beyond 24 months, the savings really start adding up. Its also great for users who refuse to take a contract, which is not an option at sprint.

 

The bad? At non discounted rates, the savings are nominal for the 20-24 month upgrader. Factor in evp discounts available at sprint , like the 10% credit union discount available to practically everyone, and we see the 24 month cost at sprint beat tmobile by 130+.

 

Does tmobile charge activation costs?

 

How are they with admin fees and surcharges on these value plans? Sprint really takes this to the extreme. Are tmos better?

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One caveat to all this is that, if people have to pay for their devices up-front, or realize how much they're paying for their devices, they might start buying more Huawei and ZTE phones...and then potentially flooding tores with complaints about those phones' poor quality. Actually, Huawei and ZTE have gotten better over the past couple of years, but now you've got the new crop of Chinese phone manufacturers who will sell a low-end device on the cheap. So what carriers gain in reduced subsidies gets (partially) lost in support costs. Hence carriers' willingness to cough up a $400 subsidy for the iPhone.

 

Me? I'll take the cheaper plan with the unsubsidized phone the next time it comes around, as long as I'm actually getting a decent deal/getting all the features the phone can utilize (e.g. LTE, ahem AT&T and Verizon MVNOs). Tracfone branch (and Sprint/VZW/AT&T/T-Mobile MVNO) Straight Talk has been doing exactly this: buy an unsubsidized phone (either from them or from elsewhere, plus a SIM from them) and pay $45 per month for unlimited (more or less for data, depending on the underlying carrier) everything.

 

The rest of my family? Well, the last heavily subsidized phone anyone has gotten (Tracfone and Virgin Mobile both subsidize their phones to an extent...maybe by $40-$60) was a Nokia 5165 on Cellular One/Concho Wireless. Since then, my mom has been through four phones (Nokia 2126, Nokia 2126i, Optimus V, LG Marquee), my dad has been through four, more or less (Nokia 1221, Nokia 2126, Nokia 2126i, LG 440g), one brother has been through three (Motorola w376g, Optimus V, Marquee coming very soon) and the other has been through three (Samsung t10Xg, brother's w376g, LG Marquee). The amount each family member has spent monthly has been way less than what they would have spent on-contract, even though Tracfone minutes aren't particularly cheap (8¢ or so is the minimum) and Ting has very, very small device subsidies (the Marquees are cheap only because they're refurbs).

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I wish tmobile good luck on this path, but I see them crashing and burning. They have been losing around half a million branded contract customers the past few quarters. I have a gut feeling this is only going to make this worse instead of better. The sticker shock of seeing phones at 500+ dollars is going to make people walk right out the door and into an ATT/Verizon/Sprint store.

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I wish tmobile good luck on this path, but I see them crashing and burning. They have been losing around half a million branded contract customers the past few quarters. I have a gut feeling this is only going to make this worse instead of better. The sticker shock of seeing phones at 500+ dollars is going to make people walk right out the door and into an ATT/Verizon/Sprint store.

 

T-Mobile has actually been doing this for awhile, with its Even More plans etc. The primary reason they're losing customers is the lack of an iPhone, like it or not; $XX up front plus $XX per month for a phone seems to work well enough for them.

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I am completely in favor of this. When people know how much their devices cost, it will likely lead to more competitive device pricing. It will also bring more competition in wireless service pricing and more transparency. It's all positives in my mind. I hope Sprint follows suit. And leave the duopoly at a further disadvantage.

 

Robert via Samsung Note II via Tapatalk

 

If it ends the need for a contract or lowers the monthly fee so in the long run buying the phone outright and paying for service for 2 years is the same or cheaper than paying more per month but with a discounted phone i'm all for it too. When your off contract now your price per month stays the same but they have made their phone money back or should have.

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T-Mobile has actually been doing this for awhile, with its Even More plans etc. The primary reason they're losing customers is the lack of an iPhone, like it or not; $XX up front plus $XX per month for a phone seems to work well enough for them.

 

Even More were subsidized plans. You are thinking of the Even More Plus. I had one of those plans when I had a Mytouch 4G. I loved it since my bill never went up. Always paid 65.35 every month for 500min/unlimited txt/data(5gb full speed). I would probably still be a tmobile customer if they did not force me to have a contract with the value plan.

 

iPhone plays a part, but they are losing more customers now than when they were in the middle of the ATT buyout with those old plans. I believe the combination of poorer customer service, heavily pushing value plans, and decreasing how much they subsidize their phones for Classic plans are causing people to leave.

 

Rate of branded net contract customer losses in the third quarter of 2012 improved slightly sequentially (492,000 in Q3/12 compared to 557,000 in Q2/12) but increased year-on-year (389,000 in Q3/11) due to the impact of the iPhone 5 launch

http://www.engadget.com/2012/11/08/t-mobile-usa-q3-2012-earnings-revenue-down-6-4-percent-to-4-9/

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One of the major problem i see with this is that other carriers would adopt this but still keep the same monthly pricing. Also why would you want to pay full price for a phone if its still gonna be locked to that carrier.

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One of the major problem i see with this is that other carriers would adopt this but still keep the same monthly pricing. Also why would you want to pay full price for a phone if its still gonna be locked to that carrier.

 

The price of service without a device subsidy has traditionally been reflected on the pre-paid side.

 

This doesn't really change much except make the true price of the device and the true cost of the service transparent to the consumer, and give the consumer the freedom to pay off his device early, upgrading even more often.

 

However, the value plan also aligns pretty nicely with the strategy of making their network 100% compatible with AT&T devices, in a bid to lure unhappy customers from that carrier. And the availability of the Nexus 4 for just $299-350 from the Google Play store.

Edited by gangrene
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If it ends the need for a contract or lowers the monthly fee so in the long run buying the phone outright and paying for service for 2 years is the same or cheaper than paying more per month but with a discounted phone i'm all for it too. When your off contract now your price per month stays the same but they have made their phone money back or should have.

 

It does not end the required 2 year contract.

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