T-Mobile CEO confirms the iPhone and the death of phone subsidies

http://gigaom.com/mobile/t-mobile-ceo-confirms-the-iphone-and-the-death-of-phone-subsidies/

by rkudeshi • 14 years ago

98 75 14 years ago

fbpcm• 14 years ago

As of yesterday 3G works on T-mobile iPhones in Austin.

Well, in a way that's some sort of good news, but shouldn't they actually work in LTE instead? Playing this catch up game will not really help them grow the business. Except maybe if they are looking at a different market segment.

CrazedGeek• 14 years ago

T-Mobile is supposed to absorb MetroPCS's LTE network, IIRC.

jvm2• 14 years ago

HSPA+ is actually quite fast though; in my experience it's comparable to WiFi.

dangrossman5• 14 years ago

I like T-Mobile's plans; I chopped my bill from $90/month to $30/month with unlimited data use by switching over and bringing my own phone.

What doesn't make sense right now is that their no-contract "Monthly4G" plans are a better value than the "value" plans. They have the same service levels at the same prices, but without the contract.

If 80% of their activations are choosing the value plans, are these people simply not noticing there's another option in the website menu? I can't imagine why you'd sign a contract for no benefit.

forax• 14 years ago

Agreed. I set up my nexus 4 with a $30/month plan that has 100 min of voice, unlimited texts, and 5GB of data at non-lte 4g speed (throttled after that). I can't understand why you would opt into a binding contract at a higher price with a lower data cap. I'm betting that their new no-contract, no-subsidy model will work out well for them especially as the upfront prices of android phones drop.

codenerdz• 14 years ago

so you're doing most of your communication over voip then? Or you just dont talk on the phone?

chimeracoder• 14 years ago

> If 80% of their activations are choosing the value plans, are these people simply not noticing there's another option in the website menu? I can't imagine why you'd sign a contract for no benefit.

That's the case on a lot of carriers, not just T-Mobile. Off-contract plans are usually cheaper than on-contract plans. Verizon, AT&T, etc. just don't advertise their off-contract plans, so you have to ask for them explicitly.\

In T-Mobile's case, they're actually pushing the disadvantages of an on-contract plan (lock-in) with some of the advantages of an off-contract plan (cheaper bill, though I suspect still not as cheap).

rmason• 14 years ago

Just got back from a Verizon store and wished I'd had this information. They told me that I had to pay the same price whether I had a prepaid phone or not.

I tried unsuccessfully to argue the logic with them that if they didn't need to subsidize the prepaid phone why couldn't they pass the savings through to me?

I was told by the manager that's the plan take it or leave it, so I left.

mgkimsal• 14 years ago

OK, I give up. Where does tmobile offer a $30/month plan with unlimited data? I can't find anything close on their site.

dangrossman5• 14 years ago

Browse Plans > Monthly4G > Browse Monthly4G Plans

http://i.imgur.com/gIWsM.png

cantbecool• 14 years ago

http://prepaid-phones.t-mobile.com/monthly-4g-plans It's to the center right.

skystorm• 14 years ago

The value plan math starts to make sense when you go to family plans and/or routinely need more minutes. We currently have 3 lines, two of which come with 2GB data, with 1000 shared minutes and unlimited messages. $80/month plus taxes.

xur17• 14 years ago

Exactly. The value plans start to look really nice as you add more users, especially with the $0 add a line promotion they had a few months back (and still might have).

pkulak3• 14 years ago

It's not a contract, just not post-pay. You can cancel the service whenever you like. And it really is only cheaper for multiple lines.

dangrossman5• 14 years ago

That's not clear from the website. The "value plans" page says in the footer:

> Credit approval, $35 per line activation fee, and two-year agreement with up to $200/line early cancellation fee required; deposit may apply. If you switch plans, you may be bound by existing or extended contract term (including early cancellation provisions) and/or charged a fee of up to $200.

modeless2• 14 years ago

The main advantage of the value plan lineup is the truly unlimited data offering, which you can't get with the Monthly 4G plans (they are "unlimited" with throttling after a few GB, and trust me, you don't want to know how bad the throttled speed is). You can get 500 voice minutes and unlimited data for $55/mo, and though tethering isn't allowed they can't really stop you if your phone is unlocked. No other carrier offers anything remotely similar.

If you don't want to tether, though, Monthly 4G is definitely the way to go. $30/mo for 100 minutes and 5 GB data; all you need is a VoIP app and that's perfectly serviceable, and again no other carrier offers anything similar.

bsimpson2• 14 years ago

T-Mobile will block you if you tether on Monthly4G. Your phone data will still work, but if you use it for more than a couple minutes, the tethering will start going to dead links.

techsupporter• 14 years ago

Really awesome, but 1900MHz doesn't penetrate the low-e coating that my employer uses on its office buildings. AT&T's 850MHz HSPA and 700MHz LTE do, so I can't switch, bad though I may want it.

bdcs2• 14 years ago

If you get ANY signal through, you can use a signal booster, like CelFi: http://cel-fi.com/ . All they need is electricity and a window (to allow decent GPS signal).

They're 500$ new, 200-400$ on eBay, and free with T-Mobile subscription of 18mo (and dealing with some phone bureaucracy. This may seem like a lot, but it's a lot cheaper than paying 750$/yr more for data with AT&T, plus it will benefit your whole office.

eli5• 14 years ago

I do not think T-Mobile is providing them free any longer, but I'd be happy to be proven wrong.

mdasen2• 14 years ago

I believe that T-Mobile offers WiFi calling to help combat the issue. According to the presentation, T-Mobile is hoping to improve in-building coverage by 15-20% through this network modernization (including distributed antenna systems). I'm not saying that should cause you to reconsider, but it's possible that T-Mobile will be improving in that area as well.

w1ntermute2• 14 years ago

The only reason T-Mobile is doing this is because they have a ton of unused bandwidth due to low subscriber numbers, so they're trying to differentiate themselves from their competitors. Ultimately, it's much more profitable to use the subsidy model, because it allows you to hide the true cost of the phone from consumers, most of whom are too stupid/ignorant/rich to realize/care they're getting ripped off.

eli5• 14 years ago

That's totally unfair. AFAIK, T-Mobile is the only major carrier to currently offer a reduced monthly rate in exchange for not taking the subsidy. If you're paying the some rate either way, you'd be stupid not to take the subsidy.

NoPiece• 14 years ago

I think you are overstating the case against the subsidy model. It is hard to compare plans because they differ in small ways (minutes. texts, etc..), but my current ATT plan is 2 lines, 700 min, 200 texts, 'unlimited' data, and two iphones for $125 a month. I'd need at least the T-Mobile $60 plan to get comparable data, so it would be $120 a month; roughly the same price. More voice and texts with T-Mobile, similar data. But I get the phones with AT&T, so it ends being a slightly better financial deal. If you don't need voice, the $30 T-Mobile plan is an amazing deal.

w1ntermute2• 14 years ago

You're making the assumption that we need to buy new phones every two years. Now that the smartphone spec race is starting to slow down, we're going to see less of a need for frequent smartphone purchases. You could easily use the same phone for 3 or 4 years, as long as it doesn't break. But when you're on the subsidy model, you have to pay extra for the subsidy even if you don't get a new phone.

pkulak3• 14 years ago

With a T-Mobile value plan you can get 1000 minutes, unlimited texts and unlimited data for $100. That's cheaper, more minutes, and you can actually use text messaging. If you can get by with 2 gigs of data, it drops down to $80.

http://www.t-mobile.com/shop/Packages/ValuePackages.aspx

kbutler• 14 years ago

http://www.t-mobile.com/shop/Packages/ValuePackages.aspx

2 lines, each with 1000 min, unlimited text, unlimited data $99/month.

The phone subsidy is costing at least $600 over two years, so it may a reasonable choice if you're saving more than $300 per phone.

shmerl• 14 years ago

Sounds good. In general, it's time for more people to stop using contract plans with subsidized devices and higher monthly fee, and to start using non contract plans with full price devices and lower monthly fee. Of course if these monthly prices would really be lower.

OldSchool3• 14 years ago

I've been using T-Mobile precisely in this way for over 5 years to be able to switch phones at will and keep recurring costs low and off-contract.

Their unlimited voice-text-2GB 3G/4G data plan has never cost me more than $50/month per phone including all taxes and surcharges.

nathanb2• 14 years ago

Can you elaborate on "off-contract"? It sounds like even without the subsidy you still have to commit to a two-year contract.

X-Istence• 14 years ago

After your contract is over, you are technically off-contract.

In the past T-Mobile has also offered customers the ability to have a monthly plan that didn't require a contract. I'm hoping that they keep that around.

kfitchard• 14 years ago

But yes, you are correct. If you sign up for a value plan you're on contract. They're subsidizing rates not phones in this case.

qeorge• 14 years ago

If you own the phone you can just do a prepaid arrangement. They just bill you at start of each month for the coming month of service.

(I have T-Mobile, Nexus S, $70/mo for voice/sms/5GB data)

OldSchool3• 14 years ago

I'm not sure about what's offered right now to new customers, but for me once the original contract expired I didn't renew it and instead of getting phone "upgrades" I got a cheaper "loyalty" plan and I've let that run for years.

dangrossman5• 14 years ago

None of these plans have a contract, they're month-to-month:

http://prepaid-phones.t-mobile.com/monthly-4g-plans

nazgulnarsil• 14 years ago

Never bank on explaining math to your customers.

dizzystar• 14 years ago

Finally! I was wondering why someone didn't say this already.

T-Mobile is nuts with math anyways. My friend has a 65 dollar plan she pays over 100 a month for.

bdcs2• 14 years ago

Wait, I thought Google was buying T-Mobile! Kidding...

I think this is great news for Google. Why? Because unlocked, unsubsidized phones with cheap data are going to be brought to the forefront of the consumer's attention. Consequently, margins are going to go down for carriers (overall -- individually, TMO might get a boost) and phone producers as people are able to quickly move to the carrier with the cheapest data, to the phone which offers the best features per dollar. Google, in turn, will benefit as more and more people move to cheap phones with data-heavy plans -- an advertisers dream.

nachteilig• 14 years ago

I only switched from t-mobile because my unlocked phone couldn't use 3G on their network. It'll be very, very tempting to go back if they have decent coverage these days.

It doesn't seem clear that unsubsidized iPhone can work in the US, but I guess we'll see.

joezydeco2• 14 years ago

I recently got a iPhone4 from Virgin Mobile USA for $349 and $30/month plan and it's working just fine. Glad to see others are going this way as well.

mingramjr• 14 years ago

How's the data speeds with Virgin?

joezydeco2• 14 years ago

Did a check last night, with 4/5 bars I got 600 kbps down, 350 kbps up. Not spectacular, but I'm not watching YouTube in the car or anything.

mdasen2• 14 years ago

I'm excited that T-Mobile is looking to boost its network and committing to a bit of a different direction than many US carriers have taken. AT&T and Verizon are going toward on-contract, subsidized devices paired with expensive plans. Sprint seems to be trying to price discriminate with customers who want the latest devices paying AT&T and Verizon style rates on-contract with Boost and Virgin trying to pick up cheaper customers who are willing to live without the latest devices and keeping them off the latest network that Sprint customers get access to (4G LTE). T-Mobile seems to be trying a somewhat European strategy. It's clearly being altered to live up to American appetites (for example, they're going to finance what would have been the device's subsidy). This may not turn out to be something amazing, but it's exciting to see one of the 4 wireless companies pushing for a new direction.

It's also good to see T-Mobile pushing fast for 4G LTE. While HSPA+ 42 does offer good speeds, the marketing perception won't change and the fact that ping times are worse on HSPA+ does mean that important real-world use cases can lag. I'm a little dubious of their schedule. Sprint started working on LTE a long while ago and thought they would have 120M POPs covered by the end of 2012. Considering that they've been launching more rural areas and haven't been able to launch in several cities they announced a while ago, it seems like it's going to take Sprint a good while longer than they had anticipated. T-Mobile is saying that they will have 100M POPs covered half a year from now and 200M POPs covered a year from now. That's ambitious. Judging from Sprint's slipping release schedule, it might be prudent to think that T-Mobile's projections might also slip.

However, if T-Mobile's dates slip on LTE a bit, it shouldn't hurt them too badly. Their customers can fall back to HSPA+ 42 and that provides a good network experience (if not as good). This is in contrast to Verizon and Sprint customers who fall back to EV-DO when out of LTE coverage range. That probably doesn't matter for a lot of Verizon customers, but Sprint is still working to cover top markets.

T-Mobile does have some good assets. The fact that they're going to be able to launch with 10MHz LTE will be good since it should match what Verizon and AT&T are deploying and out-do Sprint's 5MHz deployment. If they merge with MetroPCS, they will have a good spectrum position to continue growing LTE on including 20MHz LTE channels. Lower/different pricing combined with unlimited 4G might start attracting customers. Part of this is just undue excitement over the prospect of a re-invigorated competitor in an industry dominated by two carriers. Still, maybe T-Mobile will pull it off.

mtgx• 14 years ago

So why aren't they already doing this with the Nexus 4 and offering it for $300 unlocked, instead of charging $200 with contract? They can start doing this today. They don't have to wait for the iPhone - unless they made a deal with Apple that they can't sell a Nexus phone for half the price of what the iPhone will be when they'll sell it unlocked.

chair6• 14 years ago

Want a Nexus 4? Grab it direct from Google, then get a SIM card from Straight Talk (http://www.straighttalksim.com/). $45 a month for 'unlimited' voice / SMS / data (throttled after a certain amount - no big deal, if you're near wifi often) riding on AT&T or T-Mobile networks, depending on where you live.

I converted from AT&T a month ago and it's working out pretty well so far, after some initial headaches getting them to provision the SIM card properly. I'm still on the AT&T network, just through the Straight Talk MVNO.

untog2• 14 years ago

Actually, T-Mobile offers 100 minutes, unlimited SMS and data for $30 a month. Might be cheaper if you don't use voice too much- and you might even be able to get LTE on your Nexus 4 when T-Mobile launch it (I forget what the final verdict was on that whole story)

c0nsumer• 14 years ago

I looked into this, and Straight Talk doesn't allow tethering per agreement. That was frustrating.

MatthewPhillips• 14 years ago

Straight Talk is a scam and they'll block you (not throttle, block) once you pass a pretty small usage threshold. Their own forums are nothing but people complaining about getting cut off.

Remember that all of those carriers are reselling service. They cannot possibly offer it for truly cheaper than the big guys. They are just buying in bulk in hopes that you don't use much.

jvm2• 14 years ago

Buy it from Google, get a TMo SIM, and sign up for this plan: http://prepaid-phones.t-mobile.com/monthly-4g-plans

untog2• 14 years ago

This is great. I'm always reminded of my mother, who I handed down my 2G iPhone to a few years ago. She's more than happy with it, but only has data on wifi because adding data onto her plan would triple the cost of it, or some other crazy margin.

She'll be much more likely to sign up if she can get it more affordably, with her existing phone. She, and many others I suspect, have no need to get a new phone every two years.

bsimpson2• 14 years ago

There are plenty of pay-as-you-go carriers that do voice + data for $50/mo. I was on T-Mobile Monthly 4G, but their coverage is crappy. Straight Talk lets you do either AT&T or T-Mobile for $50.

JoshTriplett2• 14 years ago

Straight Talk, though, has some major limits on what you can do with the data connection (web only, no audio, no video), and they'll cut off your line if you do anything they don't like, or if you use more data than they expect you to use on their "unlimited" service. T-Mobile lets you do whatever you like with your data connection.

golfstrom• 14 years ago

This is an interesting side effect of the U.S. carrier cartel. People simply don't know about the alternatives. Americans have accepted that Verizon and AT&T are the only acceptable carriers, and are no longer price-sensitive, just as long as it feels like they're getting a free iPhone every 2 years.

Ives• 14 years ago

If they themselves quote a price for the iPhone starting from 650$, how is 99$ + 20$ a month for 20 months = 499$ dollars total full price? I'm still 150$ short and that's assuming a 0% interest rate.

alanctgardner2• 14 years ago

If you want to see a microcosm of this, look at the Canadian cellular market. Most of the budget players are now on a 'tab', where they effective lend you $200-400 which is prorated. The funny thing is the math they use:

On WIND, for example, they give you 10% credit for the value of your bill every month. On a $50 plan (which is high for them), you get a $5 a month subsidy for your phone. If you stay for three years, they let you off the hook.

Meanwhile, the 'Big Three' (who own most of the budget players as well) offer a prorated subsidy: you get 1/36 of the value of your subsidy monthly, over three years. So, on an iPhone, you can get up to $20 a month in subsidy. Clearly this more than outweighs the extra cost of the plans.

What's funny is, people are afraid of 'contracts', even contracts with prorated termination fees. I once got the scary contract talk from a WIND salesperson, so I drew a little diagram on their chalkboard of the value over time of each contract. He saw the sharp drop at the end when they released the remaining $200 of debt, and his jaw dropped a little. People don't really think about this stuff rationally. Bell has even started giving a 10% discount monthly if you buy a phone outright, which makes absolutely no sense unless someone handed you a phone for free.

My point being, if experience in Canada proves anything, people will flock to this as long as you market it properly.

pacaro• 14 years ago

It'll be interesting to see if anything comes of this w.r.t. the consumer price pressure that will then be directly on phones, currently the subsidy hides that from the consumer allowing handset manufacturers to set prices with the carrier

T-Mobile CEO confirms the iPhone and the death of phone subsidies

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