T-Mobile Announces it Will Carry iPhone and Eliminate Subsidies
By Karla Robinson
December 11, 2012
December 11, 2012
- Starting next year, T-Mobile will begin offering Apple products, including the iPhone, but CEO John Legere says the company will make customers buy the phones themselves.
- “T-Mobile is eliminating all device subsidies in 2013, requiring new customers to pay full price for their phones up front, buy it on installment or bring their own unlocked devices,” writes GigaOM.
- “T-Mobile will shift entirely to its unsubsidized Value Plans, which offer customers far cheaper rates for voice and particular data,” the article continues. “Traditionally carriers factor subsidies into their normal contracts rates — basically you’re paying a mortgage on your phone. With the Value program, T-Mobile is keeping the contract, but passing what it saves on subsidies back to the consumer.”
- Eighty percent of T-Mobile’s activations in the last quarter were value plans, signaling a strong demand for the model. However, the unsubsidized price of the iPhone 5 is between $650 and $850; the phone’s popularity is largely due to carrier subsidies, so T-Mobile could face a hurdle convincing customers.
- “T-Mobile will have to explain to customers that they will actually save money over the length of a two-year contract by paying a lower value plan rate,” notes the post.
- “Legere said that T-Mobile would offer the iPhone in a unique way. He implied that T-Mobile could heavily finance the device, selling it for $99 and then charging $15 to $20 a month in payments over 20 months. That kind of financing plan, however, would look very much like a subsidized contract plan to the customer.”
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