T-Mobile is the distant 4th place finisher in the U.S. cellular market. But in 2013, they’re going to make a bold change that will set them apart from all other U.S. wireless carriers, starting with no more hardware subsidies.
No more hardware subsidies and $500+ phones? How is this possibly going to help T-Mobile gain customers and market share?
Up front, customers will have to shell out more. The benefit, though, will be lower monthly payments for the customer over the life of the contract as part of subsidized monthly bills include repayment for the steep hardware subsidies. An optional choice, according to T-Mobile, will be “financed pricing” on hardware which will see the up front cost in the neighborhood of $99 with $15-$20/month for 20 months. At least initially, financed hardware looks almost identical to subsidized hardware on paper.
T-Mobile USA CEO John Legere says that even though customers might see financed hardware and subsidized hardware as identical, the experience will be “dramatically different”.
Aside from the new hardware pricing, T-Mobile maintains that even more support for unlocked devices will be offered, meaning customers could buy phones elsewhere for better deals and then bring them onto T-Mobile’s network “for free”.
While the idea of potentially more expensive hardware up front for the promise of cheaper monthly payments will certainly be controversial, we’re pretty sure T-Mobile’s other headliner for 2013 will return nothing but positives – the iPhone.
At the same analyst conference where T-Mobile revealed the new hardware plans, they also announced that they had finally reached an agreement with Apple to sell Apple products. The iPhone as well as several options of iPad/Mini (we assume) will be offered up to customers much the same as competing carriers such as AT&T, Sprint and Verizon already do now. T-Mobile has repeatedly stated that the lack of Apple’s iconic handset on their market has led to high levels of customer defection to other carriers that do offer the iPhone. Up until this point, however, T-Mobile has maintained that it wasn’t financially smart for them to make the concessions needed to carry the iPhone. Whatever has changed doesn’t necessarily matter. All that will matter next year is that one of the most popular phones on the market will be available to T-Mobile customers.
Combined with the new hardware pricing plans, T-Mobile definitely has the cards in play to stand out from the competition. The changes to hardware pricing and subsidies is definitely gutsy. But if it succeeds and U.S. consumers can realize the benefit that T-Mobile’s new plans offer, they will be that much farther ahead of the other carriers. The real question, though, is just how much the iPhone will stop the bleeding of customers from T-Mobile to other customers, and what type of data the T-Mobile iPhone will support. We’d like to assume that T-Mobile will take the time to launch their first ever iPhone alongside their LTE network. But if things fall behind schedule, they’ll have to make due with HSPA+. Mind you, T-Mobile’s efforts to re-farm HSPA+ to more iPhone friendly (read: non-AWS 1700 MHz) spectrum as well as push their HSPA+ network to 42 Mbps in select cities does give them some leeway.
2013 is definitely going to be interesting in the mobile world at the carrier level alone. Should T-Mobile launch LTE early on with their new iPhone, would you be willing to pick up and move, or at the very least make them your next choice once your current cellular contract ran out?