Are you ready for T-Mobile’s “Uncarrier Event” today? You should be because all of the details of the No. 4-and-slipping mobile carrier’s plans to offer contract-less services -- while ending the practice of subsidizing what consumers shell out for their increasingly sophisticated and costly phones –- have been posted on its website and parsed by online experts for quite some hours now.
"This could be an effective way for T-Mobile to reinvigorate its efforts to brand itself as the low-priced option in the market," BTIG analyst Walter Piecyk says in a research blog cited by Reuters’ Sinead Carew.
The company will also unwrap its version of the iPhone5, according to CNET’s sources, as well as its plans for its 4G LTE network. The absence of Apple from T-Mobile’s smartphone choices has been a sore point for the company, contributing to an exodus of customers over recent years. CNET’s Roger Cheng, Brian Bennett and Sarah Tew are among the live bloggers covering the press conference starting at 10:45 a.m. ET.
“T-Mobile's offering, dubbed “Simple Choice,” makes the company the first of the big four U.S.-based carriers to drop one-year or two-year contracts in favor of purely month-to-month-based arrangements…,” explains Matthew Steven on Ars Technica. “Customers can now sign up for a month-to-month package with unlimited texting and voice, plus 500MB of data at just $50 per month. (The price increases to $60 for 2GB and higher.)”
“The move … sets up what will be a closely watched test of how consumers react when presented with the full cost of their favorite devices,” Thomas Gryta and Anton Troianovski point out in the Wall Street Journal. “The standard-issue iPhone 5, for instance, sells for $199 with the subsidy and a two-year contract, but it costs consumers $650 if bought without carrier support.”
T-Mobile will, however, offer finance plans that allow consumers to make a down payment and work off the balance in monthly installments of, say, $20.
In an extensive Q&A on the new plan targeted to consumers, CNET’s Marguerite Reardon and Kent German ask: “This kind of sounds a lot like a contract/subsidy plan. What's the difference?” The answer: “The big difference is that after you pay off the phone, your overall monthly bill goes down. It's just like when you finish paying off a car or the mortgage on your home. Once the loan is paid off, you own the device outright and you can continue to use it.”
Under traditional plans, the underwritten portion of the phone you purchased is bundled into the price of the contract and is, in effect, the subsidy that keeps on subsidizing the carrier’s bank account. The consumer’s monthly cost does goes down after the contract is up. Of course, who wants to be seen using a phone that’s two years old or more (except people like grey hairs who aren’t seen using them in the first place)?
There’s no termination fee at T-Mobile if the consumer sees a better deal somewhere else. But there is the matter of the phone you purchased perhaps not being useable on another carrier without having it unlocked -– a practice that I’d bet most consumers don’t understand or shy away from for fear that it will somehow backfire on them (if it’s even legal). T-Mobile, on the other hand, is promoting the ability of customers to bring at least some current devices to its new plan.
“Pop in a T-Mobile SIM and use your current phone on T-Mobile’s Nationwide 4G network with an unlimited talk, text and data plan,” the web copy reads. “Unlocked GSM phones (including AT&T iPhones) are compatible.” But that leaves out the CDMA universe, which includes all the other major carries. At least, I think it does.
To the average consumer, the mobile phone marketplace is, of course, a confusing morass of hidden fees, add-on charges and features and benefits that seem impossible to compare from one carrier to the next.
T-Mobile’s attempt to set a new paradigm introduces another set of considerations to already exploding heads but at least it “knows it will need to explain the change to its customers,” as the WSJ’s Gryta and Troianovski put it. “The company and its dealers have spent March teaching employees how to sell the new plans, with more than 20 hours of training per person, according to dealers.”
T-Mobile’s invitation to the festivities in New York City tweeted by @evleaks last week contains the line: “From now on, many of the things are [sic] competitors do, we don’t.” Evidently that includes employing proofreaders. Whether its other innovations prove to be more than more than a sloppy misreading of the market will be interesting to track — not only by consumers and other carriers but also by the Apples and Samsungs who have relied on the subsidies offered by the other carriers to boost sales.