T-Mobile Will Offer The iPhone Without Subsidy

t-mobile-iphoneAt an analyst conference last week, T-Mobile CEO, John Legere, confirmed that the iPhone would indeed be a part of the carrier’s 2013 smartphone lineup, and that, unlike other carriers, T-Mobile won’t be subsidising the cost of the device.

Presently, carriers offer the latest iPhone starting at $199 with a two-year contract, retrieving the actual cost of the device through the two-year period by charging a little extra for your monthly plan. T-Mobile intends to move to the unsubsidized model, offering phones at full price and reducing your recurring monthly costs under its “Value Plans.”

T-Mobile says that there’s a lot of demand for its cheaper value plans, which accounted for 80 percent of its activations last quarter. However, convincing potential customers to spend upwards of $649 as opposed to $199 is going to be a tough task for the carrier, even if it does turn out to be cheaper over a 24-month period.

For this, T-Mobile plans to devise an instalment model, which closely resembles the current subsidy model. GigaOm has the details:

[CEO] 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 subsidized contract plan to the customer.

The carrier would also continue encouraging unlocked iPhone owners to hop on to its network, as detailed earlier.

T-Mobile’s pretty much revealed its entire iPhone strategy except for when it’ll actually start selling the device. It could either start after the rollout of its iPhone compatible 1900MHz 4G HSPA+ network, or it might want to wait until its 4G LTE network is ready, which could take more than six months.

Do you think T-Mobile’s plans of abandoning smartphone subsidy would succeed? Would you buy an unsibsidized iPhone on T-Mobile’s networks for the cheaper value plans?

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  • Dave

    I believe it may work for them, having sold my previous iPhones on Craigslist (all tmobile buyers) they obviously don’t mind paying a premium up front without jeapordizing their monthly payments. Only time will tell

  • Gelo

    That’s for sure will work with T-Mobile customers awaiting for an iPhone to come to their preferred carrier. And if it fully supports iphone’s 4G there will be thousands of switches from AT&T, Verizon and Sprint.

    • Dave

      Tmobile’s 4g service is very very slow, I doubt there will be AT&T switchers

      • Lawliet

        That could also depend, some are willing to have slower 4G for unlimited data, if they would offer the plan.

  • Kasi

    Wish I had know this 2. Days ago before I bought an 5 I am a tmonile customer. Since for ever

  • Master T

    In the article you mention that this closely resembles the subsidized plans of the other networks, but you forgot to mention one important aspect to this scenario which is clearly an advantage for T-Mobile customers over the others. After the 20-month financing plan is complete, the monthly payment will drop down to whatever the ‘value plan’ is. On the other networks, you continue to pay the subsidy even after the network has recovered the full cost to them for subsidizing the iPhone. The only way that the plans are truly ‘even’ is if you purchase a new iPhone every two years and are taking full advantage of the increased plan prices on the networks doing monthly subsidizations.

  • LoganExplosion

    Without Subsidy and without signal

    • Kraken

      In areas where T-mobile has good coverage, their speeds (at least for 3g and HSPA+) and signal quality are drastically better than AT&T. In the areas in between, not so much…

  • Emorosa

    People who have been with T-mobile have been dying for the iPhone to come. It wouldn’t be such a hard thing to pay the big budget price when your only paying 40 for unlimited 4G everything. Big boost for T-mobile