T-Mobile Opens Up The US Cell Phone Market
Today T-Mobile became the first carrier in the US to offer customers the following choice: sign a new 2 year contract and get a cheap phone, or bring your own phone to the network and get the same plan for a lower monthly fee, with no commitment.
This is really interesting. Bear with me.
For years, US carriers have locked customers into long-term contracts by offering them a ‘cheap’ new phone. It seems like a great deal, until you realize that the carrier has crippled the phone. Some features don’t work at all. Some require you to pay the carrier an extra fee. And there are lots of restrictions on third-party apps (like Skydeck).
So why don’t more people pay up for the unlocked, uncensored version of their phone?
As recently as 2007, most US carriers did not allow you to bring your own phone to their network. They loosened up that year, partly because of the public debate about wireless net neutrality. Still, consumers kept taking the blue pill: the restricted but subsidized phone. Some argued that American consumers were in love with the words ‘free’ and ‘cheap’, and that for their own protection, market-distorting handset subsidies needed to be regulated or banned.
The real problem was that when you signed a 2-year contract with a carrier, the cost of a ‘free’ phone was built into the monthly fee whether you wanted it or not. You might be smart enough to know that the phone wasn’t really free, but you couldn’t do anything about it. If you declined the carrier phone, the only money you could save was the upfront price — zero, if the phone was free. And if you brought your own phone to the network, you ended up paying for two.
Today, T-Mobile became the first carrier in the US to offer monthly plans with and without a phone at different price points. At the high end, the new Even More Plus plan promises unlimited voice, text, and web access for $99.99 if you take their phone and $79.99 if you don’t. Of course, the $99.99 plan requires you to sign a 2-year contract, so that T-Mobile can earn back the subsidy. For the first time in the US, you can see that the true cost of your phone is the sticker price plus $480. But more importantly, for the first time you can decline that phone and save not just the sticker price but the $480 too. If you have an unlimited plan with AT&T and you are happy with your current phone, you can switch to T-Mobile and save $20 per month. If you are in the market for a new smartphone, your budget just went up by $480.
Everywhere else in the world, consumers buy their phones and phone service independently. That’s because everywhere else in the world T-Mobile’s new plan is the norm. If other US carriers follow T-Mobile’s lead, it could transform the domestic market.
But T-Mobile has very little to lose, because they place fewer restrictions on their phones than any other big carrier; their business model doesn’t depend on you taking the blue pill. Who will be next?
[...] This post was mentioned on Twitter by Matthäus Krzykowski and Jason Devitt, skydeck. skydeck said: T-Mobile opens up the US cell phone market: http://bit.ly/cNhJM [...]
Interesting move. I can see many cases where you buy the phone from somewhere else (Bestbuy/Amazon?) and get one of these deals with it. And the services that is promoted in that deal is the one I really care about (Gmail, Facebook, Skype, Spotify, Twitter etc.).
Something wrong t-mobile is doing to people bearing with them for years: They charge the $35 activation fee when you switch from an old and expensive plan to any new one. That's unfair for those who've been supporting them for years. $35 just to change from plan to plan, just to put some representative's finger in a keyboard. That's ridiculous and unfair, T-Mobile… You should “thank” supporters and not punish them.
[...] monthly everything unlimited plan for $79 a month. You just need to bring your own devices. Jason Devitt, CEO of Skydeck, and one of our favorite Mobile industry insiders thinks this is a major development as it indicates that the market might be ready to transition [...]
this aims at the top end of the market. to be truly revolutionary we need a similar option at the bottom end of the market. instead of renewing a $40.00/month plan for two more years and getting a new free phone give me the option of keeping my old phone and paying only $20.00/month. such plans are offered in almost every EU nation. we need them here in the US. we need new super cheap voice only plans for users that bring there own phone.
“Everywhere else in the world, consumers buy their phones and phone service independently. ” unfortunately not in France. The standard plan of all major carriers is with a “cheap” phone.
I've changed plans on T-Mobile multiple times and never been charged a fee for doing so. It's also trivial to change plans or add/remove services via their website.
Not planning on changing again since I'm now on their unlimited loyalty plan for $40/month (unless they offer something that includes Internet for less than the $79.99 mentioned here).