Tilted
..
T-Mobile USA announced in December that it would be moving completely to an unsubsidized model for smartphone activations in 2013. (Here's a YouTube video from the Deutsche Telekom investors' conference in which they made the announcement - you probably don't want to watch it though, it's near an hour long and they discuss a number of other business / go-forward strategy issues.)
What that will mean is that customers will have three options: (1) acquire a smartphone on their own and activate it on the T-Mobile network, (2) pay the full price for a smartphone from T-Mobile, and (3) pay full price for a smartphone from T-Mobile but finance it (along with paying for services) over, e.g., 20 months. Customers will no longer be able to get a highly subsidized phone from T-Mobile. Instead of paying $100 or $300 for a high-end phone (e.g. Galaxy Note II or iPhone 5), they will have to pay $500 or $800 for it. Instead of getting a lesser phone for free, they will have to pay $300 or $500 for it.
The trade-off will, supposedly, be lower service pricing and being off-contract. They'll be more flexibility with regard to upgrades and, for those that are happy keeping their phones for longer than 18-24 months, probably significant savings on the overall cost of having and using their phones. Of course, so much will depend on the details, e.g. actual pricing.
This will be closer to the model that most of the world uses when it comes to mobile phone costs / service. In many places they have more flexibility and portability between carriers, but they have to pay the real price for the phone itself. They also tend to have lower service costs.
Anyway, this may or may not be the beginning of a change to the model commonly used in the United States. T-Mobile will be the first of the major carriers to try this. Depending in part on how it goes, AT&T, Verizon, and Sprint may follow. Here's a WSJ blog post discussing that possibility.
Any thoughts? Do we Americans like our cheap smartphones too much to accept these kinds of changes (though, it's largely psychological - you end up paying the real price for the phone anyway)? Will paying significantly more for your phone be justified by lower service costs and the freedom to move between carriers or upgrade when you wish?
What that will mean is that customers will have three options: (1) acquire a smartphone on their own and activate it on the T-Mobile network, (2) pay the full price for a smartphone from T-Mobile, and (3) pay full price for a smartphone from T-Mobile but finance it (along with paying for services) over, e.g., 20 months. Customers will no longer be able to get a highly subsidized phone from T-Mobile. Instead of paying $100 or $300 for a high-end phone (e.g. Galaxy Note II or iPhone 5), they will have to pay $500 or $800 for it. Instead of getting a lesser phone for free, they will have to pay $300 or $500 for it.
The trade-off will, supposedly, be lower service pricing and being off-contract. They'll be more flexibility with regard to upgrades and, for those that are happy keeping their phones for longer than 18-24 months, probably significant savings on the overall cost of having and using their phones. Of course, so much will depend on the details, e.g. actual pricing.
This will be closer to the model that most of the world uses when it comes to mobile phone costs / service. In many places they have more flexibility and portability between carriers, but they have to pay the real price for the phone itself. They also tend to have lower service costs.
Anyway, this may or may not be the beginning of a change to the model commonly used in the United States. T-Mobile will be the first of the major carriers to try this. Depending in part on how it goes, AT&T, Verizon, and Sprint may follow. Here's a WSJ blog post discussing that possibility.
Any thoughts? Do we Americans like our cheap smartphones too much to accept these kinds of changes (though, it's largely psychological - you end up paying the real price for the phone anyway)? Will paying significantly more for your phone be justified by lower service costs and the freedom to move between carriers or upgrade when you wish?
