Do Your Homework – T-Mobile Uncarrier Plans are NOT Harmful to Consumers

I can understand being confused by these new plans, but public figures, like an Attorney General, need to be informed before they make this kind of mistake.

Working and living without a smartphone in the United States is becoming harder and harder.  Nearly everyone that I know has one, and they are a huge convenience for getting in touch with someone.  The biggest problem, however, is usually the costs involved.

Unlocked phones can be very expensive, and even though many carriers offer subsidized prices for smartphones.  What isn’t very well known, however, is that even though you end up paying a little now, you end up covering not only the price of the device, you end up paying a higher price for the service plan over the life of your 2 year contract.

t-mobile-logo-huge

T-Mobile’s new “uncarrier plans” attempt to address this inequity.  You can either bring your own compatible device to the party, or you can purchase one from T-Mo.  If you purchase one from T-Mobile, they’re going to charge you full price for the device.  You make a down payment at the initiation of the contract and then pay it off in monthly installments or in dedicated payments, your choice.  However, once the phone is paid off, your overall monthly bill with T-Mobile’s Uncarrier Plans drops.  After the phone is paid off, you stop paying for it.

There’s been a lot of hubbub in the news lately about T-Mobile’s new plans. They buck the system and unfortunately many people are so used to the subsidy model of purchasing a smartphone they don’t understand how these new plans are structured.

Case in point, after reading a press release from the Washington State Attorney General, I hung my head and nearly cried.  The guy just doesn’t get it.

When you buy a phone for service at T-Mo, you buy the phone. Period. You can buy the device out right or pay for it over time. If you cancel your service, you don’t get to return the phone. You have to pay it off. T-Mo won’t allow you to “return” the device.  This seems like standard practice to me. You buy something, you have to pay for it.

The WA AG accused T-Mobile of deceptive practices and filed an injunction against them, stating the following:

“After an investigation of the company’s practices, the Attorney General’s Office learned that the company failed to adequately disclose that customers who purchase a phone using the 24-month payment plan must carry a wireless service agreement with T-Mobile for the entire 24 months— or pay the full balance owed on phone if they cancel earlier.”

Here’s the kicker –

“Consumers who cancel their wireless service face an unanticipated balloon payment for the phone equipment – in some cases higher than termination fees for other wireless carriers depending on how early they cancel. Instead of a “two-year sentence” for wireless service, consumers face a different two-year “sentence” to avoid a lump-sum balloon payment for the phone.”

Right. Hello!  You still have to pay for the phone you bought. It’s not a subsidized phone. The phone was purchased at full retail price and got you reduced SERVICE pricing.

It’s clear that the WA AG just doesn’t understand how this “new” pricing plan works, and T-Mobile did the wise thing and just signed whatever the AG put in front of them to make the issue go away. Otherwise, the AG would have been totally embarrassed.

I’m embarrassed; and I wasn’t even involved!

T-Mobile later released a response –

“As America’s Un-carrier, our goal is to increase transparency with our customers, unleashing them from restrictive long-term service contracts – this kind of simple, straight forward approach is core to the new company we are building,” T-Mobile said in a statement. “While we believe our advertising was truthful and appropriate, we voluntarily agreed to this arrangement with the Washington AG in this spirit.”

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The iPhone Cometh to T-Mobile

I saw an article today that indicated that T-Mobile USA would finally start selling Apple products in 2013. This makes a great deal of sense considering that T-Mobile has been doing a great deal of spectrum refarming, moving support for their HSPA+ network to include the iPhone compatible, 1900mHz band.

A short while ago, I wrote an article for BYTE indicating that despite the spectrum refarming, T-Mo USA would never, ever, EVER carry the iPhone. The big reason wasn’t frequency compatibility like everyone thought, especially with the spectrum refarming. The problem for tiny T-Mo was the huge device subsidy fees, as well as the device quotas that Apple would require of them. Sprint paid well over $1.0B USD to carry the iDevice.

In order to eliminate the need for a subsidy, T-Mo will carry the device, but charge the customer full price for it. Meaning that the T-Mo branded iPhone will likely cost between $650 to $850, depending on the amount of onboard storage. The voice and data plans will cost the customer a lot less as a result; and will be classified under T-Mo’s Value program.

The iPhone isn’t the only device that will go full price on T-Mo. All of their devices will go that way in 2013. Many T-Mo customers may choke on that, but in order to soften the blow, T-Mo will setup installment payments over 20 months if users can’t handle the full down stroke at contract start. While this may look like a device subsidy, it isn’t, and will still save users money over the 20 month installment period, according to T-Mobile USA.

The only thing really up in the air is when T-Mo will actually offer the device. T-Mo’s spectrum refarming should be completed by May 2013; and they may roll the device out nationally then. Apple tests the iPhone on every carrier LTE network before they allow the carrier to enable LTE support. T-Mobile won’t launch their LTE network until the second half of 2013; and as such, I’m guessing that Apple and T-Mobile USA will likely support the iPhone 5S (or 7th generation iPhone), making their inaugural announcement on stage, with Apple in September or October of 2013.

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