Friday, December 07, 2012

T-Mobile to eliminate subsidized devices as it launches the iPhone in 2013

T-Mobile USA will finally have the iPhone in 2013, but it will do so in a manner radically different than the rest of the Big Four wireless carriers. The nation's No. 4 wireless carrier will sell the iPhone only unsubsidized, meaning the popular subsidies that lower the cost of a cell phone but lock a customer into a long-term contract won't exist, T-Mobile CEO John Legere said on Thursday.

To be clear, T-Mobile will roll this change out across its line. The carrier already supports this type of system, but in 2013 it will be the only way customers can buy devices and use them on the carrier's network.

T-Mobile currently offers both Classic and Value plans. Classic plans subsidize the device and require a two-year contract, as with other carriers. Value plans let customers pay the full cost of their smartphones or pay it monthly in exchange for lower monthly service rates. Customers can also bring their own devices to the network.

Carriers typically subsidize the cost of devices to lock a customer into a contract. That means that the fully-priced 16GB iPhone 5 ($649) can be sold at $199. This applies to other phones, such as Android, as well.

Legere also said that T-Mobile had not made a volume commitment to Apple anywhere near the deal that Sprint committed to in 2011. In order to get the iPhone and iPad, Sprint inked a four-year, $15.5 billion deal with Apple last year.

T-Mobile earlier said that while it wanted the iPhone (badly), it was unwilling to mortgage its future for it.

Legere was speaking during Deutsche Telekom's annual investor conference. He didn't go into specifics but noted that the 2013 Value plans will be "fair and simple pricing" with "low out of pocket expenses" for customers. He added that that customers may be able to purchase the "most iconic device in the world" for $99 and then pay monthly installments of $15 or $20 over the next 20 months.

Those installments will be on top of the Value plan pricing. It's unclear at this time what the new Value plan pricing will be.

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