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T-Mobile to end device subsidies in 2013

T-Mobile
By Adam Zeis on 6 Dec 2012 04:17 pm EST
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If you're a T-Mobile customer come 2013, you may want to think long and hard before picking up a new device. While speaking at Deutsche Telekom's annual investor conference, T-Mobile CEO John Legere said that in 2013, T-Mobile will eliminate their Classic rate plan (that includes device subsidies) and opt for a new Value plan instead. Typically carriers offer plans will built-in subsidies to offset the cost of a device. With the Value plan, customers "will be able to pay an upfront fee for their devices and then pay the balance of the device in affordable monthly installments". So if you're looking to T-Mobile for a BlackBerry 10 device after launch, this may be something to ponder.

Source: FierceWireless 

Reader comments

T-Mobile to end device subsidies in 2013

69 Comments

What does this mean for Enterprise companies? e.g. I get my hardware from work and expense my bill, will my company no longer get subsidized phones now either? Or is this strictly for consumers?

I was planning on going to tmobile for BB10,,, What if I went to Best Buy or Radio Shack would this still apply???

I see this as a good thing, carriers can start competing on Service Quality and Price instead of using flash phones (that they had nothing to do with) to lure customers in.

You can no longer buy a phone at the subsidized price i.e. $200. It will now cost you the MSRP price i.e. $600, but you can pay for it with monthly installments. They used to do this with the classic plus plan, which I'm on, back in 2009.

Exactly.

NOTHING to worry about. The total cost is about the same. In fact, you don't even have to pay $200 up front anymore! Sign a 2-yr with $50 UNLIMITED EVERYTHING and pay $20 for the phone. After you pay off the phone, your bill drops to $50/mo.

This is what no one is talking about. As it stands now with T-Mobile, you still have to enter a 2 year agreement with the value plans. I need more clarification on that. Contracts should be a thing of the past if I'm paying full price for me equipment.

Thanks everyone - and I'm with bigbmc26 on this one. There should be a trade off of some sorts.

I thought I wouldn't have a contract extension if I bought a T-moble phone at full price WRONG!!! If you pay it of over time they extend your contract. I say BS to that. However their plan is the cheapest by far. I'm paying $45 a month for unlimited talk text and web

Not sure you read this right, they will no longer subsidize but they will finance the phone for you. They likely sign you up longer than it would take to pay off the phone via monthly payments.

Basically you pay a down payment on a phone. Lets say 200. Then you pay 20 a month for 20 months which goes on you bill. After the 20 months, your bill gets 20 dollars taken off a month. In the end its cheaper then doing it the classic way because the plans are cheaper.

Right now with Verizon, ATT and others, once the subsidy ends, ie the carrier recoups the subsidized cost of the phone, they keep charging you the higher rate and get to claim the extra as profit. Of course, most people upgrade after 2 years anyways, but if you choose not to, you end up losing because your rate is never reduced.

This is exactly what I'm doing. It is cheaper than Classic plan. You also have an option to pay down the balance for the phone early too.

TMO_9000_32GB_PB

This is fine by me. Will T-Mo sell unlocked phones or unlock at the end of my paying off the cost of the phone? The ony reason why I put up with locking and firmware modifications is the subsidy.

Just using Android and an example. You can buy a nexus 4 for $300 dollars. I curious how T-Mobile is going to be price competitive. The MSRP always seemed like an artificial number to me.

I seems most people have also missed the part where the article explains that T-Mobile will finance the phones they sell. For example the will sell a phone for $500, the customer will pay $200 on the spot and then a monthly payment plan for the phone until it is payed off. They have been offering this deal for a while now.

I'll also be blunt. I doubt that there are a lot of people so loyal to BlackBerry that they are going to buy a BlackBerry 9900 or 10 for $600 dollars when you can buy a Nexus 4 for $300.

I'm figuring this is a sign the cell phone industry is going to go through some large changes or T-Mobile is going to substantially change there business model. i.e. not sell high end phones.

Why buy a $300 Nexus 4 when you can get a dumb phone, or a cheap Android for like a $150? It's all relative. I have an Android and I've seen Jellybean and now I'LL be blunt - I am not impressed.

I must admit, I agree with EVERYTHING you've said except this comment

"'ll also be blunt. I doubt that there are a lot of people so loyal to BlackBerry that they are going to buy a BlackBerry 9900 or 10 for $600 dollars when you can buy a Nexus 4 for $300."

I think at the end of the day, hard working people(which are the REAL Blackberry users) will pay for what they want. T Mobile is the only one that offers payments. I know Att, Verizon, and Sprint in the L.A. area don't. They(T Mobile) are setting themselves up to be a strong competitor and with this new merger on the horizon, I personally look forward to what TMO has coming.

My five cents

I so wish the Canadian mobile industry was opened up to outside competition, allowing companies like T-Mobile, etc to enter the market.

Unless these companies actually build their own infastructure, they wont be any cheaper as they will have to lease their spectrum from existing licences. The reason that we pay so much is that we have a small population for the same level of infastructure that a country of 300 million has.

Yea right...As time goes by the plans go up again. What about the so-called free phones offered on new contracts? I guess we have to pay for those too...

I'm planning on buying phones out right from now on anyways so I'm hopping there able to lower the service price even more. Looks like it will be more like Metro Mobile than T-Mobile.

No I think the point is or at least my point is, if I'm paying full price for my equipment, why am I signing a contract?

I saw this coming a few years back as wind, koodo and solo came to the Canadian market. (even though they're owned by the big boys save for wind)
The days of heavily subsidized plans is coming to an end and I'm somewhat ok with that. Especially if that means less contract years.

I'd be more interested in reward style price cuts. More years as a customer, larger plans, multiple devices, etc. The longer I stick around, the more I get back. Reward me for being loyal!!!

Yeah, this is a particularly sore point for me. I've been a BlackBerry customer on Bell for 10+ years. I have the same monthly contract pricing as someone who just walked in and bought a new BlackBerry. In some cases, the "introductory" rates for new customers have been lower than my existing plan. What the hell, Bell. The longer you've been a customer, the cheaper your rates should be. Give me some actual incentive to stick with you.

when you negotiate your contract ask them what they can offer. I have been with bell 9 years, and have extra data, minutes, extended free hrs, long distance and free phones so far. just ask, they will offer something.

I don't think that this will be a big deal!

o2 Germany has been doing this for 2-3years now.

Monthly contract fees went down by 10Euros.

And eighter you pay the full price or you can pay a monthly rate over 24months for your new device.

8700 -> 8310 -> 8900 -> 9900 -> 9790

Why is this BS?? I'd prefer this. Then those darn Iphone people (although they aren't on T-Mobile), wouldn't be getting a bigger subsidy. Their phones costs the carrier more, but they get the same rate. Which means they get a bigger subsidy. It is BS.

This way at least everyone will see the cost of their phone, whether up front or over the life on the deal.

Sorry, but how is this any different from the current situation?

Current model: Get new phone for lower cost, or free in some cases. Carrier affords this because your monthly charges are high enough to (a) cover cost of the "free" phone they gave you, and (b) cover cost of the usual network charges you'd incur

New model: Pay full price for device, either on the spot, or monthly until the phone is paid for. Carrier sells you network access (minutes, data, features) for cheaper than people on subsidized plans.

Guess what, the monthly bill you'll pay is the same (assuming you amortize the cost of your phone over the course of a two year span).

- You will end up paying less over two years (at least that's how it worked out when T-Mobile had Even More Plus)
- If you choose to keep your phone beyond two years, you won't keep paying the subsidization price
- If you come to T-Mobile with your own phone / buy one unlocked, you won't pay the subsidization price.

That's what I've been saying for years. The only phone worth buying on contract is iPhone because they subsidy it the most. I always get iPhone which I sell and buy me 2 phones on ebay. He,he.

For those that still dont understand: t-mobile will no longer sell phones that cost ______ on a ____year plan. They will just sell phones for the actual price, not reduced if you are signing a contract. The price is like buying a prepaid/pay as you go phone even for plans and you and dispurse the cost over the months wihin your monthly dues.

Or in other words, instead of paying $200 for the phone and a higher plan rate forever, it will be $200 up front plus a lower plan rate plus a monthly bill for the phone until its paid off.

Short term, you're paying the same as before. Long term (once the phone is paid off) you're paying less.

Basically, it's a loyalty reward system.

I think it will open up a little competition. You will have other places to buy the phone. Best Buy, Amazon, Crackberry. Shop for the best price on the device you want and take it to the provider you want. I like it. It will also help hardware manufacturers as they wont have to cave in with huge volume discounts. Rim will have more pricing power. More profit on hardware

It would be interesting to see if their prepaid plans get cheaper. Because for those who can afford to pay full price for phones, why would they sign a 2 year contract when they can go prepaid?

But then, I doubt that's a big percentage of customers (those who can buy the device outright)

I am a T-Mobile subscriber and I use the Value Plans now. I've been using the Value plan for about 2 years now. I simply buy my own devices and I get a great rate. My phone bill is typically 80 - 100 less than anyone else I know. I would much rather pay a one time price for the phone and get the cheaper rate. When I switched from the Classic Plan to the Value plan. I started saving 60 a month off my bill. Multiply that out over two years and I have saved 1440.00. I then use those savings to buy my new phone.

Buy an unlocked phone then go with who you want. I just switched to Straight Talk. $45/month. Paid $229 for my Android Galaxy S slider

I've never signed up for a 2 year contract and I refuse to pay for a subsidized phone.

Seems to be exactly what goes on now, they're just being more upfront about it. Either way, you're paying for phone - it's just a question or whether they tell you or hide it in the plan...

Well this depends on the price of their new plans without the subsidies which would become lower. I think it's more fair since people that want a cheaper phone will pay off the price while maintaining a relatively lower cost plan. Before, phones cost up to 200 dollars(with a few exceptions) with high priced plans which means no matter what phone you get you can only save a bit of money at the first down payment for the phone but everyone would be paying for more expensive monthly plans.

Rogers currently does this...not exactly like a downpayment but the more expensive the phone (Subsidized price) the less your cancellation fee or early upgrade is.

This is very bad news for Apple if it catches on, and good news for RIM. As someone else already pointed out Apple gets subsidized way more than Android or BB, if any other major carriers offer this the shell game will be gone, and Apple will no longer get preferential treatment.

I'm done with Apple. Today I heard that my iPhone won't have NFC anytime soon, and when Apple does have NFC... I need to buy another NEW iPhone. Give me a break. The maps are horrid, the glass explodes the first time that it drops, the battery life is terrible. Done, Done, Done. And to boot, the OS hasn't changed since the day that it was launched.

Sent from my BlackBerry PlayBook

I've been with t-mobile for close to 13yrs now, and i don't upgrade every 2 yrs but when i was heavily dissatisfied with a samsung android phone a few yrs back i went back to blackberry and wanted the latest which was the bold 9700 at the time. They gave it to me for free, provided i renewed my contract... They even reduced my data plan to 20 bucks a month...it took some complaining on my end and several supervisors later they gave me the deal...now, i don't know what will happen when blackberry 10 is out but i'm not expecting to pay more than 100 for it, otherwise i walk; and they don't want that. ;)

So i have been out of contract for a year. I pay an extra $10 a month. Where did that money go?

If this is true, expect a class action lawsuit. I don't mind paying for the phone, but I do mind not getting the benefit of the money I have T-mob.

I wonder if what price they will be charging for the phone? If they gave their customers the same price or slightly higher than what RIM is charging them per device and you can pay for the phone over months, it would be very good.

I don't understand the people that are so opposed to signing a contract. Are you not planning on having a cell phone in two years? Planning on switching carriers within a year of going with them? So you are admitting you are likely to make a mistake choosing the initial carrier?

>>I don't understand the people that are so opposed to signing a contract.
There is this thing called a market. I pay a company for service, and if they fail to deliver, I stop giving them my business at least, perhaps even pursuing them for what they stole from me. Why would I sign a contract that would require me to pay ~$300 to stop giving them business ? I know, because I want shiny stuff that I couldn't otherwise afford.

As the economies of the world start to stumble, businesses everywhere will be under increasing pressure to survive, and fraud will get even worse. So people would be wise to avoid signing contracts when possible.

Okay people need to understand what it really means to buy a "discounted" phone on the Classic plan. You aren't getting a discount unless they are running a special for a free phone or a $50 phone. When you buy a discounted phone on contract you actually pay more for the phone over the term of the contract than if you just buy it out right.The fact is this is how the companies make their money. Just take some time for yourself and do the math if you don't believe me, but for those who don't want to, here's what I came up with. This is the T-mobile Classic plan vs the Value plan. Both are the Unlimited Nationwide 4G with just the monthly charge excluding taxes and fees. I am using two phones for this example; just because we have no clue what BB10s will cost so I am using the current T-Mo prices for the Galaxy SIII and the BB Bold. I figure BB10s will fall somwhere in between. I should point out that my monthly cost of the phones was dividing the price by 24.

Value Package- $69.99 per month = 1679.76 over 24 months
Classic Plan- $89.99 per month = 2159.76 over 24 months
$480 difference.

S III retail- $549.99 = $22.92 per month + $69.99 p/m = $2229.84 over 24 months
discount- $279.99 = $11.67 per month + $89.99 p/m = $2439.84 over 24 months

BB Bold retail- $549.99 = $22.92 per month + $69.99 p/m = $2229.84 over 24 months
discount- $129.99 = $ 5.42 per month + $89.99 p/m = $2289.84 over 24 months

Bottom line for S III: over 24 months will cost you $210 more with the discounted classic than the full retail with the value. The BB Bold is a little more manageable with it only being $60 more.

I don't quite understand this post

I have a grandfathered plan that I do not want to change.
I have not upgraded phones on my line (from a family plan) ever.
Does this mean I will have to pay full price for the new BB10?
Surely 'CS Retentions' will not want to lose me. Or will they?
It sure does not sound right,

T-Mobile rep will run the numbers for you. I went through this when I got my 9900 and it was better than anyone else's plan no matter how you slice it. choose your carrier based on service or coverage areas but this pricing plan is not a bad one.

If I'm not mistaken, this is what Koodo Mobile does for their customers. Sort of a "tab". You still pay some for the phone and the rest is applied to your tab. 10% of your bill every month goes to pay off your tab. ie. $70 phone bill=$7 of free money applied to your tab to pay off your new phone. If you stay with them long enough you get a really cheap phone, other wise you leave and pay for the remainder of your tab. Rather than cancelling your 3 year contract 3 hours before it is up and still paying hundreds of dollars like at Rogers Wireless.

This has been an ongoing rip-off with T-mo for a few years now, not in the cost of value plan vs classic but in the being forced to sign a 2 year contract and not getting a subsidy. What are they giving me for the time cost of my 2 year commitment?

Example: those that start fresh, 1st time new service and bring your own device are strapped with that 2 year contract . WHY? They haven't given you anything, whats their risk?

Can't you just buy your phone with your credit card and use prepaid/pay as you go sim cards? That's what we do here, and we can jump carriers anytime we want without any fee. It also make the carriers to be very competitive&creative in plan's price.

WINDmobile has this already on the windtab. I got my 9900 that was, only had to pay $199 up front. Two more years, and I get a blackberry 10!