T-Mobile announced that it is breaking with the wireless industry contract standard and moving to a system that charges customers on a month-to-month basis with the opportunity to upgrade their phones any time they like.
T-Mobile played up the idea that it’s moving away from an industry that is “broken,” saying that consumers shouldn’t have to be tied to wireless carrier for a standard two-year contract. It argues that its plans give users more freedom than its competitors.
“We’re canceling our membership in the carrier club,” said company chief executive John Legere at a press conference Tuesday. He said that any consumer who comes to T-Mobile now will have “signed your last contract.”
Under the company’s plan, customers pay for their smartphones separately from their voice, text and data usage. Consumers who choose to leave T-Mobile before their phones are paid off will still be responsible for paying for the device, the company said. Phones will be locked to T-Mobile initially, though the carrier will unlock the devices when the phone is traded in or paid off.
The company will ask consumers to pay a certain amount down on the device, and then a regular monthly fee to pay for the majority of the rest of the price.
For example, the iPhone is coming to T-Mobile for the first time on April 12 for $99 down, and $20 per month for 24 months. That brings the price of the phone to $579 — a relatively high price tag, but still less than buying an unsubsidized $649 iPhone from Apple.
The company said that this system reflects a more honest breakdown of wireless fees. It argues that even with plans that have consumers bear the cost of a smartphone, people will still save hundreds of dollars compared to traditional smartphone plans,
T-Mobile also announced that it will carry the Samsung Galaxy S4, HTC One and — starting Tuesday — the BlackBerry Z10, which will round out the company’s 4G device portfolio. The carrier had previously announced that it would enable 4G data for the Samsung Galaxy Note 2 as well.
The company is currently the nation’s fourth-largest carrier trailing far behind Verizon, AT&T and Sprint. Legere said today the T-Mobile has 33 million subscribers; its nearest rival, Sprint has 48.1 million. T-Mobile has long appealed to consumers looking for cheaper smartphone options, and has had success in the past with its pre-paid smartphone plans.
Under the new plans, Legere said, there will be no separate pre- and post-paid plans — customers can either pay up front or at the end of the month, depending on their credit rating.
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