T-Mobile says it’s leaving ‘the carrier club’ with new pricing structure

Mark Lennihan/AP - A sign for a T-Mobile store is displayed, Wednesday, Nov. 9, 2011, in New York. T-Mobile is a subsidiary of Deutsche Telekom.

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.

More tech stories

Facebook 1Q results soar; CFO to step down

Facebook 1Q results soar; CFO to step down

Facebook’s first-quarter earnings and revenue grew sharply, surpassing Wall Street’s expectations thanks to an 82 percent increase in advertising revenue.

Get Aereo out of the Supreme Court

Get Aereo out of the Supreme Court

The justices are ill-suited to evaluate a new innovation. It’s time for Congress to weigh in.

“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.

 
Read what others are saying