In case you haven’t heard yet, T-Mobile plans to stop subsidizing phones in 2013. Yes, you read that right.
Now that you’ve had time to let that sink in, it’s not all bad. Customers aren’t going to be expected to pony up $500 right off the bat for a new smartphone. Instead, T-Mobile is transitioning all new activations to its Value Plans, in which customers typically put some money down for a new smartphone up front (typically around $100-200, although this can vary), and then pay an additional amount each month (usually $15-20) until the remaining balance owed on the full price of the phone is paid off. $15-20 might seem like a lot of money at first, but in the end, the customer pays about the same each month for phone service, since Value Plans in and of themselves are quite a bit cheaper than classic rate plans.
That means there are big savings to be had if you bring your own device, or if you buy a new phone from T-Mobile and keep it for a while after it’s already paid off. In essence, it’s like AT&T or Verizon reducing your monthly bill by $20 after you’ve been on your current contract for 20 or so months.
Or, a T-Mobile customer can also choose to pay the full price of the phone up front, and start enjoying the cheaper Value Plan right away. In any case, this isn’t quite as drastic as it sounds, and it has the potential to really change how people view the phone buying process.
It also comes at the perfect time, because Google just released a really awesome smartphone for just under $300. The LG Nexus 4 is proving to be extremely popular and therefore hard to get. LG has also said that the lack of stock isn’t because the initial production run was low, but because the demand really is that high.
In other words, people are hungry for unlocked, unsubsidized smartphones. And Google and LG have proven it’s possible to make these smartphones, and keep their prices very reasonable – almost 50% what some other comparable smartphones cost. Therefore, T-Mobile’s move to end handset subsidies isn’t foolish; it’s forward-thinking, and coming at just the right time.
But what do you think?