Green Room

Video: T-Mobile eliminates 2-year contracts, uses flat-rate unlimited pricing

posted at 1:01 pm on March 26, 2013 by

This is an interesting move by T-Mobile, which not long ago was a takeover target for AT&T. Instead of trying to compete in the traditional paradigms used by the two giants in the market, Verizon and AT&T, T-Mobile will opt for simplicity and straightforward pricing:

This shift is the company’s latest attempt to make itself more competitive in the mobile industry. Earlier this year, the company allowed options that either included a traditional two-year contract or no contract at all. T-Mobile’s web site now shows, for instance, that a customer could select an unlimited talk, text, and web option that includes up to 500MB of high-speed data for a single phone for $50 a month.

The price rises as the data level increases. For example, 2GB will cost you $60 and 4GB will set you back $70. The rate does not include the additional fee you pay for your phone.

This fee is instead of a subsidy. The company will charge you a small amount on top of your phone bill each month, but unlike the higher monthly fees you would normally pay a carrier under a contract. Cooley explains that T-Mobile is charging $20 a month for a premium smart phone, which is taken off the bill after 24 months. The length of time depends on the type of phone, but the fees stop once you pay off the device.

I’m a T-Mobile customer, and at first blush the pricing appears cost-neutral to me. There are months when I approach the current 5GB monthly limit on high-speed data (which is imposed because I have the hotspot service), but most months I wouldn’t exceed the 500MB threshold.  This is probably not aimed so much for current customers as it is to attract new customers by providing an easy-to-understand fee schedule and a less-claustrophobic contractual relationship.

Hopefully, it works. At least we’re seeing some innovation in the direction of customer orientation.

Recently in the Green Room:

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

I’d switch in a heartbeat of they had better 3G coverage. I’m not even asking for 4G, but come on, get with it T-Mobile. My area has only 2G from T-Mobile; Verizon covers all of it with 3G and 4G sporadically throughout the day. I hate them, but I’ll stick with VZ for now.

mythicknight on March 26, 2013 at 1:36 PM

I’ve been a tmobile customer since they were Voicestream. The prices have always been good that’s why we’ve stayed so long. That being said, customer service has tanked in recent years. All incompetent foreigners that refuse to tell you where they are when you request a US based customer rep.

Also, both mine and my husband’s phones have been arbitrarily changing the time on our phones from CST to EST. Even if we set it to manual it switches it back to automatic and changes the time. This is extremely annoying and affects us very negatively. Thankfully, since EST is an hour ahead we are not being made late but we’ve rushed only to find out we are an hour early! Of course, the “helpful” reps don’t have any answers. They claim no one else has this problem, but my friend works at the local tmobile and she said that it is happening to them at their facility and the engineers are perplexed. This has been going on for MONTHS!

I really hate to change but my patience with them is wearing thin.

mrsmwp on March 26, 2013 at 1:42 PM

mythicknight on March 26, 2013 at 1:36 PM

Unfortunately the takeover hubbub set them back almost a year in their build plans and they were already a bit behind but they are working on it.

forest on March 26, 2013 at 1:51 PM

Virgin Mobile was the first compnay to come up with this ‘no contract’ model, obviously T Mobile liked the idea. Virgin Mobile actually went further than that, as they offer unlimited internet with all their voice plans, includomg the 40 USD one. So, ovwrall better deal than T Mobile. Only their coverage (both 3G and 4G) is not that great outside urban areas.

jimver on March 26, 2013 at 1:57 PM

Another nice thing about no-contract is you actually pay the price they say, rather than a phone bill larded up with taxes, fees, etc.

My area has only 2G from T-Mobile

customer service has tanked in recent years.

Yep; you truly get what you pay for. I don’t want to pay through the nose, so it’s worth it to me to get 2G when I’m outside an urban center and crappy customer service on the rare occasions I need it. Considering the alternatives….

calbear on March 26, 2013 at 2:51 PM

Unlimited talk
Unlimited text
3 GB Internet full 3G speed, unlimited throttled after
Unlimited calls abroad to 54 countries
$30/month

Catch: I live in Israel.

Excuses that “oh, but Israel is a small country so there’s less expensive infrastructure needed” are B-effing-S. If the telecom market was actually competitive in the US, you’d see small, regional telecoms everywhere competing on the same geographic size as Israel. Not like most people really need national coverage anyways, and again, with real competition you could pick up a different cheap regional SIM for the times you take a flight to visit your kids.

People who think that America is a free, capitalist country are idiots.

solatic on March 26, 2013 at 3:13 PM

T-Mobile has the best customer service and the worst coverage. Wish I could have stayed with them but when I moved it was Verizon or nothing.

Ronnie on March 26, 2013 at 4:15 PM

We just switched to Virgin Mobile and we’re perfectly happy, $50 gets you 1200 minutes and unlimited text and data on the Sprint network.

Speechlesstx on March 26, 2013 at 5:55 PM

T-Mobile is being forced to do this to compete, given their customer service ratings and their mediocre coverage. It’s the only way they can get out from under juggernauts like AT&T and Verizon.

Excuses that “oh, but Israel is a small country so there’s less expensive infrastructure needed” are B-effing-S. If the telecom market was actually competitive in the US, you’d see small, regional telecoms everywhere competing on the same geographic size as Israel. Not like most people really need national coverage anyways, and again, with real competition you could pick up a different cheap regional SIM for the times you take a flight to visit your kids.

People who think that America is a free, capitalist country are idiots.

solatic on March 26, 2013 at 3:13 PM

Somewhat true, although when a company pours its own resources into upgrading and maintaining infrastructure, you can bet they’re going to the sole proprietors of said infrastructure. If small local telecoms thought they can compete evenly with much less money, we’d already have that system in place. And with a country of this size, hundreds of small telecoms could end of ghettoizing the industry, with some telecoms banding together to provide unfettered access to customers on some, but not on others (especially in overlapping markets), and capitalism would run its course until there were only a few left after the most successful ones (likely based out of huge, subscriber-heavy metropolises) bought up all the smaller ones for their coverage. In the end, size really does matter.

mintycrys on March 27, 2013 at 2:13 PM