Video: T-Mobile eliminates 2-year contracts, uses flat-rate unlimited pricing
posted at 1:01 pm on March 26, 2013 by Ed Morrissey
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.