Comments on: T-Mobile battles the subsidy beast (by raising prices)

By: Darthritis

Darthritis — Thu, 29 Mar 2012 16:06:55 +0000

I was strongly looking at T-Mo for a while. I had been on Virgin for 6 months to see how a non-contract plan worked. For me, it was the selection of officially supported phones that had me go to another provider. That and the AT&T merger weighed heavily on my mind.

I hate throwing perfectly functional things out, and do want to see less phones in landfills, but I think it is best to offer incentives to bring-your-own phone users than raise prices on subsidized users. OTOH, cheaper plans haven’t worked to T-Mo’s satisfaction yet.

By: keninca

keninca — Thu, 29 Mar 2012 14:37:45 +0000

Kevin, T-Mo is the only company that offers a plan that doesn’t make subscribers pay for the subsidy whether they have a phone or not, and they have been steadily reducing the savings over the last year or so, as they phase out various plans (I am grand-fathered on an old plan,EvenMorePlus, that is ~$25/mo less expensive than a plan with a subsidy, but they don’t offer it any more).

VZ, ATT, and Sprint don’t force you to buy a phone with their service, but they charge the same monthly fee whether you get a $300 or $400 subsidy or not. That is constructively bundling. They are masking the true cost of the phone, and encouraging people to buy a new one every two years.

I am a T-Mo customer and a shareholder (in their parent company), mainly because they are better than the others, but they could do more, and that was my main point. Carriers (at least VZ and ATT) don’t want to change their mentality, because bundling favors incumbents, and they are the incumbents.

By: PrepaidWireless Guy

PrepaidWireless Guy — Wed, 28 Mar 2012 20:05:16 +0000

The real issue is that even knowing this, customers in North America will continue to want subsidies. People simply have no patience or sense of earning something before purchasing it. We want everything now, when we want it, and have little ability to save diligently. Even knowing they’ll pay a lot more in the long run, people can emotionally accept paying $20 extra per month, rather than save up for the upfront $300, $400, or whatever the full price of a given handset happens to be. It’s pathetic really. The fact is that if people paid more for their handsets, they’d be more loyal in the long run b/c the cost of moving carriers will be more painful. However, carriers look only at short terms gross add gains, and customers look only at what they can get today for as little money down as possible, rather than consider the total cost of ownership. Even prepaid wireless handsets have some subsidy these days for smartphones.

http://www.prepaid-wireless-guide.com

By: Derek Kerton

Derek Kerton — Wed, 28 Mar 2012 19:52:08 +0000

Valid point from Darthritis, but what he asks has been done. Years ago T-Mo reduced prices on “Bring Your Own Phone”.

I think the notion of raising prices on subsidy plans shows an intent to push customers towards bringing their own, or making their phones last a little longer.

This could backfire when T-Mo wants to motivate people to upgrade hardware, for ex. wishing them to migrate to LTE. However, those kinds of motivations can be done on a very targeted basis. Individual customer could be targeted to get off inefficient phones, or a deep discount could be offered on an LTE phone in order to motivate an upgrade in times when it behooves T-Mo.

By: John

John — Wed, 28 Mar 2012 18:07:04 +0000

I think this is a great idea, only charge the customers who want subsides, other users like me who half the time upgrade my handset from ebay can save money which they rightly deserve since they aren’t taking subsides unfortunately I can’t see my provider Verizon considering this option anytime soon, t-mobile doesn’t have good enough coverage for me.

By: Kevin Fitchard

Kevin Fitchard — Wed, 28 Mar 2012 16:22:24 +0000

Hi Kenica,

I don’t think that’s fair, at least in the case of T-Mo. You can buy a prepaid phone or SIM from T-Mobile or sign up for buy your own device and sign up for a cheaper plan. How is that illegal bundling? People sign up for subsidy contracts because they’re some how convinced they’re a deal. Both carriers and consumers have to change their mentality if subsidies are going to disappear. But it seems to me T-Mobile is taking those steps.

By: keninca

keninca — Wed, 28 Mar 2012 16:13:44 +0000

The FCC or DoJ could solve this problem for T-Mo, by forcing the carriers to end their illegal bundling of equipment and service, just like they did in the 1980s with landlines. I wonder if Brodman has actually lobbied anyone in the government about this, or if he just wants sympathy from some consumers.

By: Kevin Fitchard

Kevin Fitchard — Wed, 28 Mar 2012 13:45:19 +0000

Hi Darthritis,

I see your point: Why not lower prices on the unsubsidized plans rather than raise them on the subsidized ones? T-Mobile is definitely chasing profits. That said even its subsidized plans are lot cheaper than the Big 2′s plans.

By: Robert Wilke

Robert Wilke — Wed, 28 Mar 2012 13:34:10 +0000

This is what I’m doing. I had a subsidized phone for 2 cycles. My last one is coming due in June. I could upgrade in April. Instead I jumped on that walmart 30.00 plan with tmo. I bought the gnex outright and the savings over time when I did the math were pretty sobering.

By: Darthritis

Darthritis — Wed, 28 Mar 2012 13:07:15 +0000

Interesting idea, but why raise rates on people who use subsidized phones? Doesn’t that just drive price conscious folks to another network? Wouldn’t lowering the cost of data plans for “bring your own phone” be better at retaining customers while increasing the perceived utility of the phone?

The only reason I see this action making sense is if T-Mobile wants to raise data prices, because that’s where the profit is.