TMoNews first reported the price increase, and notes that nowhere did T-Mobile make it clear at the time that the $99 down payment was only a temporary or introductory pricing.

The iPhone 5 pricing was part of what made T-Mobile’s big new “no-contract” phones push so attractive. From our coverage in March:

T-Mobile will finance the iPhone 5 for a down payment of $99.99 and payments of $20 each month for 24 months. That works out to $580, which is actually cheaper than the unsubsidized, unlocked device price of $650 Apple charges today.

Part of that plan included “eliminating subsidies” that end up chaining U.S. wireless customers to carriers via expensive two-year plans. We don’t know how much T-Mobile has to pay Apple for each device. It’s possible the pricing change could have been planned all along, or it could be that T-Mobile realized after a month that it can’t afford to keep subsidizing smartphones that much.

T-Mobile clearly isn’t ready to clarify what its motivation was. When asked if this pricing hike was always planned, I received this statement from the carrier: “As America’s Un-carrier, T-Mobile is committed to introducing the hottest new smartphones at unbeatable promotional prices – but we all know promotions are temporary.”

As a result, the cheapest T-Mobile iPhone 5 won’t have a total cost of $579 anymore, but will jump up to $629, including the $20 monthly payments for 24 months. There’s nothing illegal about that. But if T-Mobile did intend that this was temporary pricing when it first advertised these prices, the fine print must have been really small. And that’s disappointing.

The carrier’s posture since it first announced changes to its business model has been concentrated on being different and to standing out from its fellow U.S. carriers. But this pricing change comes off like nothing more than an advertising bait and switch. And there’s nothing different about a U.S. wireless carrier that gives its customers reasons to complain.

This post was updated with a comment from T-Mobile at 2:05 p.m. PT.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A look back at mobile in the third quarter
• Defining the mobile wallet: what it is, why it matters
• Confused about the wireless markets? Here’s a breakdown

Although the branded net customer additions numbered only 3,000, it was the first time that figure was positive since the first quarter of 2009. Customers on the network only tell half of the story though: Measuring monetization of customers through ARPU, or average revenue per user, is just as important.

ARPU fell by 6.3 percent year-over-year to $54.07 for postpaid subscribers as the company says 36 percent of the customer base has switched to either a Value or Simple Choice plan. Once again, however, prepaid customers came to T-Mobile’s rescue: ARPU for this group rose 11.3 percent to $28.25.

T-Mobile sold approximately 500,000 iPhones in just under a month; Sprint, Verizon and AT&T monthly numbers were found by dividing Q1 iPhone sales by three.

In March, T-Mobile introduced the Simple Choice offerings when it decoupled service plans from the price of hardware. As the company gains new customers — or has existing ones switch to newer phones — it will have an even greater number of people on the Simple Choice plans, which range from $50 to $70 per month.

The company highlighted its $1.1 billion capital expenditures for the quarter, investing large sums in network modernization. T-Mobile began to move some services to different frequencies last year on its network in order to pave the way for LTE services. This also allows T-Mobile to carry a standard GSM iPhone, which will likely bring new customers. By the end of 2013, T-Mobile expects to cover up to 200 million people with its new LTE network.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• U.S. Wireless Data Market: Q4 and Year-End 2008
• Takeaways from mobile’s second quarter
• A look back at mobile in Q1

Based on 2012 results, the combined company would have $24.8 billion of revenue and $2.7 billion of free cash flow. As of March of this year it has approximately 43 million subscribers. The deal terms were complicated including a 1 for 2 reverse stock split by MetroPCS, a cash payment of $1.5 billion to its MetroPCS stockholders and the proposed NewCo made up of T-Mo and MetroPCS acquiring all of T-Mobile’s capital stock from Deutsche Telekom in exchange for approximately 74 percent of MetroPCS’ common stock.

While the deal was approved by shareholders and regulators, the combined company still is trying to fight it out in a highly competitive and saturated mobile market. As my colleague Kevin Fitchard wrote when the deal was announced, this is a deal about beefing up T-Mobile’s spectrum so it can keep fighting Verizon and AT&T. Meanwhile Sprint, the nation’s third-largest carrier is in a deal of its own trying to buy Clearwire with cash provided by new partial owner Softbank.

It’s like a soap opera where everyone’s fighting for the airwaves. However, those fights are in the future, and today we just have to watch the stock and ponder what this means for the customer. Luckily, Fitchard already explained how this deal affects customers, so read that while you watch the stock.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Carrier IQ and the continued erosion of operator trust
• Sprint’s tightrope walk: finding a balance for its network modernization plan
• The future of mobile: a segment analysis by GigaOM Pro

The official word from Sprint via email suggests that Samsung can’t deliver the required inventory in time:

“Sprint is excited to launch the new Samsung Galaxy 4.  We had planned to launch this next generation of the award-winning Samsung Galaxy line-up on Saturday, April 27. Unfortunately, due to unexpected inventory challenges from Samsung, we will be slightly delayed with our full product launch.  Sprint is one of Samsung’s largest partners and we are working closely with them to launch in all Sprint channels as soon as possible. We expect to make Galaxy S 4 available at www.sprint.com and Telesales (1-800-SPRINT1) as planned on Saturday with Sprint retail stores and other channels receiving devices as inventory becomes available.”

T-Mobile offered a similar statement, noting a five day delay at this time:

“We know customers are really looking forward to getting their new Samsung Galaxy S 4 soon. However, due to an unexpected delay with inventory deliveries, the Galaxy S 4 will not be available on www.T-Mobile.com as planned on Wednesday, April 24. Instead, online availability is expected to begin on Monday, April 29. We apologize for any inconvenience and are working with Samsung to deliver the device to T-Mobile customers as soon as possible.”

AT&T began taking pre-orders for the Android phone on April 16 and its website currently shows April 30 as the shipping date for Galaxy S 4 orders. I noticed that date did change over the past few days — I saw an April 24 ship date at one point —  but the carrier didn’t issue a formal statement on phone availability. Verizon has yet to announce launch details and is widely expected to do so by May.

The inventory delay of a few days won’t likely hurt the Galaxy S 4, which is competing in the Android space against the HTC One. That phone also experienced delays, which the company really didn’t need. HTC builds a great phone, but it lacks the marketing power and brand awareness that Samsung enjoys. As a result, it has watched its share of sales drop while Samsung has gone on to rival Apple.

Update at 8:56am PT: Per a tweet from Ken Muche, Verizon PR: Verizon Wireless is opening Galaxy S 4 pre-orders on April 25 for $199 with contract and after a $50 mail in rebate, but the phones won’t be in stores until May 30. Thanks to PhoneScoop for spotting the tweet.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Carrier IQ and the continued erosion of operator trust
• Sprint’s tightrope walk: finding a balance for its network modernization plan
• The future of mobile: a segment analysis by GigaOM Pro

T-Mobile customers can begin ordering their Galaxy S 4 for $149.99 down on April 24, followed by 24 interest-free payments of $20. The carrier eliminated phone subsides and contracts last month. Customers can now pair the $50, $60 or $70 Simple Choice monthly service with their Galaxy S 4. The benefit here is that once the Galaxy S 4 handset is paid off — a cost $629.99 — the $20 handset payments disappear from ongoing monthly bills. T-Mobile expects delivery of the Galaxy S 4 in retail stores on May 1.

Sprint is still subsidizing smartphones and is charging $249.99 for the Galaxy S 4 in either White Frost or Black Mist with a two-year agreement. Customers on other carriers, however, can save $100 by porting their number to Sprint and opening a new account. Sprint is opening pre-orders on April 18, with phones in Sprint stores on April 27. The carrier advertises unlimited data service for the Galaxy S 4.

The handset is LTE capable on Sprint’s network but if you’re not in a Sprint LTE coverage area, service will drop down to the carrier’s much slower 3G network. That’s a key difference from the Galaxy S 4 on AT&T or T-Mobile: when those handsets are used outside of an LTE zone, they’ll revert to HSPA+ service, which is typically 5 to 10 times faster than 3G.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Carrier IQ and the continued erosion of operator trust
• Sprint’s tightrope walk: finding a balance for its network modernization plan
• The future of mobile: a segment analysis by GigaOM Pro

Friday is also launch day for the T-Mobile iPhone. It is the last of the major U.S. wireless providers to get the iPhone, and as a result is looking for ways to boost its appeal to potential customers beyond its unusual new payment plan structure.

T-Mobile’s new no-contract payment plans, introduced last month, mean customers can walk out of a store with a new iPhone 5 for $99, with $20 monthly payments for the next  two years. It actually works out to be cheaper than buying an unlocked, full-price iPhone directly from Apple by about $70. The plans are also slightly less pricey than what T-Mobile competitors are offering.

While the pricing does work out to be slightly cheaper, the fact that T-Mobile is getting the iPhone so late in the game — AT&T has had it for almost six years; Verizon for two, and Sprint for about 18 months — means many customers have already settled in with a provider. T-Mobile’s novel pricing plans are intended to appeal to people who may not otherwise have considered an iPhone or a smartphone; but this trade-in deal also could interest people who are at the end of a contract on an older iPhone and could be tempted to find a carrier offering the best deal.

The trade-in offer is available to ”well-qualified customers” (those who can secure financing for the payment plan) through June 16.

This post was corrected at 9:39 a.m. PT to reflect that “well-qualified”customers don’t have to pass a credit check, just secure device financing.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A look back at mobile in the third quarter
• Defining the mobile wallet: what it is, why it matters
• Confused about the wireless markets? Here’s a breakdown

“Continuing our legacy as the first carrier to launch Samsung’s Galaxy series, we are excited to announce AT&T customers will be able to begin pre-ordering the Galaxy S4 beginning April 16 for $249.99 with a two-year commitment. We are proud to offer this iconic device and continue to offer our customers the best smartphone line-up, with a variety of devices for every lifestyle and budget. For more information and to pre-order, please visit http://www.att.com/galaxys4.”

Interestingly, T-Mobile loosely shared details for the Galaxy S 4 on its network earlier this week. T-Mobile CEO John Legere noted that the Galaxy S 4 would arrive around May 1 for the up-front price of $99 and 24 monthly, interest-free payments. Customers can also pay full price for the phone and then just pay $50 to $70 for monthly service through one of the Simple Choice plans.

It’s likely that T-Mobile’s Galaxy S 4 will cost less than what AT&T is charging: Assuming the phone payments are $20 per month — the same as the iPhone 5 — the Galaxy S 4 would cost $579 on T-Mobile. Will consumers see that price difference and take advantage of it? That’s the big question that remains unanswered as T-Mobile transitions completely away from phone contracts with subsidized phone prices.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• U.S. Wireless Data Market: Q4 and Year-End 2008
• Mobile 2012 and beyond
• Takeaways from mobile’s second quarter

To be a part of the show, just call in and leave a voicemail at 262-KCTOFEL. If you do, we’ll play back the question on the show and answer it. Or you can tweet me at @kevinctofel on Twitter. Each week, I’ll answer as many questions as I can while keeping the podcast to a manageable amount of time: 20 to 30 minutes at most.

Show notes:
Hosts: Kevin Fitchard and Kevin C. Tofel

• What are the chances of Verizon getting another Nexus phone?
• Can any Chromebook or Chromebox run the crouton scripts for Linux?
• Why would anyone wait for the phone to ‘arrive’ at T-mobile when there’s already an unlocked GSM model?
• What’s the best keyboard for Android?

(download this episode)

Subscribe to RSS

iTunes

Stitcher Radio

SELECT PREVIOUS EPISODES:

Podcast: Facebook’s feedin’; Lean In’s meanin’; and everyone’s Hadoop-in

IoT: When devices can talk, will they conspire against you?

Call-in show: Why the “I’m leaving iPhone” trend?

Internet of things Podcast – Almond+’s nutty idea: Making sensor connectivity a snap

Yahoo’s WFH Boo-Boo

PlayStation Snore?

Podcast: Why the internet of things is cool and how Mobiplug is helping make it happen

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A look back at mobile in the third quarter
• U.S. Wireless Data Market: Q4 and Year-End 2008
• Takeaways from mobile’s second quarter

Here are the stories that emerged from the event:

• T-Mobile launches LTE with a bang, the iPhone 5 and no contracts
• It’s finally here: T-Mobile iPhone 5 goes on sale April 12
• T-Mobile is ending subsidies and contracts, but it’s still locking phones
• T-Mobile’s new LTE network is fast, but it’s going to get a lot faster
• Samsung Galaxy S 4 hits T-Mobile around May 1 for $99 plus monthly payments
• Why Apple doesn’t need a cheap iPhone if T-Mobile does it for them

T-Mobile image courtesy of Flickr user swruler9284

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A look back at mobile in the third quarter
• Mobile 2012 and beyond
• Takeaways from mobile’s second quarter

The idea that Apple needs to produce a phone that attracts buyers that can’t or won’t lay down $200 up front for a smartphone in addition to a monthly carrier contract has been touted as a way for Apple to regain its momentum in smartphones. The thinking is that Apple has nearly saturated the upper end of the market in established markets, causing its yearly iPhone sales growth to slow somewhat. The real growth, some say, will come when Apple convinces people who’d otherwise opt for the cheapest phone that comes with their plan to buy an iPhone instead.

T-Mobile’s headline-grabbing $99 unlocked iPhone 5 may be one way of getting there. When you do the math – the $99 upfront payment T-Mobile requires plus 24 months of monthly payments at $20 – the total adds up to $580. That’s less than the $650 Apple charges for an iPhone that’s not locked to a specific carrier. And in addition to those savings, T-Mobile is also offering cheaper monthly plans, as my colleague Kevin Fitchard has detailed.

For some people these prices will put the iPhone in their grasp. But it’s still not exactly cheap: what T-Mobile is offering is still probably a couple hundred dollars more than what analysts have suggested would count as a true “low-cost” iPhone.

It is actually possible to pay even less for an iPhone from a major U.S. carrier: the nearly 3-year-old iPhone 4 is free on contract in the U.S. and the iPhone 4S is $99 on contract. But T-Mobile is actually making the latest-model iPhone cheaper.

T-Mobile’s plan may stand out from the likes of Verizon, Sprint and AT&T, but if you look outside of the U.S., what it’s doing is not all that novel: it’s just a payment plan. It shifts the cost of the device over two years in place of a higher upfront cost or a subsidized, locked device. If you look at what Apple does in some developing markets like China and India, it looks very similar. Apple has used no-interest or low-interest payment plans as a way of helping give customers, who might not otherwise be able to swing an expensive smartphone, a way in.

At surface level, this plan is about T-Mobile finding a way to attract new customers. But there’s also potentially interesting benefits for Apple too. It doesn’t just get yet another iPhone carrier partner, it might also be getting a new look from U.S. customers from that coveted “lower end of the market” that formerly wouldn’t have considered an iPhone because of the pricier subsidized, locked carrier models.

Apple executives have been careful to say that “cheap” smartphones will never be “the future of Apple’s business.” But maybe, if T-Mobile’s experiment works, more creative pricing plans will be.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Confused about the wireless markets? Here’s a breakdown
• The future of mobile: a segment analysis by GigaOM Pro
• Report: How Mobile Cloud Computing Will Change Tech