April 1, 2013

T-Mobile's New Strategy: Pros and Cons

T-Mobile USA

T-Mobile USA has revamped its pricing plans, the latest move in an industry that's still experimenting feverishly with various ways of luring customers and getting current ones to pay as much as possible. Here's how T-Mobile's gambit compares.

The most significant change is that T-Mobile is breaking the cost of the phone away from the monthly service fee. Instead, the company will sell the phone on an installment. It's making a big deal out of the fact that it will no longer have two-year service contracts, but it's replacing them with two-year financing contracts. To buy an iPhone 5 from T-Mobile, you'll be putting $100 down and then paying $20 per month for two years to pay off the phone. That's on top of service fees that start at $50 per month for unlimited talk, text and 500 megabytes of data. An additional $10 per month gives you another 2 gigabytes of data. Add $20 instead, and you get unlimited data. If you leave T-Mobile within the two-year period, you'll still be charged $20 a month until the two-year contract runs out.


T-Mobile's plans are generally cheaper than the competition. If you've paid off your phone, your monthly bill declines. You can pay off the phone early if you want, with no penalty. You can also buy "unlocked" phones, or bring them over from AT&T, and get a good deal on monthly service. T-Mobile's "4G" service is relatively fast — at least, faster than Sprint, in places where Sprint doesn't have LTE. T-Mobile also offers unlimited data service, for peace of mind.


T-Mobile's data network coverage is poor in rural areas. It's only now rolling out an "LTE" network, and it doesn't have access to the low frequencies where Verizon Wireless and AT&T run their wall-penetrating LTE networks. There's no option to share a data plan among many devices, but T-Mobile makes it relatively inexpensive to add a line to the plan: $10, which comes with 500 megabytes of data usage.

Bottom Line

The price over two years for a 16-gigabyte iPhone 5 with unlimited calling, unlimited texting and 2.5 gigabytes of data usage per month, excluding taxes, is $2,020.


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