In the US, the traditional way to get a mobile phone is through a big provider. They cut you a sweet discount for the phone (and let you know they are doing so) and, in return, charge you extra for the plan for a two year contract.
Some folks have argued that it's a better deal to buy your own phone "full price" and then get a cheaper plan to use on it — but Americans seem to like their discounted phones and the convenience of using them.
Now T-Mobile is dropping those subsidized phones, in exchange for significantly cheaper plans. Will other carriers follow suit?
Reshared post from +Terrence Lui
Will US Consumers Give Up Their Subsidy?
T-mobile announced today that they are going to completely get rid of any phone subsidy in 2013. You read that right. Basically, anyone who signs up with T-Mobile now will have to pay full price for any phone they want (they can always bring their own from another carrier) and in exchange they will get a much lower, unsubsidized, rate plan.
Many of you who follow me regularly know I have written about this often. You can actually save a lot of money by buying your phone upfront and finding one of the prepaid unlimited deals that are out there that range between $30 and $45 a month. This is even more true now that you can get a great phone like the Nexus 4 for only $299. (That is when it's available) But none of the major carriers have been bold enough to break away from the crowd and actually go with it as their full strategy.
I love that T-mobile is trying. I'm not sure it will work; I think US customers have a death grip on their phone subsidies even if it isn't the right thing for them in the long run. But sometimes if you want to succeed in life, you have to take bold risks. It will be interesting to see if T-mobile can get the message across.
What do you think, is there any chance that T-mobile's strategy will succeed or will US customers hold on to their phone subsidy to their dying breath?
http://gigaom.com/mobile/t-mobile-ceo-confirms-the-iphone-and-the-death-of-phone-subsidies/
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T-Mobile CEO confirms the iPhone and the death of phone subsidies
At Deutsche Telekom’s analyst conference, T-Mobile CEO John Legere revealed that T-Mo’s deal with Apple will include the iPhone, but it will also coincide with a radical change in its pricing. It’s el…
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Depends if the plan prices come down enough, but probably. Realistically, if I can get a Nexus 7 for $200, how important is it to have a $600 state-of-the-art Droid DNA when I can get a solid, slightly-used Galaxy Nexus for less than $200?
In fact, I got the Galaxy Nexus, for a similar reason: it's powerful enough to do anything I need and then some, but I can't get a subsidized phone anyway (or I lose my unlimited Verizon plan).
And with devices like the Nexus 4, this is very feasible.
It will certainly complicate things a bit when it comes time to buy a phone. That's not necessarily a bad thing … and I can see Verizon doing bundles of both types (by phone X for Y and pay Z a month, or buy it for A and pay B a month).