T-Mobile Confirms Subsidy-Free iPhone

The CEO of T-Mobile USA, John Legere, has announced that T-Mobile will be selling Apple's iPhone from next year; it will be sold in a different manner to other carriers. All device subsidies will be canceled and new clients will be required to pay the full price of their phones up-front, buy it on installment or use their own unlocked devices.

The unsubsidized value plan will also mean that T-Mobile's customers will pay far less for voice and particular data. It is usually the case that subsidies are included in some way in normal contract rates, but with the Value Plans, T-Mobile subsidies which are saved go back to the customer despite keeping the contract.

By separating the price of the handset and the monthly line rental, the company will also assist their customers with financing their devices in a much more transparent way; this will allow consumers to realize the full, high costs of a modern smartphone.

In the last quarter, 80 percent of T-Mobile's activations, according to the company, were for value plans; this would suggest that this type of model is particularly popular and in high demand. It remains to be seen whether the iPhone will break this pattern. The cost of an unlocked, subsidized iPhone 5 comes in at between $650 to $850, varying between models; as operators provide large subsidies for devices, out-of-pocket costs can be lowered to $200. This is one reason why the iPhone 5 is so popular.

The lower value plan rate also means that customers will be saving money through the duration of the two-year contract, and this is something which T-Mobile may well need to explain to customers. Despite this fact, T-Mobile will still struggle to compete against Apple's iPhone.

However, T-Mobile's Legere stated that the iPhone will be sold uniquely to customers, and hinted that the device could be heavily financed by the company so that it cost only $99. An additional $15 - $20 would be charged in payments over 20 months. The problem with that is the customer may compare this financing plan to a subsidized contract plan.

Legere said: "When this device rolls out I can only tell you it will be a dramatically different experience, and I can only tell you that of all the reports that have been written about what's going to happen when it comes out, they're all wrong."

It is possible that T-Mobile will be getting the iPhone within six to 12 months: the reconfiguration of HSPA+ on the 1900 MHz PCS band will be completed by T-Mobile in the next six months, and this will ensure that the iPhone is compatible with 3G nationwide; or the release of T-Mobile's LTE network in the latter part of next year may appeal to Apple. If the latter point proves to be true, T-Mobile may have to wait until Apple releases a new iPhone.

There are two possible reasons why T-Mobile is going ahead with this gamble: firstly, it wants to demonstrate its innovative capabilities; secondly, the company will not be tied to the subsidies placed on network operators. (CY) Link