'Uncarrier' T-Mobile Does Away with Subsidies as iPhone Intro Looms
T-Mobile USA is going where no major wireless carrier has gone before. The fourth-largest carrier is nixing smartphone subsidies as it gets closer to putting its hands on the iPhone.
T-Mobile made the announcement at the Consumer Electronics Show i-Mbile n Las Vegas on Tuesday night. The company also put out rapid-fire press releases about LTE network enhancements, a 4G Connect laptop and tablet service, and the unlimited no-annual-contract plan.
We caught up with Avi Greengart of Current Analysis from his Las Vegas hotel room to discuss T-Mobile's announcements. He told us the new T-Mobile contract model aims to convince consumers they should be buying their phones up front -- or financing them -- and buying the service alongside instead.
Can T-Mobile Pull it Off?
"This subsidy-free model is something U.S. carriers have not been willing to do, but T-Mobile has nothing to lose so they are going to try it," Greengart said. "T-Mobile is going to see if they can convince consumers that, if they do the math, they will see clearly that T-Mobile offers an equivalent product at a lower total cost of ownership."
Of course, in terms of equivalent product, Greengart said, T-Mobile needs to get its LTE network up and running for parity with the other major carriers in a hurry. Greengart noted that T-Mobile execs made bold claims about their ability to push out LTE quickly during Tuesday night's press conference.
"Right now, Verizon has their LTE network largely rolled out. AT&T is in the middle of a rollout. Sprint has started a rollout. T-Mobile hasn't started yet but they claim they are going to do it very quickly," Greengart said. "AT&T is ahead of schedule in terms of where they had promised to be at this point so I wouldn't put it past T-Mobile to pull it off."
Bold Marketing Moves
T-Mobile is making its Unlimited Nationwide 4G Data Plan available with no annual contract immediately. That makes T-Mobile the only U.S. carrier to offer an unlimited, nationwide, 4G plan with no data caps or overages.
"As the 'Uncarrier,' we're doing the unthinkable," said John Legere, president and CEO of T-Mobile USA. "We're directly confronting the frustrations of American consumers fed up with the cost, complexity and congested networks of our competitors."
Meanwhile, T-Mobile's 4G Connect aims to make 4G connectivity a standard, integrated and free feature on select notebooks, tablets and Ultrabooks. Through 4G Connect, consumers who purchase these devices can access the Internet through a high-speed connection via T-Mobile's 4G network, without extra equipment, annual contracts or commitments.
Legere said the company's goal is to make sure customers have a "walk-out working" experience and not be constrained to Wi-Fi to have a data connection.