T-Mobile’s Radical “UnCarrier” Shift still Eerily Familiar

by Jeff Wiener on March 28, 2013

Earlier this week writers here at TheTelecomblog reported that T-Mobile had taken a radical step and finally abolished the multiyear mobile contract, pioneering a seemingly revolutionary prepaid/subsidy hybrid smartphone solution and branding itself as the “UnCarrier,” the wireless provider who does things differently than everybody else.

The news was followed by the announcement that T-Mobile finally added the iPhone to its product list (the last carrier to do so) and is progressing with its LTE rollout, developments that seem to instantly make the Deustche Telekom subsidiary a competitive mobile player in the cutthroat American wireless market.

But before you think that T-Mobile is offering you the deal of a lifetime, finally offering top end smartphones on a prepaid “pay-as-you-go” option, the devil here is really in the details, meaning that upon closer inspection T-Mobile’s “UnCarrier” no-contract solution looks a lot like the old ball-and-chain contact that we’re used to.

Not to employ too many devil related sayings, but there’s an old adage, “Better the devil you know than the devil you don’t,” meaning of course that while your current option may not be ideal, at least you know what to expect, as opposed to that new alternative which may seem better but comes with a host of unknowns.

That’s where we sit with T-Mobile’s announcement that it has abolished the contract, as while it certainly looks attractive for those who hate being constrained by the multiyear agreement they signed, the fact of the matter is that despite these changes T-Mobile wants to make money off its subscribers in exactly the same ways that other carriers do, just without the same contract jargon.

But before we go any further, here’s a brief synopsis of T-Mobile’s new strategy: Customers initially have the choice to purchase their new smartphone outright (quite expensive) or to pay T-Mobile an additional monthly hardware fee until the phone is paid off. In addition, customers can choose a data allotment ranging from 500MB to 4GB, the monthly fee rising accordingly.

The death of the contract is an excellent marketing scheme, of that there’s no question. But looking a little deeper, it seems that perhaps that’s all it really is, a scheme designed to attract customers looking for high end phones on a plan that purports to offer the same flexibility of a prepaid solution.

The fact of the matter is while there are some savings available—particularly if you bring your own hardware to T-Mobile—with the monthly smartphone fee and the company’s rather stingy data options, consumers will essentially be paying the same monthly fee they would with similar contracted options from Verizon, AT&T, or Sprint. But of course those three companies lock customers into long term contracts, the absence of which is the real benefit of T-Mobile’s new strategy, right?

Well, if you own your smartphone then yes, the ability to leave whenever you want without stringent Early Termination Fees is an asset, but if you are paying your hardware off on a monthly basis prepare to stick with T-Mobile for the same long haul, as leaving early gets you a bill for the balance of your smartphone, a price tag often far greater than the mandated cancellation fees from contract carriers.

Further, if you’re looking for phones for your family, T-Mobile’s plan hits the pocketbook hard, the first phone still offered at $50, with the second at $30 and each subsequent device priced at $10, comparatively steep placed aside the family bundles from other carriers.

That’s not to say that its all bad from T-Mobile, there are some savings to be had, just don’t assume that no contract means no financial obligation, as you can be sure T-Mobile has created this plan not only to set it apart from its competitors, but to make it money as well.

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T-Mobile: The Cost of Being the UnCarrier — TheTelecomBlog.com
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