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Is the new T-Mobile a real threat or just marketing?

Is the new T-Mobile a real threat or just marketing?
We finally saw the future of T-Mobile today. We had seen bits and pieces and we had known what to expect for the most part, but today we got all of the answers and saw the plans laid out. But, the real question remains whether or not the change to being the "UNcarrier" makes T-Mobile a real threat to the competition or if it's just another marketing plan.

Let's not bury the lead - this feels a lot more like a marketing plan than a revolutionary change that could actually attract enough users to take on the likes of AT&T and big daddy Verizon. The major weakness of T-Mobile hasn't changed at all. If you live in an urban area, you'll likely be fine with T-Mobile, but once you get outside of metropolitan areas, T-Mobile coverage can still be spotty and slow. And, while the LTE network is on the way, it's not here for nearly enough users just yet. No change to being the "UNcarrier" changes that. But, the changes that were made could be pretty solid for the right customer.

The major changes we saw today boil down to three basic items - the iPhone, the end of contracts, and new rate plans. 

The iPhone

There had been rumors about this for quite a while and it's finally here. T-Mobile finally gets the iPhone. Apple's smartphone has been on all of the other three major carriers for a while, and it has even been on a pretty solid number of regional carriers as well, but now T-Mobile can finally offer the iPhone as well. 

Is the new T-Mobile a real threat or just marketing?
If we lived anywhere other than America, the fact that T-Mobile finally got the iPhone would be followed by the question: "Does that even matter?" But, here in the US, the iPhone is still a major player that makes up close to 50% of the smartphone market. Word had it that T-Mobile customers were so desperate to use the iPhone that there were almost 2 million unlocked iPhones on the network as of January, and a lot of those users probably couldn't even get data speeds faster than EDGE. 

Now, there will be an official iPhone 5 on the network capable of full HSPA+ speeds, as well as 4G LTE and even HD Voice. Word has it that the T-Mobile version of the iPhone is nothing more than a tweaked AT&T model, but AT&T users won't be able to just use a software update to bring over their devices. 

What's possibly more important is that T-Mobile will also be selling the iPhone 4 and 4S, although the prices aren't really all that impressive. The iPhone 5 will cost you $580 in total ($99 down + $20 per month for 24 months), the iPhone 4S is $550 ($69 + $20*24), and the iPhone 4 is $500 ($19 + $20*24). The full price for an iPhone 5 isn't all that bad, but the 4 and 4S are way overpriced. Comparatively, a year-and-a-half old phone (4S) is only $30 cheaper, and a two-and-a-half year old phone is only $80 cheaper. 

That sounds like some Apple-mandated pricing, and it certainly isn't a pricing structure that's going to help T-Mobile bring in customers. If someone could go to T-Mobile and pick up an iPhone 4S for $480 and an iPhone 4 for $380, now that would be interesting. 

The End of Contracts

This has been the focus of T-Mobile's marketing for its transition to being the "UNcarrier", and it should be, because it is the best thing that T-Mobile has done, and it is the piece of the puzzle that is by far most likely to bring in new customers. T-Mobile could be going further with the idea, and marketing more that customers can bring their own (GSM unlocked) device, because that's where the real savings will come. 

Is the new T-Mobile a real threat or just marketing?
It makes sense that T-Mobile wants to market more that you aren't locked into a contract, because then T-Mo can later on bring in some sort of trade-in plan, which would allow users to exchange a device that hasn't been fully paid off for a new device. That's the logical conclusion here. There are a lot of users (mostly in the higher levels of geekdom) that want to be able to upgrade more often than every two years, and that's what T-Mobile will allow because there are no contracts. The only other benefit are users on the other extreme who want to keep their phones well beyond 2 years.

No contract also doesn't mean no obligation, because if you do purchase a phone from T-Mobile and go with the Equipment Installation Plan rather than paying full price for the device, you will be on the hook to pay for that device even if you leave T-Mobile. Devices will be locked to T-Mobile, and won't be unlockable (officially, by T-Mobile) until you pay off the device. There may not be a lot of recourse here for T-Mo, but if the carrier can at least collect around $250-350 from you, it will have at least made back what it paid the manufacturers for the device. Remember, if it costs Samsung ~$240 to build the Galaxy S 4, and it costs you $650 to buy that device unlocked, a carrier likely only pays around $350-400 and takes the rest as profit. 

Unfortunately, right now, it doesn't mean too much aside from the fact that you can bring your own phone, and cut that expense from your bottom line, or you can start saving even more money if you're the type of person who likes to keep their phone well past the 2 year mark (assuming you can keep your phone in working order). And, that's the best that can be said, because unlike other carriers that offer no contract service (and even unlike T-Mobile's own Value Plans of old), the new service plans aren't going to save you much money. 

The Plans

The plans are better than we expected after seeing the various leaks over the past week. The new plans are simple, straightforward, and are quite a bit cheaper than most of the competition. 

Is the new T-Mobile a real threat or just marketing?
T-Mobile has been offering the equivalent of the "UNcarrier" plans for years now. They used to be called "Even More Plus" plans, but it always amounted to the same thing. It was a plan that didn't have a contract, and was noticeably cheaper because you either paid full price for your device (or went on an equipment installation plan), or you brought your own device. I've been on this plan with my wife for about three years now, but I'm going to be switching to a new plan tomorrow. 

The big difference between the old value plans and the new plans is this: T-Mobile is giving up on charging for minutes. On the old value plan, if you paid full price for a device, or brought your own, you could get unlimited data, unlimited texts, and 1500 minutes for two people for $119.99. With the new plans, you'll get unlimited everything for the same price. 

Compared to other carriers, T-Mobile is the cheapest, especially if you bring your own device. On T-Mobile an individual plan with unlimited everything is $70. The same on Sprint is $110, and neither AT&T nor Verizon offer unlimited data, but the most you could get would be unlimited voice & text plus 6GB of data on Verizon for $120, and 5GB of data on AT&T for $125. Even if you're paying the extra $20 per month for the equipment installment with T-Mobile, that's still $20 cheaper than the closest competitor.

Jumping to family plans the divide widens if you really do use all of that data. A two-person plan with unlimited everything on T-Mobile will now run you $120 ($160 if you've got two devices on the equipment installment.) The same on Sprint will cost you $210 per month. AT&T and Verizon have data plans that get ridiculous, so we'll go the other way for these comparisons. The cheapest two-person plan available on AT&T and Verizon would be the same $130 per month for unlimited talk & text, but only 1GB of data.

Conclusion

The plans are cheap enough for T-Mobile that it could very well attract new users, but more likely than not, the users that would find the most value in T-Mobile are the tech elite who would want to either bring their own device, or upgrade phones at a faster clip than every 2 years. The trouble there is that the tech elite tend to also want the best performance possible. T-Mobile can go toe-to-toe with any network in urban areas, because HSPA+ can often get speeds comparable or faster than current LTE networks. But, if you're someone who travels around the country, you're bound to hit some areas of rough reception. 

Ultimately, T-Mobile's push to become the "UNcarrier" is really not much more than a marketing ploy, because it's not going to bring in most casual customers, and really, it's not even anything new for T-Mobile. It's just putting the old Even More Plus plans back in the spotlight with a fresh coat of paint and more minutes. 

38 Comments
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posted on 26 Mar 2013, 21:30 21

1. RomeoJDR (Posts: 242; Member since: 09 Dec 2011)


Marketing is what creates real threats

posted on 27 Mar 2013, 15:37 3

30. Nadr1212 (Posts: 741; Member since: 22 Sep 2012)


I say the new tmo is a rebel threat!! There's no stopping it now!!!!!!

posted on 26 Mar 2013, 21:33

2. abcdeee (Posts: 7; Member since: 25 Mar 2013)


second

posted on 26 Mar 2013, 22:19 4

5. TROLL (banned) (Posts: 4851; Member since: 13 Apr 2012)


Yet again Micheal H great article! How long did that take you to do?

posted on 26 Mar 2013, 21:47 8

3. PapaSmurf (Posts: 8922; Member since: 14 May 2012)


You were spot on with the pricing of the iPhones. $550 for a 4S and $500 for an iPhone 4 really is over priced.

Great article Michael.

posted on 27 Mar 2013, 07:28 1

23. Aeires (unregistered)


That is the definition of insanity, buying a two year old phone and only getting $80 off the full price of the new one. I looked it up on the Apple store and the unlocked 4S without contract is $549. It's insane that people would buy it without a contract deal so I don't see too many people buying older model iPhones on T-Mobile.

posted on 28 Mar 2013, 13:18

35. patchiman (Posts: 11; Member since: 27 Dec 2012)


They're offering the phone for $50, then $20 Addons to your bill.

posted on 28 Mar 2013, 22:14

36. Cellphonator12 (Posts: 27; Member since: 19 Nov 2012)


That's exactly what Apple wants, "buy the latest, it's only a bit more".

posted on 26 Mar 2013, 22:08 2

4. Courtimus (Posts: 9; Member since: 03 Jan 2012)


For the average consumer the Verizon plans aren't too bad. $150 for unlimited talk and text and 4gb of shared data. For us geeks that might not be much data but for your average everyday joe or house wife it can be more than enough and you won't have spotty service.

posted on 26 Mar 2013, 22:23

6. TROLL (banned) (Posts: 4851; Member since: 13 Apr 2012)


That's right, I'm paying £60 with unlimited text and call along with higher 10GB of 4G which is here in the UK

Being with Verizon is like classed as prestige, where's Tmobile is like standard network to be with!

posted on 27 Mar 2013, 10:31 1

25. McLTE (Posts: 714; Member since: 18 Oct 2011)


You can't compare prices in the UK with the US. Any carrier here in the US has massively higher operating costs when compared to over seas.. look at the size of the US and then the UK.. nuff said.

While I do believe we're getting taken advantage of with pricing here in the US.. it does need to be more expensive as the carriers like Verizon have to cover a country that's way way bigger than the UK.

posted on 26 Mar 2013, 22:28 1

7. technut (Posts: 52; Member since: 03 Aug 2012)


I'm just waiting to see what the price will be on the Galaxy S4 through T-Mobile. It should be available March 1st for $650 (if you pay in full). Now, T-Mobile has stated that it will unlock phones as soon as they are paid in full... So the way I see it is this - Buy a Galaxy S4 through them for $650 (pay in full), have them unlock it, then have it activated under a Straight Talk (Walmart) plan. You end up with a hell of a deal. An S4 for $650 unlocked, Unlimited everything for $45/month and with The choice of T-Mobile or AT&T service.

posted on 26 Mar 2013, 22:39

8. ckoch125 (Posts: 191; Member since: 29 Oct 2012)


I think it is just marketing. Until they can expand their coverage or at least blanket where they have edge with 3g, no matter how cheap the plans are, it is going to be hard for people to switch. I mean after all what good is saving money if you can't use your device when you need to. I hope this takes off and other carriers move to this direction though.

posted on 26 Mar 2013, 22:43 3

9. KingKurogiii (Posts: 5647; Member since: 23 Oct 2011)


i mayyy consider switching to T-Mobile. o:

posted on 26 Mar 2013, 22:47

10. Daftama (Posts: 575; Member since: 03 Nov 2012)


Such a hypocrite company...how can you bash others on what you used to do.

posted on 26 Mar 2013, 22:49 2

11. Daftama (Posts: 575; Member since: 03 Nov 2012)


One other thing any changes you make on old plans..will increase your contract for 2yr...please explain why do I get locked for 2yrs for make a price plan change while with others I can change anytime with no problem

posted on 26 Mar 2013, 22:49

12. akz1112 (Posts: 16; Member since: 24 Mar 2013)


I'm surprise iPhone 5 is just $580. Even today eBay sell AT&T iPhone 5 for 600-630 easily. And not sure why would tmobile even consider getting iPhone 4 n 4s when sell price is just a tab less than i5. Not sure who in their right mind will buy them.

Btw I agree with the author. This Un-carrier crap is not going to bring tmobile back in the game. Price is still higher if compare with prepaid vendor like straight talk or simple mobile.

posted on 26 Mar 2013, 23:36

15. Hello-dirt (Posts: 102; Member since: 02 May 2010)


True to the straight talk ans simple mobile, BUT Simple will throttle you at 2 gigs and then send you reminders, then threats, and finally terminate your service if they deem your data usage "draining" or "excessive". The fine print will change the value of all these plans. I am unsure if T-mo will throttle, but 2gigs is not enough for one that is forced to stream google music on my N4.

posted on 27 Mar 2013, 07:31

24. Aeires (unregistered)


They have two different unlimited plans, one throttles and one isn't. The one that isn't doesn't allow tethering/hot spots so you have to determine which plan fits your needs. As much as I created hot spots, I went with the unthrottled one myself.

posted on 26 Mar 2013, 22:59 2

13. jcpwn2004 (Posts: 314; Member since: 18 Jan 2012)


they're a threat when they can provide the coverage of at&t & verizon.

posted on 26 Mar 2013, 23:23

14. suneeboy (Posts: 170; Member since: 02 Oct 2012)


Isn't good marketing a real threat? Change the title of the article to "Real threat or fake threat" or "Good marketing or bad marketing"

posted on 26 Mar 2013, 23:46

16. MAXXtreme007 (Posts: 22; Member since: 28 Jun 2012)


Always really love your articles you write Michael. Your articles are always well thought out and well made. Another drop in the bucket. Nice.

posted on 27 Mar 2013, 00:10

18. belovedson (Posts: 832; Member since: 30 Nov 2010)


people will switch over to tmobile, but once they experience the crappyness that is tmobile (outside of urban areas) they will go to att or verizon or prepay.

i wouldn't be surprised if most of the people on this forum are actually using their mobile phones and mommy or daddy or someone other then themselves are paying for it. the same people (kids) rarely leave the urban area and will not know what i am speaking of.

in short yes the marketing should be appealing for moms and dads trying to save money but they will not be happy.

i live in wa, home of tmobile usa. IT SUCKS EVEN HERE

posted on 27 Mar 2013, 00:40 1

19. CreeDiddy (Posts: 350; Member since: 04 Nov 2011)


This is the real situation.....

#1. T-Mobile has fallen well below Verizon and AT&T. They needed a jump start. UNCarrier isn't enough to gain attraction to have many switch over to them.

#2. Limited LTE coverage and availability

#3. Too many question marks on real price of the smartphone. It's a back-loaded contract.

#4. Verizon and AT&T have superior networks, customer service

#5. The biggest advantage out of all of this is APPLE!!!!! Yep!!! Count another 5-6 million subscribers per month. This will grow the Apple pie of market share.

posted on 27 Mar 2013, 01:43

20. Mr.Mr.Upgrade (Posts: 425; Member since: 30 Aug 2011)


I keep telling people if T-Mobile n sprint don't do something this year they are out the game officially

posted on 27 Mar 2013, 02:25 1

21. Cannabis (Posts: 22; Member since: 20 Jan 2013)


Obviously PA, Magenta needs money to spread their footprint to rural areas. Hence, if this new more honest take on marketing works, then they can be more profitable, which would please DT enough to either invest more $$ on the networks footprint in the US or give Magenta enough revenue to do that on it's own.

posted on 27 Mar 2013, 06:52 1

22. Tsoliades (Posts: 216; Member since: 22 Dec 2012)


I'm going with a T-Mo SIM card when the next Nexus phone comes out. Great value, I'll have the best smartphone software on the planet, fast speeds, and there are no contracts.

posted on 27 Mar 2013, 11:55

26. ZeroCide (Posts: 700; Member since: 09 Jan 2013)


People know that ist the same crappy network just different plans.

posted on 27 Mar 2013, 12:01 1

27. Prophecy515 (Posts: 2; Member since: 30 Mar 2012)


One mistake. In the 4th paragraph under "plans," why would you spend 140.00 on unlimited talk text and 5 GB w AT&T when you could pay 125.00 for unlimited talk, text and 6GB of data on mobile share. Good article, but just ironing out some of the details.

posted on 27 Mar 2013, 13:27 1

28. Note2waitingonNote3 (banned) (Posts: 87; Member since: 19 Mar 2013)


Marketing plan it's not. Tmobile is and will be reestablishing the carrier landscape which is currently dull and boring. Filled with misleading greedy uncaring carriers such as Verizon and At@t. We won't even get into the useless plans and overpriced services these guys provide their closed minded customers. Both Verizon and At@t share common traits poor data plans and over charges on monthly bills which are comical for the poor service people get monthly. Handsets on Verizon are filled to the gills with disabling bloatware and poor updates same exist on At@t too. It's tmobile that people will be flocking too.

posted on 27 Mar 2013, 14:56

29. JunitoNH (Posts: 987; Member since: 15 Feb 2012)


Verizon, and AT&T will look at this and just laugh. They know perfectly well, TMobile network is full of holes and gabs, just like a spiderweb. Moreover, people whom rely on good service, and reliability will not stick with this network. However, Verizon being an opportunist their take is as follow, eliminate subsidizes, while maintaining the same price structure. Don't think for a minute, if they increase your down payment, prices are going to go down.

posted on 27 Mar 2013, 15:53

31. deadstroke (Posts: 113; Member since: 22 Jan 2013)


lm so glad that lm wiz t -mobile now!!!!

posted on 27 Mar 2013, 16:15

32. Jyakotu (Posts: 823; Member since: 12 Dec 2008)


T-Mobile USA will have to do A LOT of explaining to new customers. Essentially, there is still some sort of contract here, if you choose the EIP. However, for customers who have already been purchasing unlocked phones, T-Mobile USA does seem to offer a better deal.

posted on 27 Mar 2013, 16:35

33. _PHug_ (Posts: 395; Member since: 11 Oct 2011)


Now? No.
But if they took their $30 plan and added options for more talk time like 500 minutes for $40 and 1000 minutes for $50 THEN they would be a real threat.

As of now they are either
1. Cheaper than ATT & Verizon with less coverage
- or -
2. More expensive than MVNOs with similar coverage but with faster data

posted on 27 Mar 2013, 17:06 1

34. scsa852k (Posts: 303; Member since: 16 Oct 2012)


Unless your job requires you to travel a lot, doesn't the 'best' network mean the network that gives you cheap rates and good coverage in your area?

In that case, T-Mo is the best network for me bar none.

posted on 30 Mar 2013, 00:58

37. Rager722 (Posts: 230; Member since: 30 Jan 2013)


I don't think you should call them "tech elites" because many people are just obsessed with having everything new and to be on top. So that can be a huge group of people.

posted on 02 Apr 2013, 12:25

38. AL4010 (Posts: 1; Member since: 02 Apr 2013)


I work for a bank and even with my hefty discount Sprint charges around 170.00 for three lines 2 non smartphones and 1 smartphone. I just went to T-Mobile yesterday and they told me to get three smartphones with unlimited text, talk, and web its 135-140 for no contract plan, paying full retail price for the phone, and discount i still save 30 - 35 dollars a month so why not switch!? They are the new competition. They split up the payments on the retail price of the phone for 24 months or you can pay in full up to you. LTE around the Chicago OHare area sucks even after the tower upgrades with Sprint. Sprint had to supply us with a "AirWave" system that gives me 5000 square feet of service around my home and still i get more like 100 square feet of coverage. Go outside on a clear day and I have to drive 3 blocks to get any service at all without my call being droped. So you decide and argue all you want on my comment but im moving on.

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