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.
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.
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.
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 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.
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.
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.