Larger carriers copying T-Mobile's subsidy cuts; carrier's parent reports earnings Wednesday
In the first quarter, T-Mobile's cost of handset subsidies dropped 42% to $310 after the nation's fourth largest carrier made some changes which saw the Samsung Galaxy S III, the most popular smartphone current available, cost $80 more for T-Mobile customers. And while this could be a deadly game T-Mobile is playing, other carriers have slowly come around to its way of thinking. AT&T has recently doubled its upgrade fees to $36. In April, Verizon added a $30 upgrade fee, and Sprint charges $18 for an upgrade plus an additional $10 monthly for smartphones. Meanwhile, without the Apple iPhone in its lineup, and with subsidy cuts, T-Mobile is looking at a 9.5% drop in contract customers over the last two years.
Not everyone is convinced that cutting subsidies is the way to go. With the next iteration of the Apple iPhone expected to be introduced next month, a little competition is all that it would take for Verizon, AT&T and Sprint to start paying more for new phones again. They would leave T-Mobile all by its lonesome without the Apple iPhone, charging customers more for new phones, and losing more contract customers.