New T-Mobile plan could boost profits by billions

T-Mix will cut back on benefits and discounts that are currently standard.

t-mobile t-mix profit
The company has already reduced the cost of subsidies. | Image by Reuters
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T-Mobile has already rolled out two plans and instituted at least four price hikes this year. But the carrier isn't done yet. While the pricing for the rumored upcoming T-Mix plan is mostly in line with the current Experience 2.0 offerings, customers will be getting less in return.

A trap



By introducing a picks system, T-Mobile will limit the number of perks and handset subsidies customers can receive. Picks are reportedly a pseudo-currency awarded based on the plan tier and number of lines.

With a limited number of picks, most lines on a typical account will likely not qualify for phone deals. Customers will have to choose between benefits that were previously included. Seeking Alpha views the move as a price hike.

Who is going to use the picks on your account?
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Going a step further than Verizon


Verizon doesn't bundle digital extras with its base plans, but it doesn't restrict access to phone deals, either. T-Mobile appears to be removing smartphone deals from half the lines.

The system is also rigid, giving customers a short window every quarter to allocate picks to perks. So if you damage your handset before the quarter is up, you won't be eligible for a new phone unless you happen to have reserved extra perks. 

If you choose a higher-tier plan and get your whole family on T-Mobile just to hoard picks, only to end up not using them, T-Mobile saves even more money.

A three-year commitment


With Experience 2.0, T-Mobile extended the installment period from two years to three years. The same will be true for T-Mix, tying subscribers to T-Mobile for longer. Since the discounts will be spread out over a longer period, the monthly cost of offering subsidies will also go down.

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Fewer discounts spread over three years mean T-Mobile might have reduced its spending on subsidies by a third compared with last year. Some rough number crunching suggests these measures could boost profits by up to $4 billion a year.

Broken promises


When T-Mobile and Sprint were merging, District Judge Victor Marrero said he "couldn't imagine they'd be so bold" as to raise rates after the acquisition was approved. T-Mobile has hiked rates directly and indirectly numerous times since then.

Roughly a year ago, there were hopes of a price war. But far from rolling out competitive pricing, T-Mobile keeps finding new ways to increase prices.

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