
 T-Mobile iPhone goes from myth to reality: $580, but no contract - velodrome
http://arstechnica.com/apple/2013/03/t-mobile-iphone-goes-from-myth-to-reality-580-but-no-contract/
======
MatthewPhillips
I really hope transparent pricing takes off in mobile. When consumers see the
true cost of the device they are buying, manufacturers are going to have to
compete on price. Which is awesome.

I think what T-Mobile is doing here is pretty brillant. Their biggest obstacle
is that consumers don't care if the iPhone really costs $600 when all they see
is the $199. But they've managed to find a way that makes the upfront costs
significantly lower at only a slight bump to their monthly rates. I think this
has a chance of working, but I worry that T-Mobile doesn't have the muscle to
push other carriers into doing something similar.

~~~
jcastro
It's hard to break the mental model of subsidies. As an example:

Last month my wife dropped her old phone and it broke, and I got her a Nexus 4
for $299 and we signed up for simplemobile (which is a Tmobile MVNO) for about
$90 a month for the both of us.

Our previous bill from Tmo was $130 a month, a full $40 more AND on contract.
Since it took a few days to wait for the Nexus she was asking "Why don't we
just go to the store and get the free phones instead? Why spend all this money
on a fancy phone?"

I'm glad tmo is doing this, but I think they will need to market it in such a
way that it is obvious to consumers that they will save money in the long run.

~~~
superuser2
Until MVNOs allow roaming, the idea that they are an acceptable substitute for
real cellular coverage is dangerous and we need to stop spreading it.

There are ENTIRE STATES and some major cities where networks like SimpleMobile
have zero coverage. Green Bay, WI, for example, is big enough for an NFL team,
but if you find yourself there with a SimpleMobile phone, it will be a brick.
Be prepared for the fact that you cannot call roadside assistance on a cross-
country road trip, from a suburb that's too far away from town, or from some
minor population centers. Forget small towns (I have some extended family in
fairly remote areas).

If you stay in San Francisco at all times, I'm sure SimpleMobile is great, but
it would not be a very good idea to do this in the Midwest. Maybe if there was
still a cost savings when you factored in an emergency dumbphone on a strong
network like Verizon.

~~~
tanzam75
Why pay an extra $480 a year for emergency service, when you can get it for
$30 a year?

$30 is what PagePlus will charge you in a year of prepaid service, using the
per-minute pay-as-you-go plan. You get access to the entire Verizon network at
10 cents per minute, _plus_ roaming access at 29 cents per minute.

In fact, this is even better for emergencies than postpaid service. Now you
have access to _both_ the GSM and CDMA 2G networks.

------
pisarzp
US carriers were give too much power. I'm surprising that government doesn't
want to intervene. There are virtually no pre-paid offers, which are immensely
popular elsewhere in the world. They are also the best way for people to
control in flexible way how much they spend on mobiles.

For US vs rest of the world price comparison: I spent 1 week in SF last year,
and was shocked to spend $60 for cheapest SIM card with data (it was T-mobile
AFAIR). In UK (and all other EU countries) you can get plenty of minutes and
unlimited data for under $25

~~~
GFischer
There are plenty of threads with comparisons on Hacker News every time this
comes out, but yes.

Here's an example of prior discussion and prices:

<https://news.ycombinator.com/item?id=4342617>

------
testing12341234
Virgin Mobile[0] (Sprint's pay as you go provider) has the iphone 4S for $450,
with unlimited text/data[1] plans starting at $35/mo.

[0] [http://www.virginmobileusa.com/shop/cell-phones/iphone-
phone...](http://www.virginmobileusa.com/shop/cell-phones/iphone-phones/)

[1] Where unlimited data really means 2.5GB at full speed, and then 256KBps
afterwards.

edit: Uses Sprint not Verizon

~~~
rucker
Virgin actually uses Sprint's network.
<https://en.wikipedia.org/wiki/Virgin_Mobile_USA>

~~~
testing12341234
Thanks for the correction, I've updated the original.

------
mtgx
So what's really different with their new plans? Just that they are trying to
educate people that phones' subsidies are included in the 2 year contract
price?

If they are trying to do that to get people to buy phones at full cost upfront
instead, I guess that's fine, if that's indeed their strategy. But if they are
just going to promote their $99 phones with 2 year "installments" - then
nothing has changed, and their "un-carrier" marketing is invalid.

~~~
Osiris
You can come in with your own phone and not pay anything. That means you could
buy a used phone online or bring an old phone from another carrier. Or, after
the two years is up, your monthly price drops by $20 so you're saving money by
keeping your old phone instead of upgrading.

I think there are a lot of advantages to this.

~~~
tanzam75
If T-Mobile is successful, this will have far-reaching effects on the
industry.

Given the choice between a $20 price drop and a new phone, how many people
will insist on that new phone?

Given a $40 gap between T-Mobile and ($20 price differential + $20 subsidy
differential), what will happen to T-Mobile's churn rates vis-a-vis the
subsidized-plan carriers?

If they can force the other carriers to respond, then this will have benefits
for everyone in the US who has a cellphone.

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alimoeeny
In all honesty, I don't know why people are "so much" hate contracts? You
know, I need the service anyway and in all likely hood I stay on the same
carrier for two years, why "so much" hate?

~~~
imgabe
It's the fact that "subsidized phone + 2 year contract" ends up costing you
more money than "full price phone + no contract". Yes, you are in all
likelihood going to be paying for some phone service or another for the next
two years. Would you rather be paying $130 a month or $50 a month?

------
melvinmt
> The iPhone 4S and iPhone 4 will obviously not work on LTE, but they will
> function on T-Mobile's "4G" HSPA+ network.

I've been using my unlocked European iPhone 4 for 2 years at T-mobile now
because it's the only GSM carrier that has reasonable plans. But while my plan
includes unlimited data (awesome) I have a slow EDGE connection 90% of the
time (not so awesome). There are some spots (Concord, San Jose) where I
magically can get 3G but never in SF or any of the other areas I frequently
am. So, I'm wondering if this statement is accurate and something's going to
change in their coverage.

~~~
vpeters25
T-Mobile has been upgrading their network to provide "4G" in the 1900 Mhz band
which makes their 4G compatible with any 3G capable AT&T smartphone.

Oddly, San Francisco appears to have been upgraded already
([http://blog.t-mobile.com/2012/11/20/t-mobile-enhances-
covera...](http://blog.t-mobile.com/2012/11/20/t-mobile-enhances-coverage-
in-10-new-metro-areas-just-in-time-for-holiday-travel))

I have an android phone just switched to T-mobile here in DFW, I get 3G and
HSPA speeds at work, but EDGE at home.

~~~
jordanthoms
I get good coverage in most parts of SF, I've seen speeds around 15mbit,
usually at least 5-6. But then you hit areas where it just sucks and you get
basically no coverage at all, like my apartment. :(

------
taopao
Good news for Android users too, they no longer have to subsidize the $400
that Apple demanded from carriers.

~~~
thedrbrian
Didn't they get a phone in return ?

~~~
tanzam75
> _Didn't they get a phone in return ?_

They got a $400 Android phone. They could've gotten a $600 iPhone without
paying any more money.

But T-Mobile is not subsidizing the iPhone. If you want an iPhone, then you
have to pay more than people who buy Androids phones.

If T-Mobile succeeds, this will be a serious setback for Apple. The other
carriers will have to respond if they start seeing defections. I'm surprised
that Apple is even allowing this. T-Mobile is the smallest of the four
national US carriers. The additional customers from T-Mobile can't be worth
the risk of losing an advantageous market structure ...

------
rusher81572
But all this will end up being the same thing right? I paid $199 for the
iphone with Verizon. T-mobile will charge $99. I looked at the plans and it is
better to go with verizon because they have a better tethering plan and better
coverage and service. T-mobile's unlimited plan allows 250MB ~ 500MB or
tethering only.

~~~
smackfu
The difference here is that the subsidy is explicit and optional and limited
in time.

~~~
NoPiece
In the plan the article outlines, you pay T-Mobile $20 a month for 24 months
to pay off the phone. On one hand it is better because because you can leave
anytime and the cots are clear, but on the other, it looks a lot like a two
year subsidized plan.

~~~
ryanhuff
As long as they un-bundle the price of the phone from the price of the plans,
consumers win.

~~~
NoPiece
But wouldn't you say they are just un-bundling it into a separate line item on
your bill? You still pay $20 a month for 2 years. I really do appreciate the
transparency, but I'd still make a choice based on overall cost.

------
bajsejohannes
I think this will be my next phone, but I don't understand why I can't just
pay for the phone up front. I like my transactions to be over and done as soon
as possible. If that makes it cheaper as well, that's a nice bonus.

~~~
arrrg
You could also just buy the unlocked phone directly from Apple.

It’s $70 more but it’s unlocked immediately – instead of after you paid it off
– meaning you can switch plans at any time. (Though currently that doesn’t
make all that much sense in the US.)

~~~
bajsejohannes
Wait, what? This iphone is locked for two years? How is that "no contract"?
It's seems you are right [1], and I guess it makes sense, otherwise there
would be no reason _not_ to get your unlocked iphone from t-mobile.

I actually just wanted an iphone with a t-mobile plan but without a contract.
T-mobile's pages are surprisingly hard to navigate, so I could find a way to
_just_ get a plan. Maybe I should look further.

[1] [http://thenextweb.com/apple/2013/03/26/t-mobile-gets-
iphone-...](http://thenextweb.com/apple/2013/03/26/t-mobile-gets-
iphone-5-99-99-up-front-with-no-annual-contract-starting-april-12th/)

~~~
arrrg
I’m not sure, but I think you can pay it off immediately and unlock the phone
that way.

------
zaphoyd
This is getting too complicated. :( Does anyone have a good link for which
iPhone/iPad models work on each technology (HSPA+/LTE) in each tmobile market?

------
bparsons
This is a pricing model where Android devices will start gaining serious
ground. When the average consumer compares a Nexus 4 ($309) to an iPhone5
($600) and starts looking at closely at the specs, the brand loyalty will
quickly start eroding. Competition will be based less on marketing and more on
the devices specs and pricing.

~~~
sivanmz
It would be more realistic to compare the iPhone with the Galaxy, which is
also sold for profit.

The Nexus 4 is sold at a loss or barely break even, following the same model
as Amazon's Kindle line. It's a class of devices sold using a different
business model, regardless of Android.

It remains to be seen whether these can be manufactured at scale--it costs to
commit to large scale production, which can be seen in LG's inability to
deliver Nexus 4 devices at launch. And it is also doubtful that they can
remain competitive over time. Other loss making devices such as game consoles
don't see frequent hardware revisions.

------
henrikschroder
"This is an important day for people who love their iPhone but can’t stand the
pain other carriers put them through to own one,"

Buy an unlocked one, then, and be completely free to do whatever you want?

~~~
smackfu
Completely free to pay off the phone subsidy that you aren't even using. It's
like buying your phone twice.

