T-Mobile CMO Says Device Subsidies Need To Go, Not Likely To Happen

Speaking at the GeekWire Summit, T-Mobile CMO Cole Brodman says carrier subsidies are hurting the industry.

“It actually distorts what devices actually cost and it causes OEMs, carriers — everybody to compete on different playing fields, and I think it is really difficult, especially from a consumer perspective, because it causes consumers to devalue completely the hardware they are using…. It is amazing hardware, but it has become kind of throw away. So, it is unfortunate, you’ve got dual-core, multiprocessor devices with amazing HD screens that get thrown away at 18 months.”

Brodman expressed his desire while on stage to be “king for a day” and get rid of subsidies in the industry forever. However, Swype CEO Mike McSherry took the opportunity to remind Brodman he is a “king of the industry” and could kill device subsidies if he wished. Brodman responded by reminding the audience that T-Mobile is just one of four national carriers and if the other three “don’t want to play along,” it’s a tough move for T-Mobile to make on their own.

“It’s hard when the other three don’t want to play along. It becomes difficult because consumers vote with their pocketbooks, and they will almost always pick a low device price oftentimes over a low rate plan price or a bundled rate plan price. We’ve experimented with that model more than anyone in the country.”

As the conversation continued, GeekWire head Todd Bishop asked Brodman if they could continue to compete without the iPhone in their line-up, to which Brodman responded with a now familiar story:

“Yes we can. We have fantastic alternate choices,” said Brodman, citing its lineup of Android, Windows Phone and BlackBerry phones. ”And I think those devices — whether it is through the app experiences, through the network experiences or through the devices themselves — do things that rival the iPhone — and in many cases — do them better than the iPhone. So, I absolutely think we can be successful. I don’t think it is healthy, frankly, for there to be kind of one OS industry dominance. And that’s why I think it is going to behoove us all to watch Windows and hopefully the application ecosystem will follow, and I think that will really help the overall industry balance.”

Check out the full video over at GeekWire.

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  • Lincoln131

    So he is bitching because we get new phones after 18 months, but my Mytouch4g was abandoned after 11?

    • Auser72

      Exactly!!!!!!!!!

  • UlyssesGhost

     Wow, thinking outside of the box for a second, hmmmm, let me see, how else could people afford these phones…..  this is a real puzzler…..  they might just save money and replace their phones when they can afford it…..   no who would actually do that, everyone should have what they want immediately when they want it or it is not fair……..   they could use an installment plan and pay it off in monthly installments……   no that is far too confusing……    Gosh I cannot think of any way that most people could afford these phones without giving them away “free”.

  • Mst2910

    “yea…yea thads what we should do…get rid of substhudies on our phones”, great marketing plan there Brodman.

  • ERIK

    If us carriers wanna change the system and have consumers pay full price do this: Let us pick the phone we want at retail BUT THEN ALSO ALLOW US TO USE IT ON ANY NETWORK WE WANT WITHOUT A CONTRACT!!!! Real consumer choice and then carriers can battle on network quality & rate plans. I could take my phone to att for 3 mos then move to vrz if i werent happy with the same phone. The issue is the carriers want the locked phones and long contracts!

    • Thomas Brezinski

      Great idea if everyone used the same core network technology.  Maybe that will come with LTE, but not likely as the spectrum each carrier is using is all over the place.

      • 21stNow

        Carriers are using different frequencies for LTE, as well.

    • http://profiles.google.com/cbdemoreno Chris Brown

      What he is getting at is the fact that we pay a subsidized price but we pay for it every month with bloated rate costs. By having us pay the full price of a device they could effectively lower the rate of our plans. You can find arguments on the facts and numbers doing a quick Google search but imagine if you paid $500 instead of $200 for your device up front (independent of upgrades) but your montly bill went down from $70 (average, minutes + web) to around $30. Your yearly cost goes down almost $500 which is a yearly savings of $200 just because you paid more up front. What’s more, you can keep that device and keep the low rate next year, meaning you save $500 the next year.

      Its truth, not just rumor, that carriers recoup the money off the subsizied device pricing with their rates. I wont defend that fact here, you can look it up for yourself.

      • Vim

        Overall I agree with your point, nevertheless…

        The rate plan difference is much less than $40/month per line.  For minutes+web it’s only about $10/month or $220 total over the 22 months until you can get your next subsidized phone. Throw in text and the difference increases to $15/month or $330 over that same 22 months. Then consider the fact that on a normal day the subsidy for a high end phone like the Galaxy S2 or the Amaze is about $300.  So the subsidized plans aren’t really that inflated, especially if you get a new high-end phone every 22 months. If you don’t want to pay for text messaging, you can even come out ahead.

        Where the Value plan shines is if you don’t want a high end phone or if you keep your phone longer than 22 months. 

    • Zeromsi

      With T-Mobile, you can choose which phone you’d want to use. you don’t have to buy from t-mobile nor a t-mobile branded phone. i’ve been using the iphone on t-mobile since the original in 2007. i went thru all iphone models except the 4s. do some research before you freak out.

  • Auser72

    He should be fired for incompetence. Never heard a representative of a company come up with a strategy, for their customers to buy less of a product that they are selling.

    • Tbyrne

      I agree. Why are all these people in power so clueless? They live in an imaginary world very different than the average working mans. I agree with the others in here. He needs to step down.

    • Makoute

      They are not really selling phones, HTC, Nokia, Samsung sell phones.

  • Tward291

    if they do go to a all value plan system and get rid of subsidies they would have to change the contract lenght have a 1 year and 2 year or go by months

    • Moth477

      How about no contract. Subsidies are there to lure us to sign contracts. Therefore eliminating subsidies then no contract.

      • 21stNow

         So how do you explain the current Value plans?

        • Spanky

          I would never sign up for a Value plan. I just don’t see the reasoning behind signing up for a two year contract without a subsidy.

        • Alfa95

          Because it’s for the people that want to take advantage of the installment plan. If you buy any phone full price, just put it on the no contract $60 dollar unlimited talk, text 2GB web.

  • Ex TMO EMP

    Here is what the real situation is.  This is an Exec that has a 6-figure salary like all the TMobile Upper management makes.  They are all thinking with “their” income levels and NOT of the Consumer income levels. They all need to stop this “We have the best Android handsets…blah blah blah” that we all hear in every meeting.  Yes… YOU may like the Android, but YOU are forgetting what our customers want!  NOT what YOU want Executive team!  This is one of the many reasons why subscribers are leaving.  DT needs to do some “house cleaning” with this old style mentality.  Put the price plans back to where a 3rd grader could understand what the plan is.  Thank you

    • Tbyrne

      Great post! Thank you.

  • http://profile.yahoo.com/O5CA7RRKIRWKO36TBCVYTLR2R4 jeffd

    he does have a point. poor people living paycheck to paycheck which is alot these days will always go with the subsidy. i also think its true about them getting thrown away in like 18 months. Personally i dont make alot of money but i only buy flagships and off contract and i cherish the crap out of them i never throw them away unless they no longer work

    • Toffer_Lloyd

       Poor people living paycheck to paycheck are exactly the people who SHOULDN’T be choosing the more expensive option (subsidized phone w/ more expensive rate). This is exactly why most of them are poor, becasue they make poor decisions.

      • Tward291

        i would be carefully when treading those grounds

        • Toffer_Lloyd

           Not sure what you’re implying. I’m giving honest advice for people to save money and I think it’s sad that people are so short sighted when they could save hundreds of dollars by going with a value plan.

    • jdubtrey

      The interim approach would be to 1) lower monthly prices to reflect no subsidy and 2) to allow them to pay back the phone price per month until it’s paid off (after around 20 months). From month 21 on, their monthly rate would drop about 10-15 bucks rather than staying flat like it is now.

      I think TMo used to do this with that set of post-paid no contract plans they had.

  • Freak4Dell

    He’s right about not being able to do it by himself. T-Mobile has enough stigmas going against it, and adding what most consumers would perceive to be high device prices would just make things worse.

    Getting rid of subsidies would solve so many issues in this country’s wireless industry. Imagine…service providers could actually compete on – gasp – service, rather than slight variations in hardware that they pretend are exclusive to their network.

  • http://chuckheston.myopenid.com/ ChuckHeston

    “…but it has become kind of throw away”
    Sounds like he’s blaming the consumer.  Here’s a good question for him, how many phones has he had in the last 4 years?  Ask that of ANY Tmobile employee.

    • Employee

      Ive had lots. but theyre not throw away. just resold to someone else.

      • Alfa95

        Mmmmm, you mean just left it in a drawer somewhere right?? ;)

  • antoine harrison

    he does have a great point in what he is saying but in order for tmobile to compete with the big dogs they have gotta get big dog material such as better phones until then its the same ol same ol with them. 

  • BahamasGeek242

    I just think its too late now for a carrier to changed the model and have consumers pay full retail on a new phone.  Tmobile has one high end phone the SGSII   when the other 3 major carriers has 4 to 6 high end phones.  I still cant believe T-mobile was not even considered for the the latest nexus phone,  T-mobile was the ONLY carrier willing to try Android when Google was shopping it and now we cant even get an exclusive hell we cant get the phone at all.   

    Please dont say buy an Unlcoked phone and use it on T-mobile it,   WHY because it should work on T-mobile HSPA+ but it will not only T-mobile 3g   

    • 3560freak

      1st, the HTC Amaze has the exact same spces as the GS2 (except they traded out the SuperAMOLED for a higher resolution S-LCD) and 2nd the Unlocked Galaxy Nexus runs on HSPA+ (21Mbps) which is what most of T-mobile’s 4G devices run on.  Get you facts straight, especially if you are going to use the word geek in your screen name

      • BahamasGeek242

        Well I have seen speed test here in Portland from a T-mobile Rep who has an unlocked Nexus and he never gets above 5Mbps and those and there a countless video speeds test on youtube from New York to L.A. to Chicago and its the same so those speeds are 3g not 4g by t-mobile standards. Show me a video of the new nexus phone getting double digits on a speed test on T-mobile network please do. Yes you are right about the Amaze I forgot T-mobile had the HTC amaze. I really don’t want to argue I just wish T-mobile had a better high-end phone line up 2 phones is not enough

        • Spanky

          Nonsense. I’ve gotten as high as 14.5 Mbps downstream on my GNex in some parts of Manhattan. If only I could get those speeds in my neighborhood…

        • BahamasGeek242

          Show the video even Engadget couldn’t get passed 5Mbs in NYC with the new nexus on Tmobile unlocked

          Sent from my Windows Phone
          ——————————

        • Zeromsi

          You’re on a windows phone. You’re not really into powerhouse devices.

          Anyways, you’d be a fool to expect to get the highest bandwidth from any service other than landline.

        • BahamasGeek242

          I am now because OEMs who make android phones don’t support their phones well and my windows phones runs a lot better than my G2x ever did and my HTC mytouch 4g and it has half the specs both of those did.

        • JBLmobileG1

          I pulled close to 12Mbps down near downtown Las Vegas Nevada on my HTC Amaze. Not too shabby… I wish I could do that everywhere I go. Regardless I still find the data speed on this phone fast. The test for me will be when I go back to visit family and see how it holds up.

  • Angeldevil75

    well he need to see spirnt  updgrades with loyal news and loyal customers  LOL

    • Tbyrne

      C’mon angel! You can do it. One more try.

  • http://twitter.com/AquarianLogic Jeff Perkins

    LMFAOOO not trying to be “hood”. What does being “hood” or your poorly and also subtle racist views of my opinion have to do with anything? Find a life, please. 

  • 3560freak

    I thought that it was just the Sensation that wasn’t getting Sense 4

  • dkupp777

    How about starting with getting some Motorola Droids? That would be a step in the right direction. I’ve been a TMo customer for a while and have been very disappointed. Unfortunately, am paying for the family of 4 plan which would double my phone bill if I migrated over to ATT or Verizon

  • 123

    I don’t buy this guy’s smoke and mirrors. You guys are making a huge assumption that companies will provide low cost service to you if you give up subsidized phones. This is unlikely to happen because large companies are going to over charge you no matter what. They have to. Corporations are in it to make money (and rightfully so I might add).

  • Red6170

    AT&T’s iPhone 4 just got an update and they now have 4g. We still stuck on “g”. Some people say T-mobile is wrecking the ship because they want out of the water. They also think that iPhone will fall out of favor so they are waiting till it is not hot anymore so they can come and say that they never needed Apple. Once my contract is up my family and I are considering switching carriers. We r willing to pay more so we can use the phone we want, even if it is inferior to a hand full of other devices.

    • Jobless Steve

      Whatever dude. The Apple Sheeple have taken over.

    • Tward291

      lol att iphone is not 4g the update just shows the toggle for data if you go on phonearean they talk about this

  • Ken Sze

    in counties like Hong Kong if you sign up for a 2 yr contract pretty much all their phones are free. But if  you just go with the no contract then you will have to pay for the phone full price. The funny thing is you can pretty much find cell phones everywhere at full price but at different prices one store can be different than the store next door. 

  • Concerned

    1) Having a handful of phones that do one or two things better than the iPhone is not the same as having something better than the the iPhone. In the same way that me having eggs, milk, flour and sugar doesn’t mean I have a cookie. Integration, it’s a handy word to have in your vocabulary.
    2) Yes, getting rid of the subsidy cost that carriers pay up-front for their customers would be a boon to the industry. Carriers wouldn’t be silently loaning out hundreds of dollars for every new line. However, for those of you that think they would actually use this to pass the savings on to customers, I cannot fathom where this idea comes from. Look at their value plans, this is just another argument for having your cake, eating it too and getting the customer to foot the bill.

    Either this man is clueless or he genuinely thinks his customers are, and I’m not sure which is worse.

    • 123

      #2 is so very true. It is exactly what I have mentioned below. Corporations are in it to make money…not save you money on your bill. If you are thinking otherwise, then you are sorely mistaken. 

    • Dwoodsz79

       $59.99 unlimited talk text and data on the value plan is a good deal. I think t-mobile did pass along the savings to the customers. Thats the best deal I find on of all the carriers.

      • Concerned

        Oh, I agree it’s cheaper than other options, obviously 59.99 is cheaper than 79.99. My point is that they make the plan roughly ten dollars less per month when compared to the classic plans, and you pay for the phone in full at twenty a month, so they still make 10 more per month as if they were subsidizing the phone. Have cake, eat it, too.

    • 567

      1) Well, one can always make it that having eggs, milk, but no flour will never make a cookie.  Both iPhone and Android phones have their features integrated.  Just that expanding features on the iPhone would require Apple’s approval.

      2) The point is manufacturers make phones that are compatible with all carriers.  That will almost guarantee the saving is passed down to consumers.  In fact, probably more than just these savings would be passed to the consumers.  Right now carriers demand phone makers to make special phones for them so the phones are locked down to only work with their network.  Look at the rest of the world, for example, Samsung Galaxy S II is just Samsung Galaxy S II, there are no variants because there is no need for it.  They are designed to work everywhere for every network.

      • Concerned

        1) And features on HTC/Samsung phones don’t need their approval?! False premise is false. You can try to complain about the iPhone being locked down if you’d like, but the fact is that even with it being locked down the ecosystem is leaps and bounds ahead of the “play store” and the camera/specs/features are all on par with bleeding edge android phones before they are a twinkle in the OEM’s eye. The iPhone is the gold standard for a reason. Android has the potential to be better, but as long as they keep leaving it in the hands of HTC/Sammy, they’re screwed. Don’t get me started on how Android has crippled itself…
        2) Okay, you buy a samsung galaxy s 9x for 499.99 from the OEM, then you turn around and pay your carrier the same as you did when they were subsidizing your phone, let’s call it 70 a month. Where is the savings? 199.99+70/month is still less than 499.99+70/month. Looks to me like you paid 300 than you would have under the current system. Meanwhile the carrier makes 300 more off of you during your (now entirely unjustified) contract. If you really think that rate plans would drop by twenty dollars plus each month if subsidies were to disappear, I have bad news for you, they won’t. Carriers do not see this as a place to save you money, they view it as potential margin, and they salivate over it.

  • http://www.unscripted360.com/ Deacon

    the one thing to take away from this is that we as consumers continue to get screwed by greedy companies .. they could get rid of subsidies if they wanted to but none of them do (well i guess TMO does) … consumers need to vote with their wallets and maybe then the mobile industry and its ridiculous contract commitments etc will change.

    • Vim

      Subsidies give Verizon and AT&T a competitive advantage since they can place larger orders and thus get the phones for a little cheaper.  Spread across a hundred million phones that adds up to a higher profit margin. They’re not going to give up that advantage so that T-Mobile, Sprint and the smaller regional carriers can have an even playing field.

  • http://wyldtek.com/ wyldtek

    I agree totally and I’m voting with my wallet. The last time I bought a subsidized phone, Android and iPhone didn’t exist. So naturally I haven’t had a contract in years either. I go with whoever gives me the service that suits my needs best for the least money.

  • stevejobbed

    What he fails to realize is that those subsidies (and the contracts they require) are what has kept T-Mobile afloat during the last year. T-Mobile lost over 800,000 customer last quarter. How many more would they have lost if not for the fact that many people either didn’t want to or couldn’t afford the contract buyout?
    The people that can afford to buy a phone outright most likely aren’t the type of “value customers” that tmobile caters to. If I buy a 3000.00 computer, I am not going to skimp on DSL internet, I will pay more for for a faster cable connection. If someone is going to pay 5-600.00 for a high end smart phone, they will most likely go to the company that provides the best coverage overall, aka not T-Mobile.

    • Sgit

      Wrong. I buy phones upfront to save more in the long run and stick to T-Mobile. People are just stupid and can’t think sown the line.

  • Bratty

    You are correct. Its ATT fooling its customers. But in fairness, the iPhones speeds are what TMo calls 4G too. Its a big giant foolfest!

  • http://twitter.com/weekilter Joseph Singer

    It’s an idea, but I don’t think it will work.  Consumers have gotten too used to the subsidized sales model even though they really don’t realize that you’re paying a subsidized rate even after you complete the terms of your agreement.  T-Mobile had a great idea to offer the same basic service at $10 less per month if you didn’t get a subsidy on your phone and still made generous offers to pay the cost of a new handset over time with no extra cost.  Unfortunately people don’t look very far ahead and only see that if they get a subsidy for two years the device will only cost them $200 or $300 instead of the up front cost of $500 or $700.  If the business model of mobile providers had developed differently it might be possible that operators didn’t have to offer big subsidies to attract subscribers.

    • Makoute

      They should’ve had the plans for 15 less or more, then we would be talking, it was still a good idea though, I still have my EM+ plan.

      • http://www.facebook.com/people/Dimitri-Gatsiopoulos/100001896384627 Dimitri Gatsiopoulos

         I believe it is $20 less. Or the plan I have on my EM+ plan is compared to the contract plan.

        My Uncle just switched from T-mo to Sprint because my cousin wanted a new phone and he couldn’t understand the concept of it still being cheaper when paying the phone full price, spread over 20 months. Now they are on 4 person family plan. They were only paying $180 on T-mo. Now depending on plan they are paying like $240 or $180 ish with less minutes. They got 2 “free” Nexus S a $200 iPhone 4S and a Free Sanyo. They could have just added about $15 a month to their bill for 2 phones on T-mobile. My one cousin and Uncle were the only ones that wanted/needed new phones. The other 2 lines had a basic and HD7. $210 with unlimited minutes/messages/2gb data each for 20 months or $240 unlimited everything for ever including a 2 yr contract and still paying $200 for a phone. Hmmm. I know what I would have done. 

        I hope Sprint treats them well.

  • Makoute

    It needs better pricing.

  • Squish37

    If I could take my phone to ANY carrier it would be well worth the non subsidized price! When I buy a computer and have AT&T cable I don’t have to buy a new computer to switch to comcast cable! Also, he says due to subsidized phones people think of them as being throw away phones after 18 months. Besides the fact technology is changing so rapidly the phones are often obsolete after 18-24 months they also usually don’t last any longer than that. I have bought several phones at non subsidized price and I always take VERY good care of my handset yet most of them only lasted about 2yrs! I don’t really have a problem with the cost of the phones but they should be made in the USA just like they are in Europe. Almost ANY phone will work with ANY carrier in ANY European country. Now that would make your phone worth more in my opinion!

  • http://twitter.com/IRONMARC23 Marcus Armstrong

    Please excuse my grammar, for my laziness has prevailed LOL

    T-Mobile fails to realize is that people will ALWAYS choose the cheaper or the most desirable phone option up front. Why goto T-Mobile who has severely spotty coverage overall compared to AT&T and Verizon and Pay $599 for the Galaxy S4 or $699 HTC Phoenix (yea i made those up) when the competition has them for $99-$200 on contract. T-Mobile’s people keep saying “oh we are cheaper than verizon and att”, but honestly, You judge a network on its coverage, not how cheap it is and tmobile is terrible with that. yes you pay 59.99 for service but whats the point of having a Galaxy S3 4G on T-Mobile but are stuck in 3 bars of GPRS/Edge when the Competition both have 3.5G pushing out 13 Mbit/sec where you use it at. 
    The Moral of this story is,You get what you pay for.. simply undercutting the competition and calling a gang of mid range android phones except the Amaze, Sensation, and Galaxy S2 better than the iPhone is Stupidity. T-Mobile is hemorrhaging 800,000 subscribers a quarter for a reason. They dont get it. 

    P.S, im debating on ditching AT&T (dropped call capital of the world) to get a Verizon iPhone 5 depending on its specs or coming back to T-Mobile to get the most powerful phone when i get out of basic training for the Army. I would be pleased as punch to pay a lil’ extra for Verizon since ive had the service before because of my job now but if the iPhone 5 ends up like the 4s, ill stick with android with T-Mobile. Luckily, the Town where Fort Gordon is, Augusta, GA, is both a Verizon 4G LTE and a T-Mobile HSPA+ 42 Mbit/sec location. 

  • Newrpsmngr

    too many options for the customer is not good….and we the sales force have to talk in circles for 30 minutes explaining the value plan to the customer.  I honestly pull out the classic plan price and give the customer the discounted phone cost instead of resorting to showing the customer a lower rate plan….there are several posts on here mentioning that we are a company in business to make money everyone is right.. i am done showing the customer the “value” of a lower rate plan with subsidized phone.

    we need to go back to having one type of rate plan.  classic plan!! the prices are in tune with the other big 3..$87.99 unlimited talk, text, 2gb web and handset protection and offer a discount on phone.

    also keep the monthly 4g pre paid and eliminate the value plan…make the shopping experience easy enough a 5 yr old can understand it.

    • Vim

      I agree with 90% of what you say.  Americans have been trained to -expect- subsidized phones by the other carriers.  Pushing the Value plan is like trying to row up river.  It would be so much easier to sell the Classic plan, especially if T-Mobile started running promotions on it again just like in the past.  The Value plan however should not be eliminated, just de-emphasized.  It should be quietly kept around for those who want to bring their own phones, regardless of whether those phones are iPhones, the Lumia 900, or someone’s old flip phone from 5 years ago.

  • wsj

    I guess that when you do not sell the phone that customers want (iPhone)  all you can do is push the product you ended up with because of poor management decisions and then blame another company (Apple) because you cannot compete because of your poor management skills.  And yes, I would pay $600 for an unlocked iPhone that works on TM at something other then Edge.  Why because Apple has more apps that I want and would use, and until the marketplace has as the same and as many as Apple, droids are still just second place phones no matter what their tech specs are.

    • http://twitter.com/fightcrazy Vinny

      I disagree, The Android platform allows the owner to flash any Rom they want to do anything they want. I have ICS downloaded on my SGS2 with free tethering. Blows away any Apple phone with their 3.4 inch screen and clocked down processors. Apple’s new I-Phone with it’s small screen and clocked down processor is still having issues with battery, I know my wife has one. Android has tons of Apps and getting more every day, how many freaken apps do you need? I have flashed 3 different ICS roms over the last two weeks, love it, try that on the I-Phone, you can’t. Everything about the Apple platform just sucks IMO, locked down crap made for little kids who need to be told what, when and how to do it. I will keep my Android device. The I-Phone looks nice but just don’t drop it or you will be paying big bucks to get it fixed. Made of glass, just what they had planned.

      • http://twitter.com/MatthewRMcCaleb Matthew McCaleb

        dude.. your a nerd…get some fresh air

  • Blah

    I am a TMobile customer, eager for a new Windows phone.

    I’m trying to figure out why I should stay with TMobile, when I can only get a Nokia 710.

    If I switch to AT&T, for $50 more phone cost, I can get a Nokia 900!!!!
    Which is DRASTICALLY superior to the Nokia 710.

    Tmobile, throw me a bone, give me hope better Nokia phones are coming soon, or I am gone.
    And I’m not the only one…

  • WirelessRefugee

    Fact is, handset subsidies are a big drain on company profits and carriers look with envy at prepaids selling high end smartphones at cost or implementing BYOPEAI* programs, then raking in the profits on high volume sales of $45 to $60 unlimited plans. 

    Is there a TMoNews pool I can enter, on the month and year that it will be published there’s more prepaid customers in the U.S.than there are post-paid 24 month contracts? I say that point will be reached by January 2014.

    * Bring Your Own Phone Even Any iPhone

  • WirelessRefugee

    Ah yes, hope springs eternal for the “iPhone is coming to T-Mobile ” crowd. The iPhone just won’t die in the TMoNews
    comments section. What has it been now, 3+ years of people saying “the
    iPhone is coming to T-Mobile,” “I have it on good authority the
    iPhone will debut in March 2010.” Well let’s talk facts instead of fantasy.
    Sprint had to pay Apple $15 billion over four years to get
    the iPhone. Sprint (and Verizon) absorb a $400 loss per sale of the iPhone due
    to the subsidy structure with Apple, where the carrier pays Apple $600 for
    the phone, but on a two-year deal sells it to the customer for $200.  These numbers change a little depending on times and the particulars of dealings between Apple and the carrier, but for now assume these figures.

    While that sounds like a big hit to a carrier’s financials, remember that carriers get the $400 back, in addition to significant additional
    profits on the 24 month contract. For example, assume the average iPhone purchaser spends
    $2000 for the iPhone and to use it for 24 months, $1600 cash flow and net profits stemming from that are respectable numbers in any industry. To be sure, 10 to 15 percent net income is decent for most businesses.

    The trouble for T-Mobile is that it does not have the kind of cash needed to
    make a deal similar to what Apple required of Sprint. And T-Mobile’s future is on financially
    shaking ground, so much so, I don’t think Apple is going to make a $10 to $15 billion deal with
    it.

    Get the money from Deutsche Telekom, you say. Nope, that won’t work. Recall
    that the parent has said “no money for you child, you have to make it on
    your own.” So any iPhone deal would have to be worked out between T-Mobile
    US and Apple. Do you start seeing why I say a T-Mobile U.S. iPhone is a pipe dream?

    And then there’s the “other problems.”

    I continue to say that the problem Apple does
    not trust T-Mobile. Apple knows T-Mobile does not have the money to be cutting
    billion dollar deals, so even if T-Mobile said “let’s do a deal” Apple probably thinks it might not ever see all its money.

    Apple does not cut deals with companies who exhibit instability. Companies such as T-Mobile, who was on the chopping block for most of 2011, and whose business is in the decline,
    hemorrhaging customers and profits.

     

    Moreover, and I know TMoNewsers don’t want to hear this, but
    my understanding is that T-Mobile is going for becoming known as the value 4G carrier.
    That conflicts with Apple’s philosophy, and public’s perception of what Apple is
    all about. Apple’s heavily marketed raison d’être is not profits, but grooming and maintaining the public’s perception that Apple is dedicated to producing products that improve the user experience, make people feel good, and instill pride in becoming life-long Apple customers.

    • Tbyrne

      Well stated. You can leave now.

    • Vim

      I agree with a lot of what you say, but I disagree that T-Mobile is in worse shape than Sprint.   T-Mobile is profitable while Sprint is taking on debt like the Titanic did water.   While the significant loss of customers in the last quarter was highly embarrassing for T-Mobile, and a sign of bad management, it wasn’t life-threatening.  On the other hand, if Sprint doesn’t right it’s ship relatively soon, it won’t be around in a few years.

      T-Mobile US’s biggest problem is that its parent company has been busy taking its profits and spending them in Europe for the past few years, leaving it with little left to reinvest in itself.  T-Mobile US is like a neglected, malnourished elder daughter who is worked to the bone to help her self-centered parent get ahead in life only to be sold away to a rich, uncaring husband before her looks disappear entirely.  Now that the marriage has fallen through, her father is grudgingly feeding her again.  But will he feed her enough for her to thrive?   or only just enough to keep her from dying of starvation until he can find another suitor?

    • Shoeless

      wow, i have to say that’s one of the most intelligent replies i’ve ever read on this site. not much competition, i know, but still…

      my only question is, didn’t t-mobile get a bunch of cash when the at&t acquisition didn’t go through? or is that money going to DT? 

      i guess the thing i really hate about the whole iphone issue is i wish that t-mobile wold just come out and say, it ain’t happening, and really focus on making a great android experience (and i’m a nothing-but-apple guy!) instead being so wishy-washy, saying ‘we’d like the iphone,’ or ‘we have a million iphone users,’ ‘here, use your iphone on our network, that’s OK with us.’ Just say hey, it’s not here, it won’t be here and if you’re hoping for it here you may as well look elsewhere.  Ya know, don’t pee on my head and tell me it’s raining. Or maybe T-mobile just hopes to hold on to the customers who want iphones by fueling the rumors that it’ll come to them … some day. I am an apple guy, but i can even see how android fans would get annoyed by the endless speculation.

      This whole thing is starting to sound like a cellular phone version of Waiting for Godot. 

  • http://profile.yahoo.com/7EC2E77SBDHFESME65JQZDAY7M Antoine H

    it seems to me that everyone issue with Tmobile is that they dont and prolly wont ever get any better as it relates to there phones. Ive been with Tmobile for 10 years now and I just keep holding on thinking that they are going to get some really good Android phones and in reality they wont. At the end of the day having really nice phones makes a big deal to me. I was hoping that Tmobile would get the Galaxy Note but thats not gonna happen. If any of you guys notice this the biggest problem that customers with Tmobile have is that they dont get good phones. I have been doing the month to month thing with tmobile since December and I wont renew my contract unless they get some good phones this year or else Im rolling out to At&t or the big V. 

  • GinaDee

    Once again T-Mobile executive management out of touch with the American consumer

    • http://tmonews.com David

      On that note I disagree, subsidies have ruined the industry. They should be done with.

  • ESH

    I agree with the CEO on this one for high end phones like the iphone and top of the line Android phones. I would rather pay for a fantastic wireless service that work with a large number of phones that the customer can pick up a phone they want from an independent phone store
    Phones might even be cheaper

    One has to ask how much did AT&T pay to Apple to carry the Iphone, when the company could money to build out their network?

  • Gouv

    Why would they get rid of them if it’s working fine for them????  It’s a money game and I know for damn sure if T-Mobile wasn’t in the disadvantaged position they are in than this guy would be singing a very different tune.  Yeah subsidies have a tendency to suck, but they fit well with the current business and profit model.  As far as i’m concerned the other 3 shouldn’t have to play along with t-mobile, T-Mobile should have been playing the game right all along and not gotten themselves into such a pickle where they have to be overly experimental with what they do to remain profitable.  Once again, T-Mobile is suffering because of poor management.  According to what tmo management probably thinks, those successful competing companies are clearly wrong and should adapt t-mo’s way of thinking.  Because obviously tmo knows whats best for the entire industry and has done so incredibly well with how they do things….  Every other carrier should just model their entire strategy and business plan after tmo’s.  

    It’s clearly not that tmobile is devalued… nope can’t be…. it must be the hardware and those damn subsidies lol….. These tmo guys crack me up sometimes!!  It’s like they deflect the underlying blame of tmobiles problems on unfair competition in some way, shape, and/or form.    Truth is, had they just been a bit more tactful a few years ago than they would have had more muscle to influence such things they complain about now such as subisides.  They could have had the iPhone, better and more spectrum than the current aws they have, and grown past the 50 million mark.  Instead they promise big, make comments like these to stir the pot, and usually end up doing less than expected.

  • Porky

    If all carriers did away with subsidized phones, then tmo would probably suffer the most. By that time, people would just go to vzn because people are willing to pay a little more for better coverage. There would be little to no incentive for people to stay on tmobile…except for pricing. But this strategy has proven time and time again that it doesn’t work. Tmo’s lower pricing has yet to make a dent in the other big 3.

  • Scoop

    I signed up for the value plan a few months back, switched from verizon since I was out of contract for over a year. I now get 2 android phones, unlimited data, unlimited text, and 1000 minutes for less (including the monthly interest free financing of my phones) than I received 700 minutes and text – no data – from verizon. And I get unlimited wifi calling and data. I haven’t had an issue with coverage. I’m all for unbundling the data from the price of the phone. Let me see what I’m REALLY paying for my phone, and for my service. And once my phones are paid off (interest free) I’ll be paying $35 a month per line for 1000 minutes and unlimted texting and data. I won’t be paying an inflated monthly rate just because I initially subsidized my phone.

  • wytwolfen

    I get the feeling there are a lot of us out here who wouldn’t mind buying phones retail if they got supported after the fact.  I just put ICS Passion Rom on my Vibrant, the one I haven’t been using for awhile and it looks and runs great – no gps – but that never worked anyway.  Still, I’d probably be happy with it if Samsung/T-Mobile updated it in a timely manner.