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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  • Taron19119

    Yeah it well never happen and if it do I want the best phone out and low price

    • Rastlin001

      Alot of what people say about the subsidized I do agree with. I am among the majority that if you said that this phone was $600 I would say fu and get a phone off of Ebay. The subsidized phone was the only way I could afford a gs2 do I know that it wool cost me more in the long run, yes I do but it’s easier for me and my family to post the extra 20 in too of my bill then to come up with extra 600 for the phone on the spot especially since I am a father of 4. Why should those whom make less or simply don’t have the finances to get a high end phone in one fail swoop have to be forced to have sub part devices. It is nice to have the option of being able to have a high end device even though it costs more in the long run. Those of us whom mostly live paycheck to paycheck it’s alot eaiser to swallows micro payments and use the money for bills or supporting our family until the economy gets better and we have better jobs so we don’t have,to worry about living hand to mouth. Just sayn’

      • ERIK

        Sounds like ur the custmer tmo tries to attract with their value plans

  • Edward_2k1

    A good point but a hard one to argue/win.

  • http://robert.aitchison.org raitchison

    What they need to do is get rid of the device subsidies but at the same price also eliminate the ridiculous markup on every device.  Sell devices for a reasonable profit and have low rate plans and you will see subscriber growth.

    This is working well for the pre-paid carriers who’ve never offered subsidies.  As a full service carrier TMO could get away with charging a bit more and still easily beat out the other 3 full service carriers.

    • MacRat

      Not only sell them at a reasonable price, but also UNLOCKED!

      • Whiskers

        And with all radio freq…
        So you can use that favorate phone on any carrier.

    • Toffer_Lloyd

      If you don’t want to pay a “ridiculous markup” there are hundreds of retailers out there ho will sell you an off-contract phone. You don’t have to buy your phone from T-Mobile.

  • Corey P

    People will NEVER stop wanting free phones, no matter the actual cost or value of the phone. Even if you have a lower rate plan, FREE is the only thing most people want when buying a new phone

    • Cp60188

      They can go to Walmart and get a $5 prepaid. Europeans pay full price for their unlocked GSM phones, and have complete mobility. T-mo would lose some of the free phone customers, and we all would have an infinitely better network because there would be plenty of money to upgrade it.

    • Snow_Fox

      That is exactly his point. As a former phone salesmen he is completely right. Even a phone that people get for “Free” can cost up to 300$.. 

      People are completely unaware of what their hardware cost and have absolutely no appreciation for it. Literally I have explained to a customer “look, this phone isn’t ‘free’ and you don’t get a replacement if something happens to it, you need to understand that just because your not paying for it upfront doesn’t mean the phone itself is free”

      Sure enough same customer came back a few days later “OH MAN, I broke my phone can I get another free?” No, they weren’t joking.. they really wanted another 300$ phone free.. People don’t listen and they are disappointed when they don’t get their way… They don’t understand the value of what they have…

      • Magentadress

        You mean the value of a phone that costs $150 to manufacturer but sales for $800 with tax?
        Stop screaming at consumers and blame the manufacturer for ripping you off with insane profits.

        • monkeybdb

          again, as i posted earlier. the manufactures are the mark up. carriers buy the phone very close to full cost. Gal S 2 is close to 500. :) is like 75-80 thats pretty close to its 109.00 retail. not a lot of wiggle room.

        • Snow_Fox

          lol…Yeah because consumers aren’t total sheep who create their own problems in the first place.

      • UlyssesGhost

         I fully agree with this.  I was sitting with co-workers at lunch a few days ago, one of whom was complaining that when he broke his “free phone” that they wanted $400 for a replacement device.  I tried to explain to him that his phone was never “free” that they spread the cost of it into his monthly bill by him paying a higher price for the service and it was like trying to explain quantum physics to a 1st grader.  He just couldn’t get past the “it was free” part. 

  • Wolfwood

    Couldn’t agree with him more.  Unfortunately, the “free” phone mentality is deeply ingrained into the average consumer’s psyche.

    • http://twitter.com/roderickhsu Roderick Hsu

      IMO The average consumer needs nothing more than a feature phone.

      • Magentadress

        In my opinion the average consumer doesn’t even need a phone. Especially those middle school and high school brats.

  • whiteiphoneproblems

    This is how I felt when we signed up for the EM+ plan we’re still happily on (and paid full retail for the phones we’re still using)…

  • Taron19119

    If this happen can we get a phone that well get update to the lates os for at less 2 yeahs

    • Brian Roush

      Did you mean to say, “If this happens, can we get a phone that will get updated to the latest OS for at least 2 years”?

      • Darkbotic

        Epic!
        I LoL’d and died…

      • 30014

        Best laugh I’ve had all day.

      • Coreyp

        If you did that to all comments on this site, you would have to quit your day job. (thanks for the laugh)

  • Mr P

    but wait did he pretty much just admit the value plan idea isn’t working? mentioning that people rather have the phone for cheaper than there actual plan bundled? 

  • whiteiphoneproblems

    their no-interest installment plan, which was part of EM+

  • Jaygqitalia

    Ugh I have been stuck with my blackberry waiting to get a new phone and havent yet because I keep hoping the Iphone 5 comes to T-mobile this summer or fall. Is there even a slight chance of this happening or should I just bite the bullet and buy the Amaze 4G I like

    • http://twitter.com/roderickhsu Roderick Hsu

      Didn’t the Amaze 4G already hit EOL status……

      • Jaygqitalia

        220 at the t-mobile website.

      • Sammyesparza91

        Nope, the white one did i believe, the black models sell more 

    • JBLmobileG1

      The Amaze 4g is an Awesome phone. I have the white one and couldn’t be happier. The built quality is top notch for an Android phone and its fast with a great camera. I know there is a newer phone by HTC coming out but because it doesn’t have a removable battery or sd card slot… I’d have to say that the Amaze still has the edge.

  • http://www.trutower.com/ TruTower

    I could not agree more. Americans in particular, though, have to get rid of the mentality that goes along with the cheaper or free device as has already been said. Until that happens (not likely, at least not unless all four carriers play along), subsidies will always be around.

  • Cyclone

    Instead of $550 or more T mobile needs to sell phones for $300, same price they paid to Samsung or HTC. Then they don’t have to subsidize anything.. Also have lower rate plans under contract and higher rates without contract.

    • http://pharaohtechblog.blogspot.com/ Conan Kudo (ニール・ゴンパ)

      Are you crazy? That would put T-Mobile in the hole by about $100 per sale! Marketing and distribution costs are built into the price too! Already T-Mobile barely skids by with $18 per customer per year on rate plans. If there were no subsidies, then T-Mobile could make a profit of $150 per device per customer per two years.

      • UMA_Fan

        So is T-Mobile making that $150 now on value plan customers?

    • Whiskers

      Or better yet , why not have the Cell phone manufactures sell the phones retail themself.

    • monkeybdb

      as an employee i get phones at cost (before tenure) so i can see what they actually cost. youd be surprised how much more they cost than you think. the gal S2 is close to $500

  • Taron19119

    okay well every cell phone carrier needs to have the same phones then

  • davidwal

    This is from the same company that sells the blackberry 9900 the most out of all the carriers in the US.

    • Hey Now

      And has the least expensive plans of most of the carriers in the US.  So your point is?

  • hg

    The mobile device makers are in collusion with carriers and each other to over-inflate the price of mobile phones.

    The HTC Radar costs the same at retail as an iPad2.

    Insanity

    • Whiskers

      That’s what keeps me from buying the latest high-end phones released every month.
      At the prices they demand for that puny 4″ screen , you still don’t get a true web sensation like a tablet.
      You might as well get a phone for what it’s used for (phone call and text) and save your money and get a tablet for the money their asking for on a 4G phone ($600.00+) , and get a real web surfing experience that you can actually enjoy.

  • Snow_Fox

    I actually agree with the CEO. People don’t understand the value of the device they are buying. (Actually a lot of people don’t understand anything about technology or its pricing at all apparently)

    People are totally clueless as to what they are buying.. and if subsidies didn’t exist.. then we could see cheaper prices on phones and data rates..

    Good luck convincing your average joe to pay full price though…

  • http://twitter.com/roderickhsu Roderick Hsu

    A lot of Europe and Asia are forced to buy phones at full price.  There doesn’t seem to be a problem in those places with people not being able to afford it.  I personally think it’s a great idea.  Companies would be forced to innovate because they know people can’t afford it and so in turn will make a more careful choice before buying.  It also benefits consumers in that devices will be as likely to be obsolete in a short 6 months as they are now.

  • Albarrios

    how many people could actually pay full price for one of theses phones???? greed in the industry created this system, now they want to change the rules. See how many phones you sell w/ no subsidies. duh……..

    • http://innovativenurse.com Kevin

      I can see where you’re coming from, but look at how many folks have purchased tablets (retail price), and are projected to purchase this year. 

      It’s just that we’ve come to expect a subsidy, but how many of our tech items are actually subsidized?

    • T-MO-FAN

       The problem is we created a system where people who should be spending money on food and taking care of their kids have to have the latest iPhones.  Its ridiculous.  I have a friend who has 3 iphones, but doesnt work and constantly complains about how broke they are. BUT they have iPhones. Its unnecessary. If they got rid of subsidies then the people who cant afford it should get the phones they can afford and stick with their basic phones with basic texting.  thats all they need.

  • Neednewphone

    It makes sense though…If you have all these manufacturers selling devices at MSRP $500-$600, then through competition, eventually the price would be driven down just like any other electronic device that becomes obsolete quickly…But of course, this would never happen because they make a lot dough through subsidies.

  • Get_at_Me

    T-Mobile has always been a pioneer in the wireless industry….Myfaves, Non-Contract, Non-Subsidy Postpaid accts with interest free device financing etc. The model in this article makes complete sense, but just like the iphone obsession, ppl often refuse to acknowledge logic.  You can get a GS2 with TMO with installment plan and comparable data speeds and coverage (in some areas) for less than ATT and VZW, (upfront cost and monthly cost), but the second you mention paying full price for device over installments to a customer, that can be a deal breaker.  TMO is passing its savings onto the customer with its Value Plans, but your average Joe doesn’t realize that…..I think the main issue with other carriers is that they don’t want to lower the cost of their plans if they were to adopt TMO’s Value Plan model.

    • Alfa95

       Because people are so used to the “FREE PHONES” that they fail to see the complete ripoff over the 2 year period.

  • Albarrios

    funny how people cant see the trees through the forest. 90% of subscribers will never/refuse to pay full price… fact.

  • Mar11974

    If I pay full price it better be unbranded, factory unlocked, with no crapware!

    • 30014

      100% agree

    • Sammyesparza91

      Can’t argue with that, well said for me i wouldn’t mind purchasing a phone at full price if it would be bundled with some kind of protection plan

      • DizzahGee

        Subsidized phones don’t get bundled with a protection plan.  If you have your phone stolen and you paid $200 for your superphone the first time to realize that it’s actually worth $500-$700, that’s what hurts the most.  It would avoid customer shock if they know from square one that the phone’s retail price is actually X.

        • CCollision

          Yeah, if that happened to me I’d probably just buy an unlocked Nexus S off Amazon for ~$300 or something. You can always get better deals than from the carriers themselves.

        • monkeybdb

          PHP insurance. pay 130 for that SMartphone instead of full price on a subsidized plan. or even better on value. who wants to pay phone installments on a phone thats broke or lost. similar reasons why lenders require full coverage on cars with liens 

  • Toffer_Lloyd

    Double Post.

  • Toffer_Lloyd

     Only people who are incapable of basic math think that a “subsidized” phone is more affordable. Compare the price of a retail phone plus 24 months of Value service versus the price of a “subsidized” phone and standard contract rate and you will know what I’m talking about.

    • Whiskers

      No , your missing their point.
      Those people who can’t afford $600.00+ cash up front while raising families are not going to ,
      that’s why most would rather subsidize their new phone.
      In the real world with a bad economy , hard earned cash is hard to come by and i’m not talking about losers with bad credit.

      • Nik

        Thats because most people don’t know how to save money and think in the long term

        • Whiskers

          Long term , shiet by the time you save all the money up for that high end phone that sells for over a half a grand easily, the next revised version already comes out.
          Then what are you going to do , start all over again and repeat the cycle over and over again ? Or what if you have multiple phone lines for your family ?
          Get real !
          You would be spending some serious coin for multiple family lines each year.

        • whiteiphoneproblems

          You “repeat the cycle” after two years (or longer)… just as you would on a contract plan. No one except folks with tons of cash to burn should be looking to upgrade every time a hot new model comes out.

        • UlyssesGhost

           Then you buy the next version when it comes out.  Then you have to also look at what it is that you need vs. what you want?  Do you really need the absolute latest superphone? 

          I have been on EM+ since it began.  I have 4 lines.  When we need a new phone on a line, I save some money and shop around.  My wife needed a new phone and hates android and likes Wp7.  She needs a phone for calls, followed by checking email, txt’ing and then some light web surfing.  I found refurb Dell Venue Pro’s on dell’s website for $149.  A fantastic deal, she has a new phone that does what she wants, I continue to have a lower monthly rate and we are all happy.  Got one for my son as well to replace his dying moto cliq that I had bought for 85 bucks on ebay two years ago.   If you have to have the latest and greatest it might be real expensive for you but if you buy what you need and shop around, you can save some real money.  But each to his/her own, what works for me may not be acceptable for you.

        • Whiskers

          Well that may be fine if your on the EM+ program but on the Value plans you now have to sign a 2 year contract roping you in while paying full price for the phones.
          If your under a Value contract and need to replace that smartphone and decide you don’t NEED a smartphone , your still paying for the whole Value package bundle for the full two years regardless if you buy a Dumb phone that you don’t WANT just to make a call or text.

        • UlyssesGhost

          But can’t you bring your own device when you sign up for value? You can also buy it outright and not make installments, right? Ebay and amazon are great places to get phones cheap as well. I am not saying this is right for you, but there are options out there.

        • Spanky

          Sure, you can bring your own device. But if you do that, why should you have to sign a two year contract? That’s my biggest problem with the Value plans.

      • monkeybdb

        did you forget about EIP? ive honestly sold like 10 devices full price upfront on value plans. the vast majority of people use the installments. which in itself is kinda like subsidies, but customizable. which is the beauty of value plans.

      • Toffer_Lloyd

         Anybody who can’t afford $600 up front for a phone shouldn’t be paying $230 for a phone and signing a two year contract for $1440+. Particularly if you’re worried about the bad economy and cash is hard to come by. Yeesh, no wonder the housing industry went nuts.

        • Whiskers

           
           That would be $1800.00 for with three lines and that’s BS to have to come up with that kind of money for a Cell phone.
          That’s why subsidizing phones is better.How many people whip out $1800.00 every 12 months just for cell phones not including the service you have to pay for ….

    • Vim

      People should do their own math and not assume that the results will be the same for everyone else as well. It’s a shell game.  You’re going to pay for that phone one way or another.  Depending on your exact plan and the phone you want, subsidized plans may or may not be cheaper.  Generally speaking, the current Value plans are usually a better buy than the current Classic plans, but they aren’t better than some of the grandfathered subsidized plans out there.

    • Tward291

      i agree with the fact that unsubsidized is the best thing. but subsidized is better for the average consumer because its all about perception people would rather see 200 than 600 or 700 doesnt matter that they save over the 2 years or not perception is a powerful thing

  • Toffer_Lloyd

     Only people who are incapable of basic math think that a “subsidized”
    phone is more affordable. Compare the price of a retail phone plus 24
    months of Value service versus the price of a “subsidized” phone and
    standard contract rate and you will know what I’m talking about.

    • Coreyp

      That’s the problem, there are MANY people that are incapable of basic math

  • Magentadress

    No subsidies = Forces prices to drop, leading to MUCH MORE AFFORDABLE off contract smartphone pricing in the future.
    Subsidies = maintains inflated off contract prices.

    Some people are too stupid to comprehend this.

    • http://pulse.yahoo.com/_AWWIKW6MNPUHOC4OVSHWUDWAHM Fabio

       Agreed. Subsidies do need to go. However, in the situation that T-Mobile is in right now, I think it’s best for them to just carry the iPhone officially and just subsidized it and THEN in the future they can worry about unsubsidizing it.

    • Whiskers

      Then you are at the level of prepaid service.
      Why would someone pay full price for a phone and have to sign a two year contract as well.
      Stupid idea T-Mobile. 
       

  • CO_yeti

    I wonder if At&t and Verizon management openly laugh at T-Mobile management in meetings… He wants two very large and profitable companies to change their business models so that his smaller company can compete!?  The point of running a business is to make a profit. Tmo would be much better served making some bold plays instead of the same old medicore, play-it-safe ideas.

    • DizzahGee

      It would be a smart business decision to go no subsidy because telcoms don’t profit off of phone purchases nearly as much as they do service.  Strange thing is, I think Cole wants to turn the cell phone industry into “dumb pipes” with comments like that, which I think is in the opposite of the industry’s interests altogether.  Customers definitely win, though…

    • Heisenberg

      America is the only country that really does subsidized phones on contract, he is suggesting we should join the rest of the world with that model.  Obviously AT&T and Verizon won’t modify what they’re doing if they’re making profit.  I don’t think he is expecting them to, seems like he was just stating his reason why he hasn’t commited SOLELY to no subsidies.

      • WirelessRefugee

        Spot on conclusion. You summarize exactly what he is saying.

        And while the U.S. carriers are reluctant to join the rest of the world, in my opinion prepaid will force them to rethink their way of doing business.

        I read that MetroPCS is gaining record number of subscribers.

        And I agree with major financial and business publications that the Straight Talk SIM program, which is the venture of the “2012 richest man in the world” Carlos Slim, will force AT&T and Verizon to abandon their money-grabbing business model.

  • http://ashn.myopenid.com/ Ash

    Many people’s head just exploded in the USA. What? no $199 iPhone anymore??!!

    Come one people learn to do basic math….

  • TMoFan

    He’s right though but for this to work the entire industry needs to move in this direction and there’s no way that is happening here. It’s sad that high-end phones are considered throwaways after six months. Yeah the tech may be old, but only because the tech keeps improving. These are the same people who call up TMo looking for a “deal” and get mad when they don’t get one. I’m still rocking my G2 and it’s keeping me happy. I can definitely wait out my contract to upgrade.

  • Nearmsp

    In China and India, consumers buy  un-subsidized phones and then choose a wireless provider. The result is that low end phones are also doing well. In fact locally made phones such as by Huawei and Micromax are sub $100 smart phones and in a couple of years will be making sub $50 phones. In the US most consumer only see the cash down or “free” phone and not the 2 year total cost. T-mobile has tried to educate customers through value plans but even reading the forums it is clear that most people do not get it. I think we are destined to have “free” health insurance through employers and “free” phones even as the cost pressures are in the up direction.

    • Makoute

      that’s because the value plans are too much, they need to shave a good 10 bucks or more off those plans.

  • stevejobbed

    That’s what I would say too if I worked for a company that has a hard time securing subsidies on some of the most popular devices out their for my customers. 

  • CCollision

    FWIW, phones aren’t really “subsidized”: That’s what contracts and ETF’s are for, to recoup the cost of the phone over the two years. The value plan and prepaid are cheaper for this reason.
    That said, I like how TMO has the cheaper, no “subsidy” plans for when your contract is up and you want to use your existing phone to save money, or if you buy an unlocked one online for cheaper, while other carriers just keep charging you the same high rates.

  • Wilma Flintstone

    It wouldn’t cause carriers to compete on different playing fields if Tmobile didn’t have that Weird 1700 MHz Band.  Just a thought CMO Brodman.

    It’s a double edged sword.  On one end, it’s great because not many people are hogging up that band making for faster speeds and yet at the same time, it’s bad because it causes Tmobile to lose out on quite a bit of devices due to the need for special AWS bands that not many companies will go through the trouble of doing.

  • http://pulse.yahoo.com/_AWWIKW6MNPUHOC4OVSHWUDWAHM Fabio

    Okay so here’s what I assume happened.

    1) T-Mobile approached Apple for a deal and T-Mobile asked Apple if they could subsidize the device less or not subsidize it at all and officially carry it.

    2) Apple said no or maybe they are thinking about it.

    3) T-Mobile now thinks they aren’t getting a deal.

    Anyways, IMHO I think that T-Mobile should have the iPhone on its portfolio because this device is VERY popular and without it, T-Mobile WILL lose customers. So dear CMO you need to just stop complaining and just subsidized the Apple device and then all your other devices you can unsubsidized them to make up for revenue.

    • Vim

      Only if the bills of non-iphone customers don’t go up as a result.  If T-Mobile has to make everyone pay more just to make iphone fans happy, than I say no deal. 

      • Guest911

        Nobody asked you.

        • Vim

          LOL! Nobody asked you either.  I have no problem with you disagreeing with me, but next time try to find something a bit more intelligent, or at least more interesting to say.

  • Richard Koliser

    The reason that you have to through away a phone every 18 months is because the stop providing security updates, doesn’t even have to be the new version but how about at least patch the holes. Think if you were still running windows 98 today…

  • bga123

    The carriers are partly to blame. I’m still perfectly happy with my dual core Amaze, but they are in the process of not only obsoleting it, but there is still no new OS refresh available or it, and when it does come it will have an older version of sense instead of 4.0. Hence, if I want the newer OS, I need to buy a new phone.

    • Vim

      Or grab an unofficial port from the XDA site…

  • shysox

    What an idiot. I bet he uses an iPhone. 

  • now_onTMO

    but unsubsidized phones are available if you opt to be off contract with a carrier right? you can choose to buy the phone itself then get a prepaid plan,right? if you can afford to ,why not..

    if you guys are’nt aware that high end phones full retail price in asia or everywhere else cost just as much or even more compared in the US.. they have post paid and pre paid plans but contract plans are not very common..  

  • Alfa95

    The value plan is GREAT!!!  It amazes me how many people come to the store and say “but I can get the iPhone 4s at AT&T for only $199 bucks and you want me to pay $599 for the Galaxy S2?”  Well let’s do some basic math, blind customer.  Let’s compare apples to apples…..3 lines unlimited talk, text and 5GB of web.  With AT&T 3 iPhone 4′s = $599.97, $349.98 a month for 24 months for service = $8399.52 so $599.97+$8399.52=$8999.49 for 24 months of service and phones with AT&T.

    With T-Mobile: 3 Galaxy S2′s = $1799.97 which of this amount only $599.97 would have to be paid upfront, the same as the iPhone’s.  $179.98 a month for 24 months of service = $4319.52. So $1799.97+$4319.52=$6119.49 for 24 months of service and phones with T-Mobile.  So we are saving you $2880 over a 2 year period and you still think that iPhone is an AWESOME deal???????? Ohhh you actually get it now and don’t think we are crooks???

    • former T-Mobile employee

      Boy, it really hurts not having the iPhone don’t it?!!  

      • Alfa95

         It hurts a little, but just because some people don’t know or even want to admit that there are phones out there that are on par or better than the iPhone.

      • http://www.facebook.com/people/CeeGee-Borela/100000183782060 CeeGee Borela

        well an iPod Touch costs how much nowadays? i mean its basically an iPhone 4 without the phone part that can be tethered to any wifi capable phone on Tmo

    • http://pulse.yahoo.com/_AWWIKW6MNPUHOC4OVSHWUDWAHM Fabio

      Agreed. Love your explanation, but of course the average customer isn’t thinking long term. They’re thinking short term, and that’s the problem.

      Customer: I don’t want to pay for X phone $359 dollars at T-Mobile, when I can get it at AT&T for $49.99!

      Basically they’re not even thinking about the 2 year contract! All they care about is getting the device cheap or free!

      What T-Mobile should do, is launch an advertizing campaign comparing T-Mobile’s 2 year long term commitment value plans, to the 2 year long term commitment plans that it’s competitors such as AT&T offer.

      Accurately show that over the 2 years of your contract, you save much more with T-Mobile than with the competitors. And also show that T-Mobile’s competitors are deceiving their customers by subsidizing the handsets and at the same time requiring that such handsets have higher rate plans.

      It won’t be easy to explain, as I can’t even explain it myself.

      • Alfa95

        True, it’s a little confusing when the customer’s mindset has always been, “what free phone am I able to get now?” but that is the sales rep job to explain it to the customer.  I’ve had customers call us thief’s, crooks, ripoff’s when they first see that they have to pay full price for the phone but then when I get 2 minutes of their time and bust out their preferred carrier of choice plan brochure and my sticky notes, compare it to our value plan over a 24 month period and show them how much extra they would pay with said carrier.  They actually put their heads down, apologize and say what a bunch of crooks the other carrier is.

        • UMA_Fan

          To put it simply to them, you should let them know what they are charged a CONTRACT.  It’s a simple: plan times 24 months plus phone cost.  That’s the deal you’re getting.

        • Alfa95

           That’s how we approach it if a customer does not get it from the beginning. The real kicker is when they look at me like they are about to pull one on me and claim that XYZ company gives them a 10-25% discount off their plan. I simply smile back, do the math and show them that even with their 25% off we are still cheaper. Plus that discount is usually off of the first 2 lines and off the main plan not features like messaging or internet which in AT&T’s case family messaging is $30 and 5GB of data is $50 per line.

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

    This is why I’ll be switching in the near future *waves Tramp-Mobile goodbye and sweeps it under rug where it clearly WANTS to be* 

    • Alfa95

       Because they are actually saving people money?

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

        are they? ¬_¬ 

        • UMA_Fan

          For people who can do math: Yes.

        • Alfa95

           Look at my earlier post and tell me how T-Mobile being $2880 cheaper than AT&T is not saving a customer money. Those are actual plans and prices, I didn’t just pull those out of thin air.

        • Mr_Vault

           Not sure if Jeff can do math….

  • Crap

    Then they should eliminate 2 year contracts then

    • Alfa95

      The reason they have to do the 2 year contract is so that people can still put the phones in the  EIP(Equipment Installment Plan).  If you are only doing 1 line and buy the phone full price upfront you can do the Monthly 4G for the same price. $60 bucks will get you unlimited talk, text and up to 2GB of web and you don’t have to worry about paying all the federal and state taxes and fees.

      • UMA_Fan

        Plus the plan is subsidized INSTEAD of the phone.

  • Coreyp

    I would LOVE to see somebody walk into a phone store in Europe and say, “I want a FREE phone.” 

    • guchy

      that’s how it is in Europe. check your sources.

  • 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).

    • Alfa95

       Even if you compare to T-Mobile’s own Classic plans the value plan is cheaper than the classic 8 out of 10 times. So yeah you get a discount if you don’t buy the phone subsidized on the classic plan.

      • 123

        Well, I guess I am in that rare 20% group because classic plans made more sense in my situation over the value plan since I got 3 galaxy s 2s for free. 

  • Kalel

     Brodman states, “So, it is
    unfortunate, you’ve got dual-core, multiprocessor devices with amazing
    HD screens that get thrown away at 18 months.”

    Can Brodman tell me of a single person that has thrown away a phone with a dual core processor and HD screen after 18 months?  It’s a rhetorical question, because those phones have only been available for a year or less.  It also couldn’t be a T-mobile customer, because they don’t have any phones with an HD screen. 

    • Alfa95

       He said it that way but in reality probably wanted to explain how high end devices that are actually worth something are given no value at all.  You’d be surprised how many customer we upgrade that had great devices that were the greatest and most powerful in their time come in, upgrade to a new device and simply not care about the old device.  For example, I upgraded a customer the other day that had 5 months ago received a Mytouch 4G as an alternate warranty exchange. I converted him to the value plan, put the Galaxy S2 on the EIP and when I asked him what was he planning to do with his old phone he looked at me and said “nothing, you guys recycle them or something? you want it?”  Here we had a device that used to sell for over $200 with a contract and over $450 with no contract when it first came out and this guy was ready to just give it away or throw it out for no compensation.

  • Winski

    I stick to my premise, this is the WORST MARKETING GUY IN THE HISTORY OF MANKIND.

    • guest

      Agreed, won’t even go to any more of his “All Hands” meetings!

  • nextgin

    How many people can afford to pay $500 for a handset? Not many, especially T-Mo customers. That’s why subsidies will always be necessary. There’s a huge mark up between cost of phone production, and what the suggested retail is. Cost about $150-$200 to make the phones they sell full retail for $550. Not to mention, most of T-Mobile phones are not the High-End models (One S compared to the One X). IF they want to continue with “we can compete without iPhone”, they need to have the TOP phones that aren’t iPhones, along with their Mid and Low spec devices. 

    • Kalel

       Got links for that or just pulling that out of thin air?  I’m betting thin air, because they did a teardown of the HTC Thunderbolt last year and it was $262 for the bill of materials, which means that doesn’t include manufacturing, shipping, development, warehouse, and support.  $150-$200?  I don’t think so.  Maybe for the mid-tier phones, but not the high end phones.

      • nextgin

        Actual I looked up the estimated cost of iPhone 4S ($206). What phone does T-Mobile sell that is LTE equipped? You grabbed the Thunderbolt as your attempt to sound wise? LTE adds $40 to the cost . And that’s 32GB iphone. Have any other prices?

        • Kalel

           Again, Iphone is a cheaper phone to make with the less specs and smaller screen. High end Androids cost more.  Seen an Iphone with 1GB RAM, dual core 1.5Ghz processor….no?  Your estimate is also just the parts, not everything else.  You think they just buy the parts and they magically are put together, shipped, and supported?

        • nextgin

          You want to talk to me about cost of manufacturing a product? Really? Since you want to go there, lets take it there. How much do you think it cost for labor to make ANY mobile phone? There’s a reason phones aren’t made in the USA, but by the way you’re talking, you think they are. The people at the plant aren’t making USA minimum wage Kalel. Now, like I said before, iPhone 4S 32GB $206 for the PARTS.  The workers that “magically” put it together DONT MAKE THAT MUCH IN A WEEK! So we can multiply that number by 2 and guess what? That would pretty much include ALL THE COST ASSOCIATED with the phone. Remember, this is done in BULK for a reason. Profit margins have to be kept. THEY WOULDN’T SELL A PHONE FOR $550 IF IT DIDN’T COVER THE COST OF THE PHONE. And since you think Tmobile sells a phone that cost more to make than the iPhone, name the device. A freaking Amazon Fire cost $207 for the PARTS. That $412 iPhone sells for $749 Full Retail. Take your head out of your ass, and think “Could T-Mobile afford to sell a phone for a lost or equal to TOTAL COST OF PRODUCTION”? NO YOU FOOL, they could not. SGII, HTC Amaze, at most cost $250 for the parts. You think it cost $300 for labor, packaging, and shipping? LOL, try again.

    • Rastlin001

      I agree with nextgin of Tmobile wishes to compete with the other companies that have the iPhone then they need to give is better points like the note for example or the nexus. As it stands now Att currently has not only the iPhone but alot of the top tier phones as well like the skyrocket hd and the skyrocket both with the exnos processor. If Tmobile wants to compete they need more highend phones, more variety, more stock Android phones and be the ones to push out updates (non buggy ones) faster than everyone else as well as better data rates… just sayn’

  • Johntho21

    Yea….. What about them 802,000 customers T-Mobile lost in Q3 or Q4 because of the 4S!!

    • http://www.facebook.com/people/CeeGee-Borela/100000183782060 CeeGee Borela

      and most of them jumped ship coz of that ATT merger not just for the 4S

      • ChadBroChillz

        I am calling BS on blaming the merger. The merger started in March 2011. In q2 they lost 50,000, which could probably be on the merger, but in q3 they gained 127,000 subs. And then in q4 they lost 800,000, which is the quarter after the iphone 4s release.  I will not say all are based on 4s, but I am willing to bet more left because of the 4s over the basically dead merger.

        • Kalel

           I’m calling  BS on the Iphone being the problem.  The execs state it was because of Iphone but internal numbers show that most of it was because of network and bad customer service, which would make sense because of the last place finish. 

    • Vim

      The iPhone was the only thing T-Mobile’s executive management could blame that didn’t reflect badly on them personally, and they knew  the tech media would eat it up without close scrutiny.  And they were absolutely right.  The truth is that the iphone was one of several reasons they lost customers, but by no means the sole or even the largest one.

      Just one example: where Verizon, AT&T and Sprint offered all their high-end phones for free on Amazon during the week of Black Friday, plus special promotions on their plan pricing, T-Mobile just sat on its rear end and did nothing.  T-Mobile seemed so certain that it was about to get swallowed by AT&T that it stopped competing. 

      They also didn’t bother to pick up any new phones after early October, allowing the other carriers to leapfrog them across all lines, even Android.

  • http://www.facebook.com/people/Peter-Andrew-Rardin/1416151034 Peter Andrew Rardin

    what an Ignorant fool, T-mobile doesn’t have a single phone that has an HD screen yet he is spamming at the mouth about how people are wanting to throw them away. I’m still waiting on a single HD screen phone on T-mobile that they have yet to be able to provide.

  • http://www.facebook.com/people/Peter-Andrew-Rardin/1416151034 Peter Andrew Rardin

    Name one phone on T-mobile that can compete with the HTC Rezound which came out month’s ago not a single phone can compete or the Galaxy note which in my Case I really want due to my huge hands. I have the Amaze 4g its a great phone and I have no intention of just throwing it away but I do have an upgrade I haven’t used in months due to all of these great phones coming out and T-mobile just skipping over the good phones for the low class phones.

    • Thomas Brezinski

      Galaxy Note is a niche market phone, there’s little point in competing with it.

      • http://www.facebook.com/people/Peter-Andrew-Rardin/1416151034 Peter Andrew Rardin

        unfortanately when your 6’5″ wear a size 14w shoe everything is pretty much a niche market from clothes to cars, I don’t know the details on what it takes to get a phone on T-mobile vs the others but I would think having something your customers actually want vs something they don’t really want isn’t good marketing.

  • me

    I’m all for no phone subsidies but then contracts have to go and plan prices need to go down. As it’s already been mentioned, a big problem is that we (customers) can’t just buy ____ phone and use it on carriers X Y and Z. Most phones are pretty much stuck on the carrier they’re sold by. Because phones need different bands, rather than producing 500K GS2 phones, we need 1/3 on T-Mo’s bands, 1/3 on AT&T’s bands, and 1/3 on Sprint’s bands – you get the point. Not the way to get a rock bottom price on handsets. At this point, I’m on my super grandfathered plan with myFaves, preferred internet, T-Zones (on another line), corp discount, loyalty credit etc.; I buy my phones outright and still come out ahead. Or I buy it on prepaid when it’s a good deal (like the Lumia for $199) and just put my regular SIM in it.