Telefonica Exec Warns T-Mobile Over Dropping Subsidies

There’s been no shortage of detractors over T-Mobile’s risky decision to move to a Value Plan only world in 2013. Now, Tracy Isacke, director of Telefonica Digital, a large Spanish multinational telecommunications company with more than 313 million customers worldwide is advising T-Mobile not to go down this path.

Isacke suggests taking it from experience as Telefonica decided to undertake the same move earlier this year with less than favorable results. In September of this year alone, Telefonica lost 253,520 mobile users as Vodafone, another large European operator (part owner of Verizon/Wireless) is also seeing negative results from the removal of subsidies.

“It was a disaster,” said Tracy Isacke, director of Telefonica Digital.

T-Mobile’s move would likely see less detractor feedback if more US carriers were to transition away from subsidies, says Omar Javaid, Managing Director of BBO Global and former Motorola exec.

“If someone wants to drop subsidies, that’s an opportunity [for the competition] to go for the jugular,” he said.

As a result, Telefonica competitors like Orange have gained market share at the expense of Telefonica and Vodafone. Fears that T-Mobile may lose customers as a result of this move is matched with the concern that it may attract customers with outdated equipment.

As part of T-Mobile’s Value Plan move, they will continue their “bring your own device” message allowing customers who finish a two-year contract at AT&T to bring their already aging device over. As T-Mobile’s rate plan prices are cheaper, there may be little incentive for customers to drop their two-year old devices and just move over to T-Mobile and save money on monthly costs. T-Mobile’s reputation is already suffering from slow network upgrades, and its place as the last carrier to receive the iPhone — what they don’t need is another ding to their image of being a bottom-feeder carrier.

It’s true that Value Plans allow customers to come out ahead over the course of a two-year agreement, especially compared to companies still relying on the subsidy model ala AT&T, Sprint and Verizon. Still, T-Mobile has their work cut out if they not only wish to avoid the pitfalls that Telefonica and Vodafone, but also to convince customers that paying $650+ dollars for an iPhone going for $199 elsewhere works out in their favor over the long run.

The problem may ultimately be a psychological issue as the US wireless market has ingrained the subsidy model for years that any move away from it could scare customers off. We’ve been trained to expect subsidized pricing even as many of us know the subsidy model is a terrible system. If the results from two mega-international carriers are a precedent, T-Mobile may face more than just an uphill battle selling customers on their new Value Plan only world.

CiteWorld via @kfitchard

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  • Maximilian

    I think the situation of Telefónica in Spain and T-Mobile in the US are hardly comparable. Telefónica is the Spanish incumbent (think AT&T), and as such usually attracts people with a higher willingness to pay, but also higher expectations in terms of quality, handset selection & subsidies, etc. T-Mobile, on the other hand, is a challenger in the US market and increasingly focused on the value segment. Therefore, I hardly expect that T-Mobile will experience the same problems, simply because they go after a completely different segment in the market. Interestingly, Isacke also fails to mention that what T-Mobile is planning to do is exactly what Telefónica’s very own subsidiary in Germany did: o2 Germany switched to value plans without device subsidies and offered installment plans for those who want a new handset instead. And, what a surprise: their challenger strategy really took off and their subscriber base is growing steadily.

  • od312

    I agree with the danger of taking away subsidies. Customers tend to live in the “right now” as opposed to down the line savings. People would rather go with companies offering the latest phones at cheaper equip prices

    • CRT24

      The up front cost of phones IS less on value. …cant get more “right now” than thay

      • od312


      • od312

        Really? Where can I get a FREE GS3 after rebate on a value plan??

        • The Architect

          I’m with you!!! Good luck trying to convince the masses that when comes to Walmart’s bargains!

        • Cruise Guy

          You can. Look around. I have seen it. They had it the other day. It had a 199 down payment, and the down payment was waived for the weekend. Meaning you paid nothing out the door. There ya go.

        • od312

          Where? I was just talkinh to a store manager and he said there would be no more free phone deals.

  • Hyuri

    I find it funny that people compare individual plans ClassicValue, but when you mention a family plan somehow the comparison becomes Valuehighest-priced-competitor. And in neither case are third-party retailer prices considered. There’s always a way to make Value plans look like the best option – even if it requires moving the goalposts.

    • archerian

      true, there are several people here who just SWEAR all Value Plans are cheaper compared to Classic Plans, and off they go with the highest device cost on Classic and UL everything. That being said, I feel Value Plans are a step in the right direction, since they directly show and shift the cost of whatever device you choose (or not choose) to you. This will be pure Gold for customers when phones reach commodity prices.

  • od312

    Advertising is getting a lil out of hand for my device’s browser.

  • tmobile rep, CA

    Why the hell are we still talking about why the value plan is better and not “stupid.” IT’S CHEAPER. Yes it involves math. Who would have thought the basic skills of adding, multiplying, and comparing numbers to each other would be involved in the process of understanding your own monthly bills. Its not the question why that’s annoying because it builds understanding. It’s the comments from people who “figured out” T-Mobile’s evil plan to save people money when comparing prices against it’s competitors are annoying. I’m sorry that you haven’t retained anything from your 2nd Grade math classes but classic plans are more expensive as are most other carriers.

    • Storm Millenium

      Coming from a “tmobile rep”, typical.

      Sorry, but if you have to explain the mechanicals of the Value Plan and EIP to each and every potential customer – then maybe this plan shouldn’t be implemented in the first place.

      This headache is basically FlexPay allover again, but worst!

      • Cruise Guy

        Actually, it does need to be explained to each and every customer contrary to your thoughts. People are sheep. Yes, Verizon has a bit more coverage and so may AT&T but people don’t understand and are paying heaps more money following the older styles of payments. People are stuck in the old school, and if they don’t want to learn or embrace a new value scheme that saves money for the customer (in most cases) then they can just follow the sheep to ATT and Verizon which pay over $100 per month for a single line. It has to start somewhere.

    • R B

      You obviously did not go beyond 2nd grade math to realize that real world economics are not simply a function of arithmetic. Take a college economics course and then come back without the cloying condescension.

  • sushimane

    i wouldnt think it would be a problem because when ur on a value plan and down a certain amount of money on a phone for example a galaxy note 2 the paper say down 250 on it and 20 dollars a month for 20 month and it would basically add up to the same amount like the classic plan but on the value plan once ur paid off the phone ur rate plan would go down like for me if i choose the 500 minutes unlimited text and unlimited data it would only cost me 60 dollars a month better then what i have now 500 minutes unlimited text and data for 86.86 for 24 month so im basically saving money if i switch to the value plan. but that’s just my opinion everybody think different.

  • rfgenerator

    If T-Mobile wants to do away with subsidies, then they also need to do away with the 2 year contracts (at least for folks who BYOD or who pay upfront for the device), it’s that simple. If they remove the 2 year contract obligation they might have a chance at selling people on this, if they continue to require a 2 year contract for those who have purchased in full their device then this is going to sink fast.

    • Storm Millenium

      Exactly! Value Plan Plus maybe? If not then just keep Classic plans and Monthly4G but allow family plans on Monthly4G like they did with EM+.

      • ebatr8

        You are ignorant about the EM+ plan, the EM+ plan was 79.99 unl talk text and web, this is the price of what classic is today. The value plans are less then the even more plus plans 59.99 talk text and web. If every other company offered the same pricing scheme then I could see your contact point making sense but they don’t do they? If you really want to have no contract then go prepaid, some may argue contract is not fair on value and for a single person their point is a good one yet still, they can go prepaid for no contract. Once you start to go family plan then value becomes better and face it no company is going to start giving you a lower prepaid style rate when they can charge you more example: vzw, sprint, at&t. Since T-Mobile is assured you are going to have service for 2 years then yea why not give the customer this discount they are not taking a discount on a phone so it makes sense just like these cable companies, xbox live, and even gym memberships you sign contracts or pay for an extended time in advance for the assured lower rates. I agree with you as a consumer I don’t like the system myself but, its the way business goes. I think consumers need to smarten up about the purchases they make because even keeping the subsidies are ridiculous you pay so much money yet are stuck with a phone for almost two years because every other carrier wont subsidize your phone until 20 months or later now.

        • Storm Millenium

          VP fanboy much? I was one of the ppl that jumped on the $59.99 EM+ unlimited plan when before that it was $79.99. The Value Plans today are pretty much the same price as EM+ but with a stupid ass contract. It only gets cheaper when you have multiple lines.

    • chuey101

      I don’t think they can do this for revenue recognition purposes. If you have someone on a 2 year contract you can spread their revenues over 2 years, if you don’t you have to factor in added risk to your projections.

      • R B

        How is that a value to the customer? Tmo should then revamp its revenue projection protocols and its business model.

  • Marcelo_L

    So after reading practically all the comments (yes, I took my time), I come down to 2 camps:

    1. Most folks are conditioned to subsidies, don’t necessarily care or are concerned with the “long term” out of pocket cost (regardless of whether they might complain later that their service is costing an arm and a leg), or don’t want/care to do the math of what those out of pocket costs/saving may be.

    2. Those folks who want/care to do the math of the overall long term costs/savings, and may not be concerned with the fact that if their “implicitly loan purchased” device is either failing past the first year warranty are going to be stuck with said device until their contract is up for upgradeability. Or, subject themselves to pay whatever the carrier wishes to charge to either break said contract, and/or the difference for what the loan for the currently faulty device costs, plus whatever cost would be incurred to “implicitly loan purchase” a new phone ( one which said person would hope would not turn out to be as faulty as their previous one).

    It seems to me, from having been with TMobile for 13 years (it was called Omnipoint when I started with them), that most folks (with TMo as well as the other carriers) are less concerned with getting the “long run deal”, as they will probably accustom themselves to keeping to a certain monthly budget, and balancing that. So if their cellphone service cost another 30 more a month than another carriers, maybe they’ll just not go out to dinner once a month instead of twice. I think this accounts more for why folks tend to think about staying with “Classic” plans than moving to “Value” plans. The “Value” in “Value” is a momentary ( as in, right now…because no one really knows what’s going to happen in the future). This is why I think most proponents (including a particular editor-in-chief of a non-official blog of TMobile goings-on) of Value plans don’t “get it”. Most people live in this country by budgeting themselves monthly, they aren’t necessarily thinking 24 months ahead because they’re not in a socio-economic situation where “financial projections” are at the top of their list of priorities to consider when making a purchase decision. The way most people even buy cars is based on “what can I afford a month”, and even if they have to take an exhorbitantly longer loan to afford that nicer car…guess what…they will ! Just because they could “get into it” now. They aren’t going to consider that they’re paying all that extra interest for the life of the loan. That’s not how most people think.

    Furthermore, the whole concept of “Values” is misnomer, it’s not “adding value” for the customer, simply because they are tied to those 24 monthly payments for the rest of the MSRP (or whatever price they FEEL like charging you…c’mon…most phones..even this Galaxy Note II in my pocket shouldn’t cost $700 retail..give me a break). IF within that monthly payment plan it included the device insurance cost (with a LOW deductible…$130 to replace a faulty Amaze 4G I bought 13 months ago that we’ve had to have the battery replaced twice? Please..try to sell that to someone else…the phone was a dud….just swap it.)

    The “Value” plan only works when “all goes as planned” with your life….the phone survives the toils of daily labor. When was that last time THAT happened ?

    • R B

      I agree with your assessment. Many customers see this instinctively for what it is: a cleverly designed/disguised marketing device/gimmick.

      1. Why would ETFs be needed in “value” plans if the reason behind ETFs in the first place was because carriers wanted to protect themselves from customers who took their subsidized equipment and ran, and the reasoning is that the value plan separates the cost of the device from the cost service? So then, if due to no fault of my own I must break contract, then I owe the ETF and the remaining balance for the device. Seems like a win-win for TMo and a lose-lose for the customer. How is that value?

      2. Does the ETF requirement cease if I pay off the phone in one year instead of two? Of course not! So Tmo gets the benefit of not subsidizing and keeps the customer on the hook for another year for no good reason, no pprotection, and no benefit that justifies an ETF. How is that value?

      3. Customers know that they cannot trust big business to act in their interests. The opposite is true big business exists to serve its shareholders. Thus, to expect a customer to hang on to and pay fully for a rapidly becoming obsolete, fragile device for two years, one of which the device is out of warranty, and to trust that Tmo would make decisions that favor the customer is ridiculous. Two years is too long to see the benefits, especially with the confiscatory ETF. With subsidized plans, at least there is the appearance of sharing the amortized risk.

      My conclusion/prediction: value plans will become attractive at first but will quickly become a customer service nightmare that will further sully Tmo’s name, if that’s possible.

      • philyew

        ETFs exist for Classic Plan customers with or without subsidized devices and they were $200/month way before the average subsidy on a smartphone ballooned to around $300.

        In fact, TM’s ETF has been $200 since at least 2004 and didn’t decrement over time until 2008.

        The point being that the ETF exists for more reasons than simply recovering the subsidy from an early terminated contract.

    • fentonr

      So, 1) value is almost always cheaper, so that does seem like a value to me. 2) How is the customer in any worse shape with value over classic if their phone breaks? 3) Why would T-Mobile exchange a product that isn’t theirs (no, the Amaze is not T-Mobile’s product regardless how much people like to argue that, its HTC’s) after the warranty is up? You had the chance to purchase the extended warranty which is not $130, its $5 to do a replacement. The $130 is if you break it. 4) phones generally have < 5% markup, sorry, that Note 2 does really cost that much, go look for unlocked ones, same price. Verizon is selling it for the same unlocked I believe, or was anyway.
      I think that from the comments you're right about the two camps. Most of the people hell bent on keeping old stuff live on the internet (bit odd, isn't it?) in stores, we currently sell something like 85-90% value as it is, it won't be much of a change to go to all value. We can properly explain it to customers and they understand the value.

  • WW

    I don’t think it was mentioned before (with so many comments on multiple stories over the few weeks since the announcement, I may have missed it) but every “authorized dealer” I’ve ever visited only sells Classic Plan (I’m thinking they don’t sell Value Plan because there’s no margin in it for them).

    Will there still be room/profit for non-corporate TMo stores when they go Value Plan only?

  • Chatter

    I’m not sure why people are surprised. It is logical that a Value-only plan system will lose customers. The actual question is if TMo can/will reverse the trend after the initial dip in sales. TMo feels that the Value plan is the “smarter” option and will make the company successful in the long run. They are betting on changing the system. They need the gamble.

    • R B

      I think you are right. But this seems to be a desperate gamble with a disingenuous disguise.

  • Ducter

    I don’t see how this works out for the good for people like me on a family plan. I currently have five lines and my contact ends in February. When I look at paying over 3k for new phones and with my current plan of 1800 minutes, myfavs, Android preferred Internet, unlimited texting on all 5 with a monthly bill of 230ish that means in order for this value plan only deal needs to cost me what? Under 84 bucks a month in order to pay the same I am now… Anyone want to wager that won’t happen?

    Currently to get new phones
    monthly bill 230*24=5520
    means total cost of new phones and 2 year contract is 6520

    new value only phones
    monthly bill said to be 20 bucks cheaper
    year contract is 8040
    am I missing something? Or does another carrier look that much better?

    • fentonr

      Can vary a little, but in general, if looking at smartphones for all lines, you should be at $20 cheaper per line. If you have an old rate plan, you might not end up cheaper, but in 99 out of 100 cases you will.

      • rfgenerator

        …and here is the key, if you are a long term customer on a non standard rate plan (i.e. Android Preferred $20/5G) then it’s a pretty good chance the may would not work out to go to Value.

        • ducter

          But from my understanding its not optional?

        • philyew

          You won’t be forced over unless you want to get a device with an installment plan, or you want to change your plan, which would have happened anyway.

        • Ducter

          Yeah, that’s the thing I was planning on upgrading to a couple galaxy note 2s and several galaxy 3s. Wire fly has pretty decent prices but seems like I won’t have that option come February. Family currently has several sensations a g2x and a defy. To buy them right out is to costly for me so guessing will have to have a long look at what other carriers are offering.

    • Mr. Hill

      The Value Plans don’t directly correlate to $20 cheaper than grandfathered plans that T-Mobile doesn’t offer anymore. It’s $20 cheaper than the current Classic Plans they offer. You would probably need to list every individual feature and its cost plus what types of phones you are using on every line and I’m pretty sure there’s a way that the Value plan still comes out cheaper. Remember that on the Value Plan each line after the first 2 only costs $5 per month to add. Then add $10 or $20 depending on what data plan you want. If they are dumbphones you don’t even need data so it’s even cheaper.

      • philyew

        As the number of lines on the Family Plan increase, the differential between the Classic and Value Plan pricing increases. You can build Classic and Value Plan scenarios in the TM website and see the relative costs.

        I did this the other day and could see that the VP remained cheaper even with four lines and four new smartphones.

        Of course, if you are dealing with a grandfathered plan then it’s unlikely that there would be savings.

        • ducter

          Just went to tmobile’s website and when I go under value plans select device as phone, select quantity (5), then select phone I have no option to select the phones I want, stuck with the default choice for a samsung flippie.. cant even see for my self exact amounts. I could call them I understand but thats getting ridiculous dealing with their “improved” customer service reps.

        • philyew

          I have to admit that I’m unable to associate Value Plans and devices today as well. I’m sure it was working a couple of days ago but now it’s behaving like multi line Value Plans and smartphones are mutually exclusive.

    • philyew

      We are pretty much on the same plan, I just have one fewer device and a couple of $10 data plans along with 2 of the preferred 5GB ones. I’m sure you are right, while the VP would be cheaper than the regular CP, it is still way more expensive than we are paying at the moment.

  • rafe1621

    Can anyone tell me why the subsidy model is bad? This is a serious question. Most people I know have been with the same carrier for forever and have no interest in changing plans or going to a different carrier. Aren’t subsidies beneficial to these people?

    • philyew

      The comparable total cost of ownership between a subsidized phone and its associated Classic Plan is almost always greater than for an unsubsidized phone with a Value Plan.

      e.g. $200 for the phone and $2160 for the subsidized plan (Total $2360) on the one hand, compared with $600 for the phone and $1680 for the unsubsidized plan (Total $2280).

      You can also get an Equipment Installment Plan for the unsubsidized device and pay a down payment which is often no more the the subsidized price.

    • Mr. Hill

      Because subsidies are supposed to justify higher rate plans that other carriers charge. The higher rate plans are supposed to make up for the cost of the phone. So you are in essence paying a higher bill over the course of your contract in order to pay the carrier back for the phone they gave you at a subsidized price. Problem is when you have your own phone or have not used your upgrade or even after you have completed your contract, the rate plans remain high. You’re paying a higher bill even if you don’t have or have already paid back the carrier for your device over the course of the contract.

      Then of course benefit to T-Mobile from a business perspective should be obvious.

  • R B

    Let’s be honest: Tmo’s bread and butter consists largely of people who do not have the resources to plan beyond the month to month. These are people who live quite literally from paycheck to paycheck. Don’t believe me? Just visit your local mall and compare the Verizon and ATT clientele with those that frequent Tmo. You’ll be startled by the contrast. This plan has no real relevance for them and no significant long-term benefit other than for Tmo, who gets to fleece them for both the ETF and the balance of the device.

    But there are no significant benefits for those at the other end of the spectrum who can buy devices outright or very quickly. They are still stuck with a two-year noose. Surely, this is not Tmo’s usual customer, but with BYOD and iphones this is the clientele they are trying to attract.

    Such failure to provide real competitive benefits for the bread and butter and the potentially lucrative clientele spells doom for this approach.

    • Mr. Hill

      Well of course. If people have enough money to where paying huge phone bills every month doesn’t affect/bother them, why would they ever go to T-Mobile? T-Mobile is a value carrier so this is nothing new or a shock to anyone.

    • philyew

      You seem to be forgetting that there is at least a $480 saving on almost every Value Plan configuration compared with its Classic Plan equivalent over the contract period.

      • archerian

        $480 saving on an individual plan? Are you sure you are not adding a possible EIP? that scenario can only happen if Classic Plan customers buy the device at full price, which they never do. The typical monthly difference between a Classic and corresponding value plan is around $20, so all subsidies aside, that’s $480. Now Value Plan customers pay for the phone, so if Value Plans were to be cheaper by that $480, that would mean Classic plans customer would also have to pay full price for their devices too AND then the subsidy add-on. Do your math again, you will see that there are several Classic Plans that are cheaper than corresponding Value plan over the 24 month period, when a phone subsidy is involved and the device is bought at the best price. This might not be true for all Classic Plans and devices (the Note 2 for example) but there are definitely cheaper Classic combinations out there.

        • philyew

          I’ve already quoted an example showing that the phone plus plan difference over two years is around $80 so I already get what you are saying, but I was talking about the difference in the plan prices which RB seemed to be missing from his critique.

  • Mr. Hill

    The majority of T-Mobile’s customers are already switching to and embracing the Value Plans. I can’t remember the last time I activated someone on a Classic Plan. The Value Plans are cheaper over the course of the 2 year contract plain and simple.

    Bottom line it’s really no different from what the other carriers are doing except that T-Mobile is upfront and actually separates the cost of the device from your rate plan price and once you have paid T-Mobile for the device through EIP, your monthly bill drops. With other carriers you still pay the same high bill forever regardless of whether you have fulfilled your contract and paid the carrier back for the “subsidy”.

    When they get the iPhone it will probably be $99 for the 4S, $199 for the 5 upfront just like the other carriers. No one will be forced to pay $700 upfront for a device. Even with EIP your bill is still cheaper than the AT&T and Verizon share rape plans. Plus you have the option of actual unlimited data.

    For those complaining “why should I have to do a 2 year contract if I bring my own device?”, that’s why they have no contract Monthly 4G prepaid so that you can leave whenever you want.

    • rfgenerator

      Sounds to me like salesmen talk. You may be right about new customers who are paying full freight getting a (slightly) better deal with the Value Plans. However customers like myself who like me who have been with the customer for years and have a 2 line smartphone either the value plans or the monthly pre-paid 4G would be paying more for less. Specifically I have 2 line family classic 1000 minute plan. Line 1 is an Android Smartphone with the Preferred Android $20 for 5GB plan, the second line is a Blackberry with the $200MB plan. With the corporate discount, and all the fees and taxes my total cost per month is $91. Show me how this saves me money (especially since I will be paying full price for the phones if I were to take the bait or switch). I was already on the fence about staying with T-Mobile, although T-Mobile’s data network has improved over the last couple years, I would say a solid 40% of the data network around me is either EDGE or worse GPRS. This elimination of subsidies while maintaining a contract or forcing me off to a much smaller data cap on monthly prepaid 4G just doesn’t cut it.

    • archerian

      You claim Value Plans are cheaper than Classic, yet when you do the math later in your post, you compare it against other operators plans, of course then its cheaper as T-mobile is a value provider. A possible reason why you don’t remember a Classic Plan activation is because most of them happen in 3rd party retailers with the prices T-mobile has in-store for them.

      If your argument for why there is a contract when the customer does a BYOD is if you don’t want a contract go prepaid, you’re actually skipping a valid question – why the protection against a risk that T-mobile does not assume? If more people move to prepaid where the ARPU is much lower, it’s less revenue for T-mobile.

    • Whiskers

      But according to all you expert T-Mobile reps , you don’t get 100% service and tower reception on a prepaid plan…….
      So why do that with Monthly 4G and get substandard sevice.

      • Whiskers

        And if you did , don’t you think everyone would jump on that ship instead of the VP with a 2year leash.

  • GwapoAko

    I believe those customers who are complaining about the Value Plan are those under grandfathered plans who are really paying low rates. Tmobile should just leave them alone if they do not want to migrate with the Value Plan. For new customers they should just put them on Value Plan and discuss the advantage of getting it against subsidized plans from the At&t , Vz and Sprint.

    • philyew

      I’m one of those people who won’t save moving to a Value Plan because of my grandfathered plan. The only real concern I have is that I will have to do a full cash outlay on four new devices, since there won’t be an option to get a subsidy or use an installment plan. That could be an outlay of over $3,000 inc. taxes, if I choose the renew all four simultaneously with comparable new devices next time around.

      • archerian

        how much do you save over the best corresponding value plan? are you on t-zones or web2go data? I’m on a grandfathered plan too, Value combinations seem to offer grandfathered rates for voice, its the data that makes me hesitant to make the change

        • philyew

          We’re on a 1800 minute MyFaves Family Plan. We use Google Voice lines as MyFaves numbers, a combination which effectively gives us unlimited voice and 2c/min international calling. I also have 2 x Preferred 5GB data plans for $20 each and 2 x 200Mb.

          This plan allows us to get subsidized phones which saved us $1700 on the devices.

          Looking at the VP pricing, it would cost us $30/month more than we are paying at the moment, meaning that over 24 months, including the cost of the phones, it would cost us $2420 more to be on the Value Plan.

  • Herb

    The hard truth is that the Value plan only saves money for accounts with one or two lines. Families with 5 lines looking to upgrade all at once would see their bill increase up to $100 as a result. Unlimited Value family plans (only unlimited on the first 2 lines) with 500 minutes and unlimited data on the 3rd, 4th, and 5th lines would cost $295 /mo. That’s a $15 increase over the same services on the current Classic plans. That’s $360 more over the course of the contract, or one full-price unlocked Nexus 4. I don’t understand how anyone can effectively sell this as a better product than what came before.

    • philyew

      I ran the comparison online a couple of days ago using the order builder and could still see savings in a four line value plan even buying four new Galaxy S3 devices.

      • archerian

        T-mobile (and their cronies everywhere) is pushing people to Value Plans, so of course on their site their prices will be such that Value Plans will be more attractive. The best deals for Classic Plans are from 3rd party retailers. The maximum cost of acquisition per line and per device is predetermined by T-mobile, its just presented differently in different retail locations and plans, if a customer gets suckered in at a place where the price is higher, then its just more money in the pockets of T-mobile and the retailer.

        • philyew

          Third party retailer deals will sometimes result in additional contract commitments and associated ETFs.

    • Mr. Hill

      $120 for unlimited everything on the first 2
      $45 for the other 3 on 500 mins 2GB ($15 per line with 500 mins 2GB)
      $100 per month for 20 months (assuming all 5 get Galaxy S3 or some other top of the line phone.

      That comes out to $265 for 20 months, $165 for 4 months when the phones are paid off over the course of the contract. $5960 total

      Comparable Classic Plan
      $160 for unlimited everything on the first two
      $105 for the other three lines on 500 mins 2GB ($35 per line)

      $265 for 24 months. $6,360 total

      Then not to mention T-Mobile charges way more upfront for phones on Classic Plans compared to Value Plans. I believe the Galaxy S3 is $320 upfront on Classic on only $150 upfront on Value. So assuming you want 5 GS3s you would have to bring $1600 in store to get your whole family phones on Classic or bring in $750 on Value.

      • Storm Millenium

        For classic plans, most ppl are smart enough to go to 3rd party vendors and get a phone like at Best Buy or Walmart where it would be cheaper.

        • archerian

          correct, the OP didn’t add the device costs to the plans, costs will actually be very similar on Classic if bought from 3rd party retailers. As an example based on numbers from the OP, getting the SGS3 from Walmart brings the effective price of the device to $98 from $320, making the Classic Plan total cost equal to Value. If any of the lines were not using unlimited talk/text, the savings would actually be on the Classic Plan side.

  • brianaz24

    I left because of the forced value plan…. not only do you pay for 100% of the device (no subsidy) you also have to pay a “migration fee” and in addition if you are 1/2 into your contract you will still end up with an ETF… at that rate I’ve pushed all my friends off to Sprint or AT&T…. so long T-Mobile it was a great 8 years…

    • od312

      I don’t know of any “forced” value plan as of yet. Elaborate. I still have my classic plan

      • brianaz24

        Wait for 2013… you’ll be forced to migrate…

    • xmiro

      Bull. No such thing as forced value plan. I’m on Classic and eligible to upgrade, got mailers last week to upgrade our phones and could keep our classic plan if I wanted ot

  • angelo

    my friend was paying 100 a month for 2 tmobile lines he switched to verizon and now pays 150 for 2 lines so his girlfriend could get an iphone and he was happy when he go droid razr m for 80 dollars and it doesnt bother him. i tried t show him how much more money he could have saved with tmobile but people see free iphone or buy one get two phones and they think they are getting the deal when in fact they are getting screwed.

    moral of the story nobody will pay $700 for an iphone on tmobile when verizon offer it for 100

    • od312

      Exactly my point!!

  • OnlineRefugee

    Consumers are loving life. The battles in the wireless war have moved to the prepaid field and the Generals (Carlos Slim, Masayoshi Son, Rene Obermann, Stephenson, et al.) are making strategic moves, especially in wireless broadband, e.g. Clearwire, the next “gold rush.”)

    We all get to wet our beaks as these wireless titans get into pissing matches.

    • philyew

      Wetting our beaks in a pissing match? Sorry but I’ll pass on that one… ;-)

  • Goodbytmo

    Sorry jack but all prepaid in 2013 one of my lines will be out in april and onto walmart for a cheeper price and the other will follow. tmobile please pull your head out of your a$$ before you piss away the rest of your customers! Someone tell me what does tmobile have to offer ? there not the cheepest they dont have the best coverage there not the fastest there customer service isnt great by anymeans and last but not least there phone line up isnt the best ether and now im suppost to sign a two year deal for prepaid. Sorry jack ship up or Ill ship out!

  • tmo boss

    With the prepaid you only use 75 percent of the towers

    • Whiskers

      Prove it.

  • JV

    Something I think no one has mentioned… If we have to go the unsubsidized route then I think that the phones shouldn’t be branded to a specific carrier, they should be stock and as such come with no bloatware.. and why would I buy a dual core Samsung SIII when I could get a quad core unlocked international SIII for about the same price.

    • Cruise Guy

      Good question. Here is the answer. First, you can buy a phone from anywhere, pending it has the same radios and frequencies and use it on T-Mobile. They have no problem with that. But there are benefits to having it branded. First, it is fully configured, meaning if you take a phone from Europe, you often have to change the APN settings and the MMS settings to make it work just right. Secondly. all of the T-Mobile Smart phones have the voice over IP allowing you to use your phone all over the world for free via wifi, or in your basement where cell phone coverage doesn’t work. The stock versions of phones don’t have this neat technology, so T-Mobile has to ad it in. And in terms of unsubsidized, the new Google phone they sell is a stock version.(no neat built in voip) When you pop a sim card into another carriers unlocked phone, it will generally work but often settings have to be changed. Also when you buy the T-Mobile variant, their customer support will help you to troubleshoot the phone.

      • Whiskers

        Why would any idiot buy a phone full price from somewhere else and then sign a 2 year contract on a VP plan , absolutely bad move.
        If your going to sign a 2 year leash agreement on a VP contract , you might as well let T-Mobile finance it for 0% interest for 20 months.

  • super 4G speed

    the problem you wouls be facing there is prepaid does not get the same service as contract plans they only get 75 percent of the towers and there is no roming there are 4 states in the U.S. that tmobile doesnt cover you can still get coverage threw roaming prepaid isnt what it is cut out to be

  • tmobile321

    Did you know with prepaid you only get to use 80% of the towers and you cannot roam. Tmobile has a agreement with ATT for roaming there is a big difference in coverage most people dont know tmobile doenst cover 5 states in america only with roaming.

    • Whiskers

      If Roaming is such a big deal where you live then simply go to another carrier’s prepaid plan that does.
      AT&T and Verizon has alot more prepaid towers than T-Mobile will ever hope for.
      One has to make a decision at that point and value would not be at the top of the list if that is the main problem.

  • Wicked1

    Glad I just updated with a great subsidy ($1 for S3 on Black Friday), before they start this bullshit. I never have paid full price for a phone and don’t plan to. I think it’s a risk as well. I only would be willing to pay $350 at the most, and that’s pushing it. Probably from Google. These $500-$600 unsubsidized prices are ridiculous, and way overpriced. These smartphones are cheap to make now, especially when they are made in some sweat shop overseas

    • Cruise Guy

      Wicked. Why don’t you try this. Pay the $200 “migration fee and $35 switch fee” to move to a Value plan. Your bill will drop almost $20 per month or more per line. $20 per month x 24 months = $500. Ok, now follow me. 24 months from now, you will have a net savings of about $265. You did get a great deal on Black Friday, and if you can upgrade on Black Friday two years from now, it could still be worth it. But considering every two years you will save about $500 over any classic plan, you can take that money and buy any phone to your hearts content. You are right though, if you wait just till the Black Friday sale, you could make out better, but you are stuck waiting to upgrade on that one day and to only what they have on special.

  • joel

    telefonica is movistar in Mexico. ^.^

  • Aston

    Wow. I rarely come onto tmonews, and I just found out about no more subsidized plans. Well then, I’ll be going to other carriers after my contract ends…assuming they don’t back peddle, which I fully expect them to do.

    • Cruise Guy

      Why would you do that? So you want to pay more at other carriers? Remember that an ATT subsidized phone + 24 months of payments is WAY WAY WAY more than a T-Mobile identical phone paid for in cash or payment plan + 24 months of payments. Go check out the pricing. You will be surprised when you do the math.

      • Aston

        Thank you cruise guy for you insightful response.

        I have done the math, and I am one of the few exceptions where the classic plan comes out cheaper than the value plan.

        It worked out that way because I bought my phones during a special tmo promotion where I got my phones for free. Yes the value plan does give you a slight discount in terms of monthly rates, but it wasn’t enough to offset the hefty price of the handset.

        Don’t always believe others when they tell you that something is always cheaper.

        Lol…you probably will not read this post. Oh well.

        I will be looking for a new carrier if tmo decides to drop classic plans. There are cheaper options out there. I will just have to look. Tmo service is already awful. The only saving grace was that it is (relatively) cheap. You take that competitive advantage by making customers paying $500-700 for a phone, and I’ll be running for the hills. And, I need multiple phones, so I would not be willing to pay thousands to upgrade all while be locked onto a 2 year contract. No thank you.

  • Jé Be (Here but Gone)

    Of.course they will experience some loss in the beginning, but if people are not intelligent enough to save money why dumb down yourself? If CEO’S of these companies are getting millions a year in sure the companies are turning a profit..stop being so greedy….damn…hell why clog up your network?…let them leave

  • Archduke Mgbeokwere

    “T-Mobile has their work cut out if they not only wish to avoid the
    pitfalls that Telefonica and Vodafone, but also to convince customers
    that paying $650+ dollars for an iPhone going for $199 elsewhere works
    out in their favor over the long run”…I get SOOOO sick of explaining this.

    PRICE BREAKDOWN AND SET ALL CARRIERS EVEN AT $69.99 FOR SERVICE(Which is how much TRULY unlimited is on the T-Mobile Value Plan):

    – T-Mobile (THIS IS JUST AN EXAMPLE T-MOBILE DOES NOT HAVE THE IPHONE YET) $199.99 DOWN and 20 a month added to your
    69.99 a month MAKING IT $89.99 FOR 20 MONTHS ONLY

    – Sprint: $199.99 DOWN and $40 per month for the
    rest of your life added to your bill

    – ATT: $199.99 DOWN and $70 per month for the rest
    of your life added to your bill

    – Verizon: $199.99 DOWN and $50.01 per month for the
    rest of your life added to your bill.

    If they are looking at upfront cost It allows customers to come the same or in most cases LESS OUT OF POCKET THE DAY THEY GET THEIR PHONE AND LESS ON THE MONTHLY BILL.

    Seriously, this American addiction to price subsidies is sickening and the more expensive the devices become THE LESS carriers will be able to subsidies.

  • John

    I think T-Mobile is doing the right thing. The value plan puts them in line (pricing wise) with lower tier phone services and they have better quality services. Even on a value plan they allow you to buy a phone. Although not subsidized they offer rebates and let you pay for a phone over a 20 month period. Personally I prefer to go to Craigslist or EBay and pay cash for the phone, but it’s an option for people that don’t have a couple of hundred bucks to spend on a phone.

    When I was younger and broker I would go for the company that had the best price and cheapest phone that I liked. Now that I’m more experienced I go for the price for the long haul and T-Mobiles service around me is excellent.