T-Mobile CMO Cole Brodman Clarifies Statements On Device Subsidies

There is little question that device subsidies are a hotbed of the US wireless industry with a variety set of viewpoints about their usefulness. One man who doesn’t see them as a beneficial part of the marketplace is T-Mobile CMO Cole Brodman, who last week spoke out regarding device subsidies and the negative impact they have on the consumer and the market.

While the comments we saw in our own post on Brodman’s comments were definitely emotional, there is an argument to be made for removing subsidies from the marketplace. I truly understand the notion that the removal of subsidies would increase the purchase price of a handset, nobody disputes that. What isn’t recognized is the increased cost of voice, data and text plans all as a result of carriers needing to win back some of the subsidy. There is plenty of supporting evidence that would help support the argument that without device subsidies, voice, text and data plans would decrease across the board passing savings on to the customer. There is a good chance a carrier has built-in an extra $20-$40 extra dollars of costs to help make up the device subsidy. AT&T and Verizon build it into the voice minutes, Sprint builds it into the total rate and T-Mobile into the voice and text plan.

The good news is that T-Mobile offers the cheapest rates because they use a razor thin margin on the subsidy at the $20 price point. I know that a lot of you are absolutely against the idea of a carrier removing device subsidies, and that paying $600 for a phone outright seems incomprehensible. It does, but mostly because we’re trained to think that way. The carriers have us running scared when we see full retail pricing. The unfortunate part of this is that T-Mobile’s Value Plans really are a great deal, they just aren’t being marketed the right way. More importantly, they are ahead of their time as US wireless consumers aren’t ready to completely grasp a world without device subsidies.

I’d urge you to put aside your fears of increased phone costs and read the following blog with the hope that one can realize that subsidies have been a thorn in the industry and consumers side for some time.

The Hidden Cost of Device Subsidies

March 12, 2012

By Cole Brodman, Chief Marketing Officer, T-Mobile

This week I participated in a panel discussion at the Geekwire Summit in Seattle. One of the questions we were asked by the moderator, Geekwire editor Todd Bishop, is “If you had a magic wand and could change one thing in the industry, what would you change?” My answer: I would remove device subsidies.

My answer wasn’t what Todd expected, but here’s why it makes sense…

Purchasing phones at steep discount (subsidized by wireless carriers) devalues the incredible technology innovations coming to market. It distorts the cost of devices and creates an uneven playing field for OEMs, carriers and retailers alike. Many Americans don’t realize the actual cost of the phones they’re purchasing with a two-year contract because the cost of that phone is included in the cost of their data plan and the fees associated with their contract. We’ve also unwittingly created a disposal marketplace for some pretty amazing products.

At T-Mobile, we think there’s a more transparent way to sell wireless, which is why we introduced T-Mobile Value plans. These plans break with the subsidy model. Instead, customers pay full price for a device in our line-up or set up payments in low, monthly installments. They can also bring their own device to our network. In return, we give them our most affordable rate plans.

In the future, my hope is we will see the U.S. industry follow our lead and move away from the subsidy-only model. Not only would this help level the playing field and foster competition, it would also help consumers by keeping rate plans affordable, providing more transparency in how they purchase wireless and it could encourage a robust, consumer-driven market for affordable (yet still amazing) used smartphones and tablets.

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  • Hurlamania

    The other plus to no subsidies is phone’s will see discounts on price as they age and are discontinued. Not just a discounted subsidy price as is now.

  • NardVa

    I think more people would by phones straight up if the price was more around 400.00 than 600.00. I think the retail price of a phone is inflated which force people into taking the phone for 200.00 under contract.

  • As much as I love T-Mobile. I highly doubt that any savings on the part of the service providers would be passed on to the customers. They’re all pretty greedy…

    • awww – you must have failed Economics 101…

      Your argument is false. 

      Greed has nothing to do with it – customers wan’t value for their $. Companies wan’t to make the most $ off of every customer – it’s a Win-Win situation.

      So there is always a self-correcting fine line of services for $.The one that offers the service at the best value will win. Some people prefer to pay more because they perceieve that one service is “better” than another or a “premium” service (re: Verizon, AT&T, Apple, BMW, Mercedes, etc, etc). There will ALWAYS be a market for that – but for the rest of us to say that they wont pass the savings onto customers is downright *retarded* and incredibly short sighted and ignores almost every credible economic theory known to man.

      tl;dr version: You’re a moron. Wanting to make $ for offering a service isn’t “greed” it’s called doing business. It’s capitalism.

    • 21stNow

       So what about the Value Plan vs. the Classic Plan?

  • While the arguments make some sense, it is more than likely that the end of subsidies will just result in higher prices being paid by customers for the phones up front with no resulting lowering of monthly costs.    

    I recently switched to tmobile and purchased subsidized phones.   The value plan was 20 dollars less per month but the cost of buying the phones would have been close to 800 more.    So the total cost of the value plans is in-fact more.    

    Also the terms and conditions of a phone contract are unilateral.   You are bound but the carrier is not bound by the terms and conditions.    If you wish to change you pay an ETF but if they change the terms you don’t get an early termination fee payment, you are just free to go.    Imagine if I sent a carrier an email that I planned to use 500% more roaming data than was allowed under contract last month and that the carrier had 30 days to cancel me ETF free or they have to allow me the extra 500% roaming data allowance?    That is what tmobile has done to us this month.   Allowable roaming minutes went from up to 50% (2.5GB on my 5GB 4G plan to 100MB) or a 25X reduction.    If I don’t like it I can leave but they don’t have to pay me anything even though they change a contract in mid contract.    In my case there is a small incentive for them to think twice about changing the terms. I am one month in on a contract that they subsidized a phone at 600 dollars for my family.   So if I leave ETF free it actually costs them money.   If I paid 600 dollars for a phone and they change the contract terms 60 days later I am stuck with a phone that I can’t use anywhere else (not on Verizon or Sprint and no 4G on At&T).   Sprint did this to me two months ago and at least they lost some money on my subsidized phones in forcing changes to customers.    The point is that loosing customers with highly subsidized phones is costly to the carriers and as a result they have to think twice about changing terms mid contract.   With no subsidy they can do whatever they wish and the customer can be left with close to worthless phones.

    • Guest

      Actually if you leave within 120 days of the beginning of your contract you’ll be billed the ETF plus the remainder of the total price of the device you paid a subsidy for and your usage.

  • ConeBone

    All BS, you will pay full price and still pay the same amount monthly, scam. They wouldn’t lower prices so give me a subsidized phone at the very least.

    • Not BS at all…

      • Exmngr

        he is actually right…you only save on average $5 per month on value…big time scam!!

        • monkeybdb

          that was sarcasm right??

    • Edy6401

      What a moron. Oh My God.

    • in2android

      I love ppl who think EVERYTHING is a scam, and EVERYONE is always trying to fool them. lol…. No supporting facts, but its a scam to you? This Bud’s for you,” ignorant nobody can outsmart me-the governments behind it all guy” Thanks for giving all of us of average intelligence someone to laugh at! Lol

      Europe has always done things this way, and they’re usu

    • NoX2o02

      I agree. There should be cheaper plans for people who buy full-cost phones.
      Hey… Wait a minute, There are!!! They are called value palns and they are cheaper because you don’t pay the subsity!!

  • Kelly

    I love my family value plan. Sure I paid full price for my Amaze AND my son’s My touch. BUT we have 3 phones and my tablet all with T-mobile. For this we pay $20 LESS for 4 lines than what my husband and I paid for separate plans for just TWO lines. 

    • Shariq949

      Why did you get a tablet on contract?

      • in2android

        she never said her tablet was on contract, she just said she has it on Tmobile. You can pay as you go with a data only sim card.

        • Kelly

          It is on contract. In fact, I won it through the T-mobile VIP zone sweepstakes. The sweepstakes was for a G-Slate (In the form of a $750 gift card), but I upgraded to the Samsung Galaxy Tab 10.1. With the value plan, if you already have a family plan, you get $10 off per month for a data plan for tablets w/ 2GB minimum. PLUS, the day I received my gift cards for the tablet, there was a $250 rebate offer on the Tab with a 2 year plan. Due to the discounts, the rebate essentially paid for that contract.  It was sooo worth it to me and I use it every day.

        • Kelly

          I’m sorry I was mistaken. The rebate for the tablet was $50. I got a rebate at the same time for the Amaze for $250. This was during one of their all hands day special sales when you sign up for the value plans. A great day to receive my gift cards in the mail. :)

        • in2android

          That’s a freaking awesome deal! Bet that was a good day! Lol… My wife bought me the Asus transformer Prime for Christmas, I had my eye on it, but I just couldn’t justify to part with the money, so my wife parted with it for me…. Lol. I absolutely love it also. The tablet experience is one of its own, and I really only touch the PC for business. I’m a fairly new business owner, and I’m actually figuring ways to do a lot of my work from the tablet. I do my inventory on it, and we also place our orders through it. We own a restaurant, and if there was a descent accounting app, and Microsoft office comparability I think I could toss the laptop! It won’t be long before tablets become full executive business devices!

        • Kelly

          It was a freaking awesome day! :) My husband and I were planning on the Prime for Christmas as well, but this came up instead. I will tell you, I’ve really become used to having internet EVERYWHERE! Once the contract is up, I’m not sure I’ll drop the data. With the value plan it’s still a good price!

        • Kelly

          I’m in school for IT/MIS and will be graduating in December. I use my mac for most classes, but I have to run windows on it due to the unavailability of programming apps for Windows that run on Lion! :P I can’t see there ever being visual studio for android… I would love to move toward more tablet usage in my schoolwork though. As more and more apps come out, I bet there will be office equivalent apps within a couple of years.

      • Kelly

        It is on contract. In fact, I won it through the T-mobile VIP zone sweepstakes. The sweepstakes was for a G-Slate (In the form of a $750 gift card), but I upgraded to the Samsung Galaxy Tab 10.1. With the value plan, if you already have a family plan, you get $10 off per month for a data plan for tablets w/ 2GB minimum. PLUS, the day I received my gift cards for the tablet, there was a $250 rebate offer on the Tab with a 2 year plan. Due to the discounts, the rebate essentially paid for that contract.  It was sooo worth it to me and I use it every day.

  • P.R.

    Actually, “full retail price” is not the actual price of the equipment. If subsidies were eliminated the vast mayority of customers will buy a mid-range or lower equipment because not everyone can pay between $600 – $800 every 2 years… manufacturers will have to reduce their prices to actual prices and the “full retail price” which conveniently changes when theres a “sale” will settle to a fair market value.   

    • G Dawg

      This is the problem with America.

      People can’t set goals and save for something that they want – they have to buy things on loans as “monthly installments” which just screw them over in the end.

      TF? Loans for phones? This is ridiculous.

      • NoX2o02

        True, but the manufcaturers and Cariers (t-mobile included) jack the full-cost prices pretty damn high. -as P.R. prices shot up when there was a sale. Companies are making alot of profits on these phones. If I start saving today to buy a phone at $600, in two years the same phones will be selling full-cost at $700 (just check best buys price on an old galaxy s 4G which is $100 more now then when it launched), and new will be $800. The subsidy shows a Value to teh customer, which is a complete illusion. And those of us paying full-cost pay the extra high fees to allow for that illusion.

  • I can agree, & I actually don’t mind paying for a phone outright using the value plan’s installment plan. I mean for one it gives you the option to get a device whenever you want to, not just every 2 years. Because you can get one anytime as long as you pay off the other phone around the time of your new phone purchase, plus it isn’t that bad of a cost. Value plans you get the device at the price you would get it on a Classic plan initially, then you pay it back at a cheaper rate that what it used to be with the installment plans, which if I’m correct is no more than $15 a month.

    • monkeybdb

      $20 now for some phones, but just cheaper down

  • Corey P

    Ok folks, the retail price of a phone is NOT inflated. It is, in most cases, the price the carriers pay the manufacturers for the phone. And to Martin, you can’t look at the price of the phones to figure out what the best deal is. The sales people usually explain it pretty clearly. I’m on a Value plan, and couldn’t be happier!

    • wsj

      Do you really believe that the carriers are selling product at their cost?  I don’t.

      • monkeybdb

        in most cases, cost for the phones are within $100 of the retail prices listed on the cards. employees buy at cost.

        • NoX2o02

          not exactly. I was an employee for years, and when phones get stolen (etc) and we enter inventory in SAP (inventory system) we get cost totals of those devices. Some are really surprising (usually low end phones, as their totals are pretty close to cost. But there are high end phones which retail at full-cost for over $100 on top of cost.

    • Roger

      The price is definitely inflated somewhat – note how tmo’s all end in nice round numbers.  If they did something like Costco who never do more than a 14% markup it would be fine.  Tmo also like to do sales on subsidised phones dropping the price paid by hundreds of dollars.  Lastly the only place you can buy tmo phones is via them anyway because the frequencies used are not the same as GSM elsewhere.

      If they always did the same markup (eg 15%), had sales like they did for subsidised phones and there was actual price competition then it would be great.

    • Whiskers

      Really , so the HD7 ($500.00+ at retail cost) i just got 5 months ago on the Value plan for $200.00 is about all it cost T-Mobile from HTC in the first place . T-Mobile did’nt take that big of a loss from that phone just to get people to sign up for their Value Plans. I bet T-Mobile did’nt pay anywhere close to the $500.00+ retail price for it from HTC.

  • Aaron Peromsik

    Within certain usage patterns, this so-called value plan still doesn’t hold a candle to T-Mobile’s own prepaid offerings, to say nothing of the competition. For the budget-minded, the prepaid version of Exhibit II 4G at Wal-Mart or Amazon is a great compromise between specs and price.

    One example: individual value plan gives you 500 min for $35, where on prepaid you get 1500 min for $30. Unfortunately there currently isn’t a good way to pay a bit extra if you want to go beyond the included 30MB of data. (For comparison, PagePlus at the same price point gives only 1200 min but 100MB data, and you can buy more if you need it without hurting your minutes.)

  • Whiskers

    The only way i would buy my next phone outright it would have to have all radio freq in it so you can use it on any carrier,
    Why would someone pay $600+ for a phone that can only be used on T-Mobiles screwed up 1700mhz freq.
    Second they would have to start selling more phones with different options than damn Android.

  • wsj

    In an ideal world the CMO is right, but we do not live in one.  If you remove the subsidies, do you really think that the carriers are going to reduce their rate plan by a corrsponding amount?  I doubt it.  Instead, they will keep the prices the same and say we did not have a rate increase which we would have had had we not removed subsidy and keep the extra margin.

    The only way to stop subsidies is by govt action, by not allowing the practice. 

    What he needs to clarify is when TMUSA is going to make a deal with Apple.

    • Littlesis1774

      Personally I think this guy should really be fired. Everytime he says something 24 hours later he says clarify it. I think he should really stop with his iphone hate.

  • Okay so here’s exactly how T-Mobile can show that the other big three carriers are thieves.

    Show U.S consumers the following:

    1) If a consumer buys an old USED AT&T iPhone 3G online and decides to sign up service for AT&T, AT&T charges you EXACTLY the same plan that they used to recoup the money of the subsidy. MIND YOU, AT&T has ALREADY recouped that money, yet they keep using the SAME rate plan. If that isn’t stealing, I really don’t know what is. (Verizon and Sprint also do this)

    2) Show consumers that the handsets are like computers and that’s why these smartphones cost more than $450 dollars, and not really the $199 and below prices.

    3) Show how much money can be saved by buying the handset unsubsidized and signing up for the cheaper rate plans.

    • Whiskers

      What do you think T-Mobile is going to do when you need tech support for that $600.+ phone you did’nt purchase from them…
      They won’t have to support it because you did’nt buy it from them, and you will be on your own for equipment protection insurance as well.
      You might as well go prepaid , you buy your phone outright anyways and you don’t have to sign a two year contract either.


      • Climber42104bg

        T-mobile does provide tech support for the iPhone, and other phones on their network, they’ll actually walk you through the MMS and internet settings for your phone if you call customer service.  You can also purchase the equipment insurance form them too. 

        • Yeah, they do provide tech support for such cases. As much as they can for hardware they don’t sell. Anyone who buys a phone outside of T-Mobile expecting T-Mobile to then service it isn’t making a smart buying decision anyway.

        • NoX2o02

          Agreed, but for us who have worked in the industry and really know our phones, or for peopel willing to search the web for the answers, unlocked is a pretty good deal. I’ve had several, from SE, to N series nokia and never had any issues dealing with those companies or getting my settings etc, even though tmo had no clue how to help, the manufacturers did.

        • philly8

          they can always call the manufacture for tech support, the nokia lumia for t-mobile even has nokia care provided so you can speak with a live rep from nokia to get started when you get your new phone.

        • Whiskers

          I’ve had 3 unlocked iphones on T-Mobile in the past and their tech support for them is a joke. I’ve had better support from forum members who knew more than T-Mobile techs and their suppose to be real techs working for T-Mobile.

      • in2android

        The insurance is cheaper through squaretrade, and so is the deductible.

      • What you’re talking about is irrelevant. I wasn’t referring to the iPhone specifically being brought to T-Mobile, I was using it as an example as to what anti-consumer AT&T practices.

        If you bought a T-Mobile phone unsubsidized, T-Mobile will not give you a rate plan that belongs to the subsidized models. That’s the difference between the big three and T-Mobile. T-Mobile would give you the value plan, because you bought the device yourself and in the long run you save much more.

        That was the whole point of the comment i posted.

  • mreveryphone

    I’ve been saying this for awhile now. You pay for the phone two times over at the end of your contract. It’s cheaper to buy the phone outright and go the month to month route.

    •  That’s so true.

  • Nearmsp

    For 8 years I had a classic family plan and was unaware about the value plan. We saved a lot of money by moving to the value plan. I made an excel sheet and made various what if scenarios and the value plan came down a winner for me every time. That said, something not mentioned here is the bulk “discount” provided by the cell phone manufacturers to wireless providers. AT&T might get the Samsung Galaxy S2 at a cheaper price than what T-mobile pays for it.  I am happy for both value and classic plans being in existence. Not many people understand value plans and thus many people will prefer upfront discounts.

    • Spanky

      I am using an unlocked GSM Galaxy Nexus, so the Value plan would make sense to me. However, I don’t agree with having to sign a two year contract for it. I understand signing a contract for a plan that involves a subsidized device. Signing one for a plan that doesn’t include a subsidized device, let alone a plan for which I will bring my own device? I’ll pass.

  • SB

    Brodman is ABSOLUTELY right.

    This is what a hypothetical bill looks like right now:

    Voice – xxx minutes – $40
    Text – yyy messages – $10
    Data – xxx MB – $30

    Total – $80/ month

    This is what the “true” pricing is:

    Voice – xxx minutes – $30

    Text – yyy messages – $5

    Data – xxx MB – $25
    Handset subsidy – $20

    Total – $80/month

    This example has a hypothetical handset (mid-range smartphone, say with $0 down and $480 total subsidy. ($20x 24 months = $480 – I ignored the finance charges).

    So, at first glance, nothing changes for the consumer. However, if someone decides to bring their own device, or chooses to keep a device for longer than than 24 months, there are some real savings for the consumer.

    Currently, every single person on every carrier with a higher-end phone is being subsidized by those using lower end phones. Every single person who chooses to upgrade every 20 or so months (or whenever they become eligible) is being subsidized by the people who don’t upgrade till after 24 (or longer) months.

    There is no thing as a free lunch. You want to play, you have to pay. The monthly amount should have a reasonable interest cost built-in – say, a total of 5% for a 12 month pay, and a total of 10% for a 24 month pay.

    Going back to the example above, I would have to spend approx. $70/month for a basic smartphone, $80/month for a mid/highrange smartphone, and $90/month for a super high-end phone (all at $0 down). I should be able to upgrade to new phone whenever I want  to. I would just have to pay the remaining balance down, finance the new and sign a 2 year contract extension from that point of time onward.

    If I am not financing the phone, give me a month to month contract at the same price, of course minus any subsidy charge (this may be a problem for the carriers, as they want some multi-year visibility).

    Oh, and while I am dreaming, how about ALL phones to be sold in the US after 2013 to be multi-mode. CDMA/GSM/UMTS/LTE (covering all the bands that are in use in North America) and UNLOCKED. You want competition, you got competition. No more Verizon phone or AT&T phone. LTE spectrum use has an “unlocked” requirement, but it is a bull shit requirement – yes it is unlocked, but oooops, we only have the VZW LTE band… FCC needs to insist that all usable LTE bands -700, 800,1700, 1900 and 2600 – are in each LTE phone).

    Ok – end of rant…


  • Roger

    How about tmo sell phones that have not been customized?  No logos on the phone, no preinstalled crapware etc?  All of that adds expense.

    • chui101

      The preinstalled crapware probably makes a bit of money for T-mobile from Slacker and such, just like computer manufacturers get a bit of a kickback for installing Norton crapware on computers.

      • Gouv

        Ahhh that would be the android problem.

      • Roger

        How does printing “T Mobile” on a phone make then extra money?

  • HM

    Badman is so right about removing subsidies which are distorting the pricing and being so gusty about introducing discounted Value plans.

    Moreover, You are neither required nor expected to buy computer from your internet provider. Then why would you be expected/required to buy a phone from your Wireless provider? AT&T & VZ are using their scale/size to sign exclusive deals with handset manufactures putting relatively smaller competitors like TMo, Sprint, MetroPCS, Cricket etc at disadvantage. These exclusive deals(not specific to iPhone but in general all phones) are not innovations but anti-competitive practices.

    • HM

       Correction to the name “Brodman”. Moderator may correct above. Thanks.

      • NoX2o02

        But, t-mobile could have combated this simply by allowing iphones and other unlocked devices from overseas to be used on their high-speed network. This is an option they are currently exporing and supposedly going to do, but c’mon. It coul dhave been done years ago.

        • CCollision

          They’re in the process of refarming their 1900MHz spectrum for that, so those devices will work in the coming years.

        • smylax

          Actually, no, they couldn’t have done this years ago. They did not have the spectrum in the right bandwidth to support it, hence why they HAD to buy whatever spectrum was available in order to launch 3G. And the only spectrum available was AWS/1700MHz. Do you think if carriers had a choice in what bandwidth to work that they would EVER pick the higher frequency? You have to use what is available…

  • HM

    Also, there are lot of Coke-Pepsi blind folded tests. I wonder if brand is suppressed and three devices with the same specs specs, one each running on each on AT&T,VZ & TMo in a city like Los Angeles, people would be able to correctly tell which network & what technology phone is using just by looking performance of Apps like Google Maps, Facebook e-mail etc.

    • CCollision

      I bet a lot of people would choose the iPhone for its stability and smoothness. And this is coming from an Android user.

  • NoX2o02

    Personally, I’d love to pay full-cost for phones and pay much less for plans, but, don’t rob me on the phone. $500 one day, and $600 when they have a sale. The truth is the FAKE full cost greatly exagerates the plastic, mass produced phone’s value as much as they say the discount devalues the technology, I mean hoenstly, today we can buy a home computer, laptop, or a basic iPad for less then some phones. They make profit on plans and features, then they make profit on phones.

  • Deaconclgi

    I’ve been bringing my own phones to T-mobile since 2008, with my N82 and several unlocked phones and generations later, I continue to do so. I will again when I purchase the 808 Pureview. I’m used to paying over 500 for a smartphone but at the rate that technology changes these days, 500 more than twice a year or two is a lot to pay for.

    My 600 dollar purchase used to be able to last a year or 2 before being out dated and that is not the case anymore.

    My wife barely agrees to the current $600 device per 2 year plan now. N82-2008, N900-2009, N8-2010, Pureview-2012 and that doesn’t count the subsidized purchases in between like the HD2, G2, Galaxy S4G, GSII, Astound, Lumia 710 and others. I’m a pretty expensive guy when it comes to tech, look at my Disqus pic.

    If I had to pay full price for all my phones…..I would have less devices.

  • The reason I have T-mobile is because I can’t afford a more expensive rate plan or the phones that those carriers sale, even with their subsidies. I’m a student and only work 25 hours a week. One paycheck pays my rent the other literally pays my other bills. I dip into savings just to buy food and I’m not an irresponsible person who goes out and drinks away my money or buys a lot of stuff I don’t need. I personally have not paid more than $100 for a new phone in over 4 years. I have two lines and have it set up so that I can upgrade one of them each year. I got the HTC sensation for $99 a month after it came out with an upgrade and NOT by calling T-mobile customer service and threatening to leave them if I don’t get a cheaper deal. (This is my opinion is something that is really hurting the company.) I got it through a 3rd party website, it just took a little patience and diligence on my part checking them periodically to catch the deal. 

    If I had to pay 600$ for a new phone every year even with payments (50/mth) for a year I wouldn’t ever be able to get a new phone. I’d be stuck with some lame phone that would make me hate technology. 

    I honestly don’t know a person who is on T-mobile because they can afford to spend extra money. This would completely alienate their base clientele and truly drive them out of business. Even $40 off per line of my plan a month I’d still come out paying more. I’d honestly rather pay another $10/line/month to be able to keep the subsidy. 

    • philly8

      unl everything with discount on phone is starting at 79.99…..value plan unl everything starting at 59.99…. att and verizon starting at 99.99

    • Spanky

      I am not Mr. Moneybags, but I can definitely afford to spend an additional $50 per month that Verizon (or $40 with AT&T) would charge me for a plan similar to the one that I have with T-Mobile. However, why would I pay more money for the same crappy service? I prefer GSM, which automatically disqualifies Verizon. Living in NYC, where AT&T is notoriously bad, T-Mobile is the only choice for me. Although the data speeds in my neighborhood are comparatively poor (1.5 – 1.8 Mbps downstream), I don’t see the sense in paying more money for marginally better service (AT&T gets about 2.8 Mbps down in my neighborhood). Just because I can afford to spend the extra money, doesn’t mean I want to.

  • Ash

    Man, after reading the comments, many of you need to go back to school and learn some basic math.

    If the rest of the world can do it, why can’t we? Have we become so dumb and rely living on credits, that we can’t plan ahead? That’s how the USA got in financial deep shit in the first place.

    And yes, only T-mo gives you cheaper plans in the USA if you bring your own phone.

    Too bad there are so many of you who don’t see the benefit or just don’t understand, and want your cheap or free phones up front…
    I guess the US carriers can laugh all the way to the bank for many many years to come.

    I’ll keep my EM+ plan and buy my new phone whenever I see fit.

    Luckily, there are still many I see is not fooled by: cheap/free phone up front, rape your wallet while you bend over every month scam. Now that’s the real scam.

  • Fixxmyhead

    totally agree with u thats why i buy off contract 

  • Gouv

    As I’ve said before, if T-mobile weren’t in a disadvantaged position overall and they were on top this guy would be singing a very different tune. This is why I don’t buy into what he’s trying to push. T-mo should have been wiser a few years back. They could have been a market leader and truly been able to push such an idea. Now they are trying to vilify the other carriers because tmo Mismanaged themselves. So now because they decided what’s truly best for everyone, the rest should jump on board and do what they want based on how they stand today and the position they got themselves into. I’m sure vzw and AT&T were taking notes on this one lol. Even if many are “trained” into this mentality, it’s not the the rest of the indutry’s fault or need to follow suit of something so supposedly transparent. Sometimes I wonder if tmobile remembers they are in this business to make money…. People would usually rather pay a cheaper price on a phone and pay a little more at the end of the month. Most don’t want to knowingly dish out that kind of cash usually even of its spread out into payments. I find many people would rather pay for a service bill than an actual bill for product if they think the service is well worth it and it’s guaranteed. This is where AT&T and especially Verizon did it right years ago. Take a look at them now. They bring in big bucks and have no need to market value brand because they have placed and emphasis on premium brand wireless which doesn’t really exist. This may sound awful but tmobile is too transparent and honest and I think that is their biggest downfall even though it’s absolutely wonderful for their customers. I think many people want to feel like they are spending money into something that is the best. This is how companies like apple and vzw and many others have dominated. Tmo hasn’t taken this approach at all IMO…. Let’s face it, people are drawn to and want to be part of what they precieve is the best or most elite. They shamelessly give their hard earned money and enjoy doin so in return for a fake sense of confidence in what they just spent. TMO needs this, their customers are either really smart and experienced with cost consciousness or just likely can’t afford anything else. Very different customer types.

    • With the way the economy is right now, I don’t think people will care much about premium brands right now. They’re only willing to go to AT&T and Verizon because of their popular handsets. People don’t care about buying things that are “premium”. Only the snobby ones of course. People just WANT to get a handset of THEIR choice and at a cheap price.

      If iPhones were to be sold without a subsidy, I don’t think they would have sold like the way they are selling now.

      Bottom line, it’s not about the rate plans, it’s about the handsets, and how cheap (subsidized) they are.

      • Magentadress

        Fabio, you are stupid and people like you are the reason unsubsidized phones are so expensive. You can’t see the bigger picture of what the CMO is trying to convey.


        • Porky

          I disagree with you. I think Fabio makes a good point. I don’t think the iphone would be as successful as it is today if they did not use the subsidy route. 

        • Spanky

          You make a valid point. If there was no subsidy when the iPhone was introduced, it definitely wouldn’t have become as successful as it has. However, that point is moot now. Apple can market a piece of turd, put an “i” in front of it, and people will line up in droves to buy it. Apple products have become status symbols. 

        • 21stNow

          There was no subsidy on iPhones when they were introduced.  The first subsidized iPhone was the iPhone 3G.

      • Porky

        I respectfully disagree.

        Apple is a “premium brand,” and people are willing to shell out hundreds or thousands for the newest apple devices even if their bank account is zero. Regardless of socioeconomic status, many buy these “premium brands” for the brand name in order to overcompensate because they feel insecure about themselves. This is just what I’ve seen. 

      • Spanky

        I am not an iPhone user, nor am I planning on becoming one. However, I respectfully disagree with your assertion that unsubsidized iPhones wouldn’t sell as well as they have. There are a million T-Mobile subscribers that will counter that point.

      • Gouv

        Oh fabio… I admire your dedication to tmo I really do. But let’s face it, if what you say is correct than how come tmo still faces loses in these economic times and the bigger guys fare better and still take tmo customers away. It can’t single handedly be the iPhone, that’s just too easy. Also if that truly is the bottom line like you say it is than why not keep and support the subsidy model?

    •  What T-Mobile is doing is hedging their bets.  They aren’t going to completely change their entire model to something different than every other carrier.  If anything having the choice to do both is a great thing.  What T-Mobile needs to do is work on the quality of their service and coverage.

  • Gouv

    One thing you must realize, you are in the minority of people that take the time to understand these things. This epidemic you are describing is not only in the USA, but it’s permeated into Europe and now the developing countries in Asia and middle east. Also another thing to consider is that even though times are tough there are still many people who have a more disposable income here in America and don’t care about cost. The world is become cashless, let’s face it however unfortunate it is. I can’t imagine it’ll get any better in the future either. As long as you are smart and maintain resourcefulness you’ll always stay a step ahead.

  • Porky

    HA! I would bet my new rolex watch that your finances are not great either. I laugh every time I see the dumb criticizing the dumb. It is great entertainment that rivals reality tv. Keep spouting out ignorant bs. I’ll be sitting here with my popcorn enjoying the entertainment. 

    • Ash

      Right, I’ve owned 3 cars, each time an upgrade. Almost done paying for my 1st house in US, saved tons on refinance at the right timing, working hard planing on buying another house in Asia.
      All done with my own hard work and earnings, not silver spoon hand me downs.

      So what have you done lately?
      “Roll eyes”

      • Porky

        I literally have zero debt, something most americans can only dream of. I have a lot of nice things, but I will not go into detail because it is just tactless and will instantly start a discussion on class warfare. But please, keep on admonishing everyone and dealing out unsolicited financial advice/criticism. It is hilarious and thoroughly entertaining, which keeps me coming back. 

  • JD Wheeler

    The fundamental problem is even if telecom companies axed phone subsidies they would still charge an outrageous amount for the monthly plans. The most exagerated cost of any item sold is a text message. (http://gthing.net/the-true-price-of-sms-messages ) The same is true for voice and data. Are we really naive enough to believe that the Big 4 would save so much and then pass the savings on to the consumer? Give me a break! The reason telecoms would want to get rid of subsidies is so they could further maximize profit. 

  • Frigadroid

    My theory is german/european thinking works great over there but this is America. We had to make our own football different than the rest of the world. We run our Derby on dirt instead of turf in the opposite direction. We drive big fast cars on the right side of the road. DT hasn’t a clue how to do business in America.
    I agree with Cole that the value plan hasn’t been marketed properly the emphasis should be, you bring your own phone for the lowest possible rate. With out a lot of fine print like roaming & throttling I might add.

    • Guest

      lol! it used to perhaps … look how sh*tty europe is doing right now. they don’t know wtf they are doing over there either. the us seems to be in better shape. they really should be modeling business after us or at least the companies that survived in the past 10 years without having to be bailed out. Ford is a great example.

  • all of yall are being duped. it costs HTC, Samsung, Nokia, and Apple like $80-$100 to make a phone but they are selling it for $599?? hmm…Subsidies or not, we, the consumers, still lose. If im satisfied with my reception, Id take my $200 iPhone 5/ HTC One X/ Galaxy S III under contract no matter if the service was Tmobile, At&t, or Verizon. 

    • Aaron Tant

      so, now your complaint lay with the manufacturer, not the carrier.

    • Jaime Laigo

      Ummm…… You are quoting the cost of parts….

    • charlieboy808

      Cost of the phone in part may be $80-$100 but not the cost of months and hours of engineering and testing.

    • Gouv

      You aren’t taking labor and other costly elements associated with production including  various setbacks and possible legal problems that arise.  That is why the price gets inflated, everyone needs to make a profit or a promised profit by the time the consumers get their hands on the device.

    •  So the parts put themselves together on public land and fly to the carriers all on their own?  The parts may be $80-$100 but there are costs beyond all of that that OEMs have as well (salaries, benefits, lights, power, rent, land, insurance etc.). 

    • Kalel

       It costs over $200 in just parts for the Iphone or any higher end Android.  Marcus, just do a google search for “Iphone bill of materials” and you’ll see that your beliefs of how much a phone costs is completely irrational and you should keep your day job.

  • Guest

    huh? and we are supposed to trust that carriers wont continue to charge us more? yeah, right…. that’s such a load of bs! this guy needs to get canned along with all the tmobile execs

    • Here

       Get out from under your Rock.  If you have had a cell in the last 1, 2, 5, or 10 years this makes sense…and why do you say they would charge you more?  Probably because you have service with AT&T.  Put a little thought into your commenting.

  • Mark

     You left out AMPS :)


    The individuals posting on this article are very disappointing. Not only does it highlight the “give it to me for free” attitude that is destroying our society, but it also displays the ignorance of how much it costs to engineer, develop, produce and market these phones. One individual said that we have been duped because it only costs about 100 dollars to make one of these 600 dollar phones.That is so short sighted. Manufacturers have hundreds of engineers that take years to develop these phones. These chip sets do not fall out of the sky and land on a manufacturing line for the workers to put together. The technology needs to be developed. It takes a lot of great minds to engineer such things as a dual core processor small enough to fit in a handset. It took decades to come up with the technology to get you your HSPA+ over the air.The bottom line is that it does cost more than 100 dollars to produce a phone. 

    As to the subsidies, did none of you read the article? Do you understand what he was trying to say? If everyone bought their phones outright the plans would cost less. This would help everyone. Because at the end of the day T-Mobile is not going to give you something for free. They are going to re-coup their costs. The costs you are not paying up front, you are paying in the form of higher rate plans. That is why we came out with the value plans. To give people a choice. Pay now or pay more later. I  don’t know why this seems so unreasonable. It is very frustrating to see so many of you react so predictably when you think someone is going to take away your “free” goodies. In a day when I see a mother of 2 buying groceries with an EBT card while she talks on her iPhone4 and gets into her SUV to go home to the house she cannot afford, I don’t know why I am surprised.

    On to the network. We are getting a hell of a deal from any Cell carrier. It costs between $200,000.00 and $750,000.00 to build one cell site. T-mobile has 52,000 cell sites. Do the math. That is just getting them built. Then there is the matter of maintaining them and upgrading them as technology matures. And then there is the cost of keeping them on the air in the form of paying the power bill and getting that fiber optic Ethernet pipe to to the site so you can update your Facebook page while on your way to the beach. That is very costly too. and all for around 50-60 dollars a month. And we complain it costs too much. 
    And who are you to decide how much someone can charge for the cost of their product? HTC does not create these wonderful devices for your convenience.  They do so to make a profit. I would like to see you create something better for a lower price. 

    At the end of the day we are all spoiled and we need to wake up. 

    • Tward291

      I agree with everything you say. We have gotten use to the 200 to 300 price tag on a subsidize phone that we think that is the real price of the handset. Most people dont see the good because we are short minded we only think in the short term. perception is strong intead of looking at the whole picture we just see 600 bucks leaving are bank instead of the normal 200-300. Im currently a student studying electrical engineering and i tell you before i started i had the same mindset that theres no way a cell phone can cost that much. If you look at the long hard work put in to these technologies we take for granted we could understand the real price.In order for us to move away from this somebody gotta go first and tmobile is with there value plan, they just need to advertise the benifits more

      • Gouv

        Good!! My undergrad was electrical engineering. However my goal was engineering managent after I got my MBA years ago. It’s rewarding once you finish. Stay strong with it.

    • Gouv

      Wow I think tmo tech is a fiscal conservative. How dare you criticize their freebies. They are entitled to it because you work hard and are driven! You are clearly a terrible person because you have so much Money and 40 percent of everything you make should go to support bombs and whores with 9 kids. How dare you judge these people and how dare you lack tolerance. We can’t all be as lucky as you, so you should share most of your hard earned money to those that contribute less to society because they are the disadvantaged ones who struggle more and deserve freebies. They are ENTITLED and thankfully we have the greatest persist elect who wants this. If we are lucky we’ll end up like Greece.

      F-ed up right?

      To think there are likely more people in this country that think this way than ever.

      • Jaime Laigo

        You sir are an idiot! 
        If you get a credit card do you not expect to pay interest or expect to
        pay at all?  It is the same as paying
        with cash is what they are saying, in the long run you save.  Don’t torch people for being able to pay with
        cash and not have to depend on credit.


        As the last quarter shows T-Mobile made money and the top 3
        lost.  Why?  The iphone is a great example of the
        subsidies issues.  So many people have
        them and the carriers will not make money off of them till 2015 or later thus
        driving up there prices on plans so they can make a profit.

        FYI, speaking to your fictional character because they are everywhere…..

        • Guest

          Jaime, your comment just made their point. If you are trying to disagree, think smarter.

        • Jaime Laigo

          Ummm, did you miss the FYI?

        • Gouv

          You guessed it…. You terrorist!!!!

        • Gouv

          Lol you terrorist!!

        • Gouv

          I never mentioned credit cards in my last reply to tmotech…  I enjoy paying with cash personally. 

          Why exactly are you are calling me an “idiot” ?

          If you meant to reply to tmotech than you are truly an idiot….

          The character he describes is not fictional, a good chunk of the population is  living off some type of hand out from the gov.  Its also safe to say that most are abusing it.  The character is not fictional, if it was than our society wouldn’t be declining.

          Furthermore, even if they lost money in comparison they still aren’t sitting on the cash reserves that the others are.  Keep drinking your kool aid and thinking everyone is an idiot because they aren’t like you.

        • Jaime Laigo

          Ummm, did you miss the FYI?

        • Gouv

          U too. U r a comment terrorist!!!

      • Porky

        This is a hilarious post. Please keep them coming.

        One thing I do want people to think about…Tmobile help perpetuate this mind set and contribute to this problem yet they are complaining about it. They are not innocent either and should not be pointing fingers when they are just as guilty. It discredits them and makes their points (however valid) carry little weight.

        • I don’t think this discredits them at all, I think you are almost missing the point of the post.

        • Porky

          Hi David,


          I understand their perspective that subsidizes are wreaking havoc
          on the wireless industry, but I do believe it discredits them because they help
          perpetuate these “sociological pathologies” ingrained in the American psyche by
          continuing to advertise and to emphasize the importance of subsidized phones.
          They are complaining about a problem that they helped propagate and benefited
          from, which to me discredits them.  This
          is similar to how many politicians in congress spent their entire career pork barreling
          and ear marking bills that benefited them; yet they turn around and complain
          about overspending.


          We just stand on different sides of the aisle on this issue.

        • Commander_Fury

           Amen . I love it when people throw around the term entitlements as applied to government even thou we don’t bring in enough money to operate a government . And before anyone mentions certain gov sponsored programs , the next thing both sides agreed to cut were food inspections . “How dare you feel entitled to eat safe meat ? Don’t you know how to boil food lib !” . As far as phone subsidies that is an American telco invention . I guess in the liberal socialist European countries they just don’t feel so entitled . Sorry but I hate that word . It comes from a politician who has the nerve to feel entitled to a lifetime of benefits for a couple of years worth of work .

  • well considering T-mobile isn’t trying very hard to get good phones for its network I would have to go to another carrier to buy a phone with the features I desire.

    • Ben McRill

      Samsung Galaxy S2 and soon the 3. Affordable and awesome MyTouch line, the HTC Amaze and Sensation, the Sidekick, the soon to be launched HTC One S, the BB9900 and torch, the windows phones. They may not all be your cup of tea but that sounds like a great line up to me! This doesn’t even mention the phones from the past!

      • Whiskers

        6 of them listed==Android
        2 of them WM and neither of them are high-end WM phones.
        Blackberry is just about done and the sidekick  , well we not much to rave about there.
        So unless your an Android OS lover , your pretty much screwed of settle more medium level phones.

        • DizzahGee

          Show me a faster processor in a windows phone than the Lumia, please!

  • haters on the rocks

    So with the value plan from T-mobile do u down 200 dollars on the phone and I have 21 months to pay it down and the data,voice,text are cheaper?

    • Ben McRill

      You would simply pay the down payment (up front, and price depends on phone) then pay off the remaining balance over the (almost) 2 years. BUT you pay much less per month. Your total 2 year cost is lower to pay full price for a phone and get the Value Plan. 

      • hater on the rocks

        ohhhh ok that’s very interesting 

        •  T-Mobile does a horrible job of explaining this to people which is one of the reasons why people get so pissed at them when they push their value plans.

        • hater on the rocks

          yeah they do confusing but i get it now. i wouldnt mind jumping on this plan but im on the classic plan and they gonna charge u 200 to change it to this plan. but maybe after my plan is over. im gonna down 200 dollar on a upgrade anyway and pay down the phone with interest free until i pay it off.

        • Simi4

          Plus the savings often aren’t that great and don’t kick in until 20 months down the line.  People want immediate gratification and a sale price they can understand,  Something like Amazon discounting a phone for .01 or Verizon doing double the data promo, or even when I first joined Tmobile and t hey had a promotion for $10 off the regular monthly rate for the duration of your time as a customer.  Those are easy to understand and entice someone to spend money.  If your own employees can’t explain it, then you’re in trouble.  Plus you often save $10-20 per month on the rate plan but then you add that same amount back as you’re paying the device back on monthly installments…so it seems like a lot of math for no reason.  Yes, you may save $100-200 over a 24 month period, but those savings don’t kick in for over a year and a half…Thats just not the best way to work it -Heck, people may move or need to cancel their contract by then for a variety of reasons.  The sale works when you normally sell the device for $200 and for one weekend, you sell it for .25 and YOU ADVERTISE THAT.  You don’t have a value sale and don’t tell anybody about it, or don’t even email or text your current customer base.  Or if your regular rate plan is $79.99 – offer $10 off per month…That way people feel they’re getting a deal every month… I was saving $10 a month for years until I finally changed my plan and went to prepaid until I can switch carriers

        • DizzahGee

          I wish they’d stop adverting the value rate plan and completely ignore the cost of the handset, it’s probably the biggest bait-and-switch in the industry, and people don’t like that.  It’s a shame, because it’s also the best contract deal in the industry, if they explain it properly.  It’s not that hard for someone to say “You pay X today, you pay Y a month until N, and after N, it’s Z.”  The end numbers are what people care about most when it comes out of their pocketbooks.

        • Simi4

          Like I said, in todays marketplace, people want immediate gratification and immediate savings.  They’d be better off to do something like that.  Telling a customer that in a year and a half they’ll start saving $20 a month – and that by then, they’ll probably want to upgrade their phone and have to start this whole process again isn’t enticing or a strong action urge to purchase for most folks.  It also doesnt register for people if you say the plan is $20 a month cheaper but you’re going to be charged $20 a month for the phone installment plan.  Its just marketing 101.  

        • tommy

          That sounds more like yesterday’s marketplace than today’s marketplace. I think eventually people are going to stop being stupid.

    • tommy

      Thats how it works. I’m curious though how many potential customers are turned off because they don’t qualify for the eip, the eip is the 20 month installment plan which is really a loan from tmobile, interest free. If they don’t qualify they are probably expected to go to the classic plan, and then they get frustrated. Might be how I would feel about it.
      You don’t necessarily down 200 dollars on the phone if there is a sale and rebate but normally that’s it because the phone is 600 and the eip is 400.

  • I’m totally in favour of removing subsidies. There are better alternatives (such as installment payment systems) that do not penalise people who fail, for whatever reason, to buy subsidized phones (either because they keep the same phone for years, or because they buy a phone outside of the T-Mobile supplied range.)

  • Plymptonia

     This is sadly, true.

    Like the “Unlimited” data for $30 that now gets you 3GB – “reduce” the price to $25 for 2GB, then slowly creep back up.  Likely to be $50 / 3GB by the time LTE is fully deployed…. maybe $50 / 4GB by then.  AT&T is the worst at creeping-fee-itis – “Wots this?  ANOTHER $1.29 ‘recovery’ fee?”

  • Alex B

    Here’s a perspective on how it works in the UK.

    Amazon sell the SGS2 unlocked and SIM free for just under £400. Combine that with a GSM SIM-only 30 day rolling contract for about £12.50 per month which’ll get you 500 minutes, 5000 SMS messages and 1GB data per month. Over a two year period, that’s a total cost of £400+£12.50*24=£700, or £29.16 per month. We don’t pay for *receiving* calls or SMS (apart from premium texts from TV talent contest voting and the like). If you don’t like the reception, you cancel the contract and take up another from another network with no penalty.

    Alternatively, you can get a handset from the network. Usually this works out more expensive, but if there are special deals going, you can sometimes get a good deal. When my last 24 month contract expired, T-Mobile pretty much matched a deal from another network; I paid £40 for an SGS2, and £20.42 per month over 24 months for 300 minutes, unlimited SMS, and somewhere upwards of 500MB data (unlimited, but streaming and downloads over 500MB are throttled down from about 4Mbps – to about 3G speeds of about 384 kbps, so I hear). Total cost=£40+£20.42*24=£530, or £22.08 per month. A more typical current contract deal would be a free SGS2 and a bill of £26 per month for 300 minutes, unlimited texts and 750MB data.

    I only ever look at the total cost of ownership. Ultimately, a subsidised mobile contract is actually composed of a bill for airtime, and a hire-purchase handset with some interest payable. By paying more up-front, you usually minimise the “interest” payable on the loan.

  • charlieboy808

    Wow! I totally get it now. In some ways I knew that the price of the phone was due to my signing of a two year contract. I always figured that T-Mobile did not want me to abuse the cheaper deals offered by renewing my contract when ever I felt like it. Now I understand that my full length contract is to really pay off the phone I got at $99. The fact that this really isn’t common knowledge is crazy! People, we all need to wake up and change the industry. I would rather pay T-Mobile to improve our network rather than pay developers for our phones. We can pay for our own phones. Think about it! WE CAN PAY FOR OUR OWN PHONES!!

    • Androidess

      True-my personal phone is the SGII that I chose to pay full price only because I didn’t want to use my upgrade I’ve been eligible for since 2009 because I have the old Loyalty plan ($49.99) & the old “aledged” unlimited data ($19.99)=$69.99! I have 2 other lines that was on EMP that I just converted to the Value plan since those don’t go over the 2gb limit since it was cheaper & I have no intention of leaving TMO. I am able to write off one line for work purposes too.

    • Idiot. This has been common knowledge for years.

  • tommy

    There’s a reason for the ‘subsidy’ model. I don’t get specifically why he is complaining.
    I’ve paid off my phone and have a Value plan, so I pay less. Otherwise I’d be paying extra to subsidize a phone I could have but do not.  Having a subsidy play is an incentive for me to trade up to a new phone. So what is wrong with that? I don’t get it.

    • It doesn’t actually help T-Mobile if you replace your perfectly good phone with a brand new one, it just helps you. T-Mobile doesn’t make phones, doesn’t profit from them, and doesn’t benefit in any way from phone sales other than the usual “Happy customers = Kerching!”

      • tommy

        After 2 years I am paying for a new phone without having a new phone so it benefits TMobile. If I get a new phone it benefits in other ways i use more data (that sucks they should not be able to charge for that!) and I am locked into another 2 years! so getting a new phone on contract does benefit them. It does not benefit them if I pay full price for a phone off contract so I say again I am confused this does not make any sense to me.

        • It benefits T-Mobile that you sign up for two years (well, they believe that – actually I have my doubts, but…) but not that you have a new phone. Yes, the phone might be the way to encourage you to sign, but so might:

          – A cash payment of $200
          – Your very own private jet
          – A relaxing massage
          – A shout-out by Conan O’Brien
          – TMONews renamed to TommyNews
          – Sex with a celebrity of your choice
          – A gallon of gas
          – A luxury cruise

          Some of these are expensive, others… not so much. Some may be more attractive to someone who wants to sign up for two years than others.

          The point is that the phone doesn’t benefit T-Mobile, it benefits you. And then only – ONLY – if you plan to replace the phone in exactly two years from now.

          – If you plan to buy a phone earlier, you’ll pay full price and will still be paying as if it was subsidized.
          – If you plan to buy a phone later, you’ll be paying as if you’re still subsidizing your phone.

          Subsidized phones aren’t really a good idea for a whole lot of reasons. And no, they definitely don’t benefit the carriers any more.

          Some history: we have subsidies not because they are a great idea, but because twenty years ago, when the carriers had to charge enormous per-minute fees because  they had to deter people from using their limited capacity analog networks, and at the same time an entry level phone cost over $500 wholesale, it made obvious sense to divert some of the huge profits from airtime fees to helping customers afford the phones themselves.

          Today, an entry level phone can cost, wholesale, less than $20 (although very few are that that level, but a quick walk around the prepaid section of your local pharmacy will show you there are a lot of affordable sub-$100 devices out there.) Meanwhile few, if any, operators are having real capacity problems – at least when it comes to voice calls, and most have moved to unmetered plans as their main products (so there are no per-minute deterrent fees!)

          In this environment, especially with alternatives such as pay-by-installment, subsidies really don’t benefit anyone.

        • tommy

           They are selling galaxy s2 for $600. That’s a nice mark-up. Subsidized they are still making the $600 over 2 years with the extra cost of the classic plan. They charge $35 just to setup the phone, and with a value plan I pay normally $200 cash then $400 over 20 months with maybe a $50 rebate, or I hope maybe a $150 rebate at the next sale.  Seems like they are making money somewhere.
          Sorry if I am being picky just don’t really get it but economics is not my forte!
          (forte would be a nice name for a phone) (naming phones is worse than naming automobiles)

    • Simi4

      Right and given the current formula, it also locks people into a 2  year contract, which is advantageous to companies like Tmobile.  If I pay for the phone, I want it unlocked and the ability to switch carriers when Im not satisfied with the service Im getting

  • Winski

    1) My on-going contention that this man is the worst marketing guy in the history of mankind still holds.

    2) ALL US-based wireless provides have become parasites on the consumer. If they continue to manipulate their offerings to suck more and more money out of the consumer, soon that market will just walk away and find/create an alternative. This 4-company clown show will be done… The wireless companies should be providing ALL PHONES to the market FREE.

    T-Mumble is just incompetent…

    • Gouv

      Not likely going to happen… and you are right, he is a fool.  

      • Simi4

        Well all phones free would be nice but won’t happen.  Im not into name calling but as a professional marketer, Ive got to say that Tmobile’s actions often leave me scratching my head.  They do need some new marketing and PR folks.  Wont go into a long list of missteps.

    • Guest911

      You have a choice – dont buy a cellphone. But you would rather whine about everything. All phones free? And you call TMo incompetent?

    • Bzdarkside

      If They put all phones FREE to the market you are more likely to be charged way more on your bill.

  • dm9226

    why do the value plans require a contract then?

    • Because… oh look over there, pretty colors!

      (My next plan will be contract free, like my current plan. If T-Mobile doesn’t offer a contract free plan, then it’s not going to be with T-Mobile…)

      • Simi4

        You mean contract free aside from prepaid?  I wouldn’t sign a contract with Tmobile right now because of how poor the customer service has been.  Having bought a Mac last summer, I think I may end my iPhone holdout and buy into the Apple ecosystem. Most folks I know have iPhones and love them.  It will be a lot easier to not have to do with a lot of Google and Android hassles & won’t have to compare dozens of handsets.  It may cost a little bit more but right now, I just want a reliable phone that works.  But also it seems the major carriers all have customer service issues – they just have gotten so big that the individual doesnt matter to them anymore.  But I was loyal to Tmobile for a long time – they havent returned the favor so my loyalty is no more

        • My mother, who lives overseas, regularly goes on prepaid when she’s here so I have some experience of it. While the prepaid plans aren’t bad, the service is definitely worse – both customer and physical cellular.

          As a basic example, Google Voice doesn’t work properly as call forwarding (required so that unanswered calls go to your GV mailbox) is disabled.

          So, no, I wouldn’t switch to T-Mobile prepaid.

        • Simi4

          The other problem with Prepaid is they outsource their customer service – most of which is in The Phillipines – and sorry, but those reps are totally incompetent.  Pretty much everything they’ve told me in the past – including basics of Tmobile policies and rate plans -has been incorrect.  Many of them don’t even have a good grasp on the English language.  Its also important for people to know that Prepaid is basically run like a separate company – they even have to port your number from your contract plan.  

        • Rotten Apple

          Most folks like the iphone because its the only phone they can use based on their mental capacity. 

        • Simi4

          Dont understand why people have such vitriol for Apple and their users.  I guess millions and millions of people , including pretty much every tech writer and reviewer is an idiot.  I havent used an iPhone but all the people I know who have it, love it.  And with Apple, you at least have a reliable device and a company that will stand behind you if you have a problem, and in most areas, a store you can go to for help.  My personal experience with Android has been the exact opposite. Some people like chocolate, some like vanilla, and others like strawberry or mint chocolate chip…It doesnt make one right and one wrong.  iPhones are constantly rated among the top cellphones out there.  It may not be the best but if its easy to use and reliable, thats a lot better than my Android experience where I spend time every day troubleshooting.

        • Androidess

          Just curious of why you’d want outdated technology like an iPhone. I have the SGII, Mytouch 4G & G2-I can do much more on any of them than the iPhone 4S my employer provided. In fact, I can’t stand it. My corporate email oftentimes freezes as well, as it’s horrible version of GPS/maps. I won’t even load music on it (I use my Android phone or sync my iTouch.) I truly don’t see any advantage except that my employer pays the bill & that it’s on VZW (I reluctantly, state the VZW part; however, I see the ability to get on the web in super remote areas where I can’t on TMO-I will never leave TMO even after experiencing VZW’s coverage since I only travel to these rural areas for work & am without issue with TMO in my personal life.) It seems to me that those that go to an iPhone now, just don’t know any better or have fallen victim to its name/marketing. I don’t even feel the need to root since, the G2 came out. Just an opinion. My iPhone is merely a glorified iPod, IMO.

        • Simi4

          Honestly I tried Android on paper because it sounded better and the entire experience has been a disaster.  Granted, I don’t have the SG II; I have another device which ironically was sent to me by a Tmobile executive to make up for previous poor customer service, and since then Ive been exposed to even worse customer service by Tmo.  As for Android and the device, its been buggy and had problems from day one.  There is no support from Samsung compared to Apple.  Ive done 2 manufacturer repairs in 6 weeks.  My phone still freezes at least once – often twice a day.  It also power cycles.  Android apps keep having problems and developers keep telling me its because they are developing apps for all sorts of devices.  The Google Play Store and Google Music also have tons of issues; every time I call or email with a problem – th ey tell me they are aware of it and send me a link to a long known issues page.  When I can’t even get a record of what apps Ive purchased/downloaded either on the web or on my device, thats also a problem and one that can’t be blamed on the manufacturer.  I could go on and on.  Pretty much 95% of the people I know – in four different countries – all have iPhones.  They are all thrilled and think Im an idiot for going thru all the hassles Ive gone thru with Android in just a few short months.  I got a Mac last year and saw that when I had problems, Apple would stand behind it – whether by phone support or by going into a local store.  The next iPhone will probably have better features and 4G – has a great camera – and as most tech writers have written ‘just works.’  I don’t know why Android people hate it so much – No matter what you think of Apple, the iPhone is consistently ranked among the best handsets by pretty much every tech writer -android or not.  The new Mac OS seems like it will have even more iOS features integrated in it so my computer and phone will probably sync seamlessly…But my main reason is the lack of support and constant problems with Android and its manufacturers – and ready to pull my hair out because my phone is such crap and all Im told by Tmobile is “we are aware of the problems but t here’s nothing we can do.”  (Well the least you could do is stop selling a phone – which by the way they’ve increased the price by 75% – when you admit that it has serious issues).  So I know I will get attacked, but this is my experience.  Maybe Id have fewer problems if the device Tmo had sent me was a bit higher quality – but just my dealings with Google Support and the problems with the Google Play store and music are enough to make me rethink Android.  Having said that, on paper, I thought it won – 4G, bigger screen (or at least variety), free text to speech GPS, free Google Music storage/streaming, free apps on Amazon and also overall seems to be more free apps than iOS (even though many developers have told me that iOS is much more profitable for them which is why they focus on that) and on and on.  

      • Rudolph Vijiga

        they have the monthly 4g plans that you could take advantage with suprisingly no contract

    • Simi4

      Exactly…it only works if the rate plans are much lower.  And if you’re paying for price for a ‘value plan’ – why aren’t you charged the prepaid rates?  Id only go for this type of system if there was true consumer freedom.  Customer pays full price for a device on the open market and can use it on ANY cell phone carrier WITHOUT a contract.  Then carriers could really compete on the quality of their networks, their rate plans, their customer service etc.  (Just like Id like to be able to buy a TV and choose the channels I want to watch instead of subsidizing ESPN and all these other channels I have to pay for to get the few that i actually regularly watch)…Given today’s economy, most consumers don’t have $500-700 to shell up front for a device.

      • Porky

        I like the theory behind your idea, but I don’t think we could ever get to such a model within the near future in the US. 

        • Simi4

          Im not a tech or cell expert but understand in the US there are 2 different types – GSM for Tmobile/ATT and CDMA for Sprint/Verizon.  Just curious -do other countries have this too or do most other countries have just one type of system – making it easier for consumers to buy a cell phone and then use it on any network.  Sadly, the carriers are afraid to compete and want to lock you into 2year contracts.  What Brodman wants is for you to pay $600 for a device AND still sign a 2 or 3 year contract. (They did away with one-year contracts).  As for customers feeling the devices are disposable, thats only because the technology moves so fast and manufacturers – especially Android – release new devices every single week…so in six months – let alone two years- your device is ‘old’ and ‘out of date.’  Personally, if a phone is working for me, I can keep it a long time…but others will laugh at me.  At least Apple only releases a phone once per year so I know a lot of iPhone users with 3GS or 4 that are quite content. 

        • VenCap

          Almost all countries in the world standardized on ONE standard, that is the World Wide standard GSM. There are a few countries that have both GSM and CDMA network but the percentage of their CDMA are much smaller. In the U.S. we are stuck with fragmented incompatible network (CDMA) that has a very strong market share. This makes new Android phones to be manufactured for both both GSM and CDMA which makes it costly and causes unnecessary delays in releasing those new phones. Plus exclusive deals from carriers and subsidy from carriers further easperbate the problem.

          Example, Samsung Galaxy S II (SGS2) took almost half a year to get to the U.S. It was available in April 2011 world wide but only appear in the U.S. by late October 2011. This phone was already obsolete by the time it reached the U.S. shores because Samsung announced the Galaxy Note in Berlin on September 1, 2011. The Note was released world wide in November of 2011. I got a chance to play with it when I was traveling to both East and South East Asia. By December 2011, the Note already sold over a million before it even hit the U.S. shores.

          That was one of the reason why I switched from Verizon to T-Mobile 7 years ago. I wanted a GSM phone because I traveled outside the U.S. so much and that carrying a CDMA phone is like having a useless brick in your pocket.

          Speaking of standards, the reason why so many people who believed in OPEN standard are against Apple products. Devices runs on a proprietary OS exclusive only to their proprietary hardware. U.S. is better of in having one carrier standard like the GSM. Similarly if people keep buying proprietary product, we are going to fragment the smartphone world just like we fragmented the carrier world. Having a unified OPEN eco-system like Android allows manufacturers to compete and have better hardware on compatible devices, not to mentioned faster product evolution.

          Consumer are free to choose hardware from many different manufacturers. Similar to having a compatible Internet running on an open standard like the TCP/IP. I recall the horror of trying to send an e-mail back in the 80s when there are so many incompatible computer networks tied to one another. The e-mail address syntax can be very long depending on how many network you have to hop. Nice to have a standardized World Wide Web where consumer can have a choice of multitudes of web browsers. Nice to have one unified standard like the Blu-ray where you can buy any Blu-ray player from any manufacturers and the movie will play. Just before that we had an incompatible format of Blu-ray and HD-DVD. If you have Blu-ray, you can even watch the BBC’s ‘Planet Earth’ which at that time only runs on HD-DVD. That is one of the many reason why I and many are supporting Android. Android is definitely not for the weak stomach and open competition allows much faster product evolution and every few months there are new phones being released.

      • Rudolph Vijiga

        the contracts is actually for the instalment plan that you will have for the phone that your going to pay on an instalment bases.. and t-mobile does have an option for you.. if you want to go to prepaid then you could certainly do that but ofcourse you need to purchase the phone for the full retail price for it

  • Fed Up

    But T-Mobile UK can give iPhones, Stock GSII’s, Sensations+Sensation XE’s + numerous other phones away for FREE? Yes their plan prices are higher depending on the phone, but who wouldn’t rather divide the 600 or so Pounds or Dollars over 24 months instead of paying it all at once? T-Mobile’s CEO, CFO, and CMO are driving this company into the ground and it’s an absolute shame.

    • Porky

      I wouldn’t. I like to party one lum sums of money at one time whenever I can. I don’t like debt hanging over my head


    Typical customers here people…nothing to see here.  Please move one.  

    Phone subsidies will be gone sooner than you know it.  

  • Dualspan

    Right, he is concerned about impact subsidies have on the market. 

    Mainly he is concerned that TMO doesn’t have the negotiating power to get the iphone and recognizes that getting the iphone is the only way the masses will stay with TMO.  Don’t think that TMO execs don’t have meetings every week detailing the lost subscribers who say they want the iphone.

  • Jeffreysabol

    Maybe people would not take advantage of the subsidies as often if you could actually get software updates out in a timely manner