Sprint Adopting “Wait And See” Approach To T-Mobile’s Efforts To End Phone Subsidies


Sprint is the newest T-Mobile competitor to sound off on the Magenta approach to ending the subsidy model in the wireless industry once and for all. According to senior execs at Sprint, Sprint will take a cautious approach and look at the economics of the move before determining their own path.

“We have thought about it and we are going to take a kind of a wait-and-see approach,” Sprint CEO Dan Hesse said during the company’s fourth-quarter earnings conference call, according to a Seeking Alpha transcript of the call. “We are going to watch what happens in the market, how customers respond to it and we evaluate options and alternatives going forward.” Hesse said right now most customers seem comfortable with buying a subsidized device in exchange for a two-year contract. But he said that “as the industry evolves, we’ll evolve with it.”

In a separate conversation with Fierce Wireless, Sprint Chief Financial Officer Joe Euteneuer explained that Sprint will assess how T-Mobile’s new plans perform in the marketplace as well as evaluating the financial viability of making such a move. Euteneuer also said that Sprint will take a close look at what kind of impact will be felt by moving away from subsidies on customer lifetime value, churn and other major financial metrics. Sprint execs have said that they could quickly enact a handset financing system where subsidies would no longer exist if the company determined that was the best course of action.

These comments echo those of AT&T and Verizon who have also said they will keep a close eye on the consumer reaction to T-Mobile’s efforts. Verizon CEO Lowell McAdam has questioned however “whether U.S. customers are ready for that type of shift because they have been conditioned to getting lower-cost phones for so long.”

T-Mobile’s shift to Value Plans is rumored to take place before the end of March. T-Mobile execs have yet to commit to a date only stating in January that it will happen “in the coming months.”

Fierce Wireless via Seeking Alpha


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  • The only full cost devices I will buy, are from the Nexus family. Period, end of story.

    • Richard Yarrell

      Good luck on that.

      • 21stNow

        What would be hard about what J.W. wants to do? As long as he is happy with a phone for a year, there won’t be a problem. So far, the Nexus phones have been coming out at a rate of about once a year.

        • Dakota

          Agreed. My Galaxy Nexus is fine & I’m still among the 1% with 4.2.1. Just wish camera and voice level were better

        • He seems to think he has all the answers, ignore him.

        • Richard Yarrell

          Well your 100% right.Just had CdmCDMA Verizon Galaxy Nexus flash back which isn’t good. I forget about the GSM Galaxy Nexus on tmobile my buddy has one and his tmobile Galaxy Nexus is still very nice. I am just happy with my Galaxy Note 2 on tmobile. But yes the tmobile Galaxy Nexus makes the Verizon Galaxy Nexus so useless.

      • You need to get off of that galaxy note 2, you are in a bubble man. You seem to think because you have it, it’s the best device. Well I have it, and it’s not. Just find a galaxy note 2 forum and stay there, all of your comments appear to put down anything that is not related to the galaxy note 2. Get over it man…

        • Yep. So crazy

        • Richard Yarrell

          You’re a clown. Don’t be like @squiddy20 be better than that my friend. You don’t know me and never will. Your option or purchases aren’t no more important than mine. If you really think they are then your pretty stupid in my world. I purchase too often you will never be me. Take those Nexus devices and go get lost take squiddy20 with you. You guys sound pretty comical

        • Richard Yarrell

          Oh brother here comes the bozo’s trying to tell someone what they should do. Guess he must really think he’s so important just like that other a hole @squiddy20 the Sprint troll here on tmonews site. Whatever i purchase is top notch what makes you any more important? ??? Get over yourself don’t make me pimp slap you.

        • squiddy20

          “Get over yourself don’t make me pimp slap you.” HAHAHAHAHAHAHAHA!!! How stupid are you?! You don’t know the first thing about this guy, let alone where he lives. What are you going to do, pimp slap him over the Internet? Yeah, real intelligent there Dick.

          “Whatever i purchase is top notch” So I suppose the LG Revolution, Evo 3D, and Galaxy S 2 Skyrocket that you purchased were “top notch” then too? Despite the fact that you put them down as “useless” and pieces of “shit”? What a joke.

        • Enough, both of you. This is ridiculous.

        • Bajamin

          So you say “The only full cost devices I will buy, are from the Nexus family. Period, end of story.” Yet you accuse others of living in a bubble…Protip: it’s just a phone.

        • Richard, that’s the last warning I’ll give. I appreciate the contribution of everyone around here, but enough is enough.

        • Richard Yarrell

          Appreciating the contributions of others means what ”Allowing people to come to this site with the soul purpose of attaching and antagnising people with no warning” Then you have a nerve to send a warning my way for responding to these circumstances which you have done nothing about. Clearly all this place is is a place to express thoughts and feelings what makes anyone’s thoughts more important than the others?? We all come here for that opportunity to express that and you want to control or threaten me with a warning. My suggestion to you is send a warning to squiddy20 just as you have done to me then maybe all will be good. I will always express myself as I see fit I’m able to do that. If your gonna moderate or be a moderator then moderate with fairness to everyone not bias toward me. It’s not a good idea Mr.David to go down that road you never know who knows who or where that will lead. Straighten out that squiddy20 person that’s your best bet.

        • squiddy20

          “with the soul purpose of attaching and antagnising people” It would help if you could spell simple things correctly before you insult others on how “stupid” they supposedly are, as you’ve constantly done with me: *sole *attacking *antagonizing

          “Then you have a nerve to send a warning my way for responding to these circumstances which you have done nothing about. ” He deleted most of our comments. Try using those astute observation skills…

          “and you want to control or threaten me with a warning.” A threat is not a warning, or vice versa. Read the definitions and educate yourself for once.

          “My suggestion to you is send a warning to squiddy20” He did. Can’t you read his comment below, “Enough, both of you. This is ridiculous”? Again, use those astute powers of observation.

          Further, you’ve been banned from Phandroid four separate times, Android Central twice (once over a year ago, and 13 weeks ago from the forums only for this same exact crap (source: http://forums.androidcentral.com/google-nexus-4/223610-list-all-163-t-mobile-hspa-42-markets-3.html#post2310418, and Android Police before they migrated to Disqus. Your comments at Android and Me are constantly downvoted well below -15 and are often met with opposition. How is it that you still don’t understand why people think so lowly of you/don’t want you around? Yes, people are entitled to their own opinions. But when you start throwing your opinions around like they are the “word of God”, and anyone else’s is “useless” (as you’ve repeatedly said to me and others), then someone’s clearly in the wrong (hint: it’s not us).

        • Richard, the comment was directed at you both, not at either specific person. Also, please drop the “who knows who” threats, that’s ridiculous, especially when you put it into the context of seeking out connections just to mess with blog comments. I can’t respond to both comments, but both of you should see the notification of a response to whichever I respond to, if that isn’t the case, I’ll make adjustments accordingly so everyone does get a notification. But please, don’t make threats, everyone knows someone somewhere. Let’s focus on bringing the conversation back into a more sensible direction. Otherwise comments will require my approval before getting posted.

        • squiddy20

          “This isn’t disq your just sadly trolling enjoy it.” Uhhhh… What? Want to try formulating a coherent sentence first?

  • Prox

    T-Mo is making an absolute fantastic move. They will save the consumer money. I just hope they explain to customers how it works over the course of 2 years contract compared to what AT&T, Verizon and Sprint are doing.

    • moises1204

      i just hope tmobile stop overpricing their handsets.

  • brandonjaye

    Any chance that the manufacturers of cell phones will make devices that last longer than 2 years on average? I personally have never had a cell phone last more than 2 years, ever. And I almost always buy the flagship phone(or the one available at the time). I’d feel a whole lot better about this if I knew I wasn’t going to have to shell out $600 every two years or so.

    • Daniel

      Their Equipment Installment Plan (EIP) will still be an option.

      • Whiskers

        Your still going to pay more for T-Mobile’s inflated retail price.
        If you have good credit and low interest rate credit cards , your better to buy the phone somewhere else cheaper .

        • Dakota

          T-Mobile is the choice if you need unlimited data. if you use less than 2GB, buying a nexus for #350 and then paying only $45a month will start paying off very quickly. with most subsidized phones these days@199 or even more, you’re only paying $150 more for the phone I know compared to a similar plan on VZ+fees on a contract plan, I’m saving@$70 a month.. so it only took 2.5 months to break even. Even if you’re only saving@$30 on Tmo, you still break even in 6mos.. and I live none of those additional fees you pay on contact plans

        • Secret Shopper #42

          As long as your interest rate is less than 0%, then it will be a better deal. T-Mobile charges 0% on the EIP “loan.”

        • Whiskers

          But with your cash you have the option of M4G or be roped into a 2 year contract with T-Mobile not offering anything but service. Atleast with M4G you have a choice to leave if their service is not cutting it in your area.

          The only thing you don’t get with it is Data Roaming , everything else is the same on the same towers.

          With the EIP on a VP you have no choice.

    • S. Ali

      > I’d feel a whole lot better about this if I knew I wasn’t going to have to shell out $600 every two years or so.

      If you were buying contract phones, you were already shilling out $600+ every two years, you just didn’t realize it. Just run the numbers between AT&T plans and T-mobile Value plans to see the ridiculous amount of money you pay for phones.

      • Whiskers

        That’s comparing apples to oranges.
        Two different cell phone companies with two totally different network coverages and pricing plans.
        If your going to do a comparison , do it with T-Mobile’s VP and Classic plans.
        And if your paying for the phones upfront anyways out of your own pocket , you would be a fool to still sign a 2 year contract on the VP when all T-Mobile has to offer you at that point is service while they keep you on a leash.
        You might as well go M4G.

        • Daniel

          The reason I stay on VP is becuase I get a 15% government discount that I wouldn’t get with M4G

        • S. Ali

          >You might as well go M4G.

          Lose out on roaming, free mobile-to-mobile family plan, and Tier-1 access to towers (over prepaid and MVNO). Yeah, that sounds GREAT. Lets not forget how easy it is to get a 12% corporate discount. I pay $84 for 3 lines, HAHAHAHHA, prepaid, what a joke.

          Crunch the numbers for yourself. A VP contract is cheaper even if you buy your phones.

      • Dakota

        I’ve never found value plans to save money until month 20. tmo retail rep even said so. the plan is $20 less but you’re paying an extra 20 for the device so it’s a wash

        • Whiskers

          And not only do customers on the VP pay the extra amount each month for 20 months , you had to put around $200+ down payment plus taxes up front too.
          The more the high dollar smartphone cost , the more down payment you have to put down at the beginning of the EIP deal just to continue the $20 or more extra a month until it’s paid off.
          In the end it may save you some money , it may not. Depending on how many lines you need and how much your willing to chunk down up front straight out of your pocket just for the EIP down payment of the phones.

        • Bajamin

          The DP is a non issue, if you were to get a phone discount you would still have to pay for the phones and the taxes at that time. But true on the high end devices you don’t really save money until around month 20. But after that you can save. And that’s comparing T-Mobile to T-mobile prices which are already about 40% cheaper than the competition.

        • U spend less upfront on value.. even after getting hit with full price taxes on the phone,…. Ur bill is cheaper on value even with a high-end phone cause on value ur not taxed on eip only the rate plan which is 20$ lower than classic

        • S. Ali

          Dude, the T-mobile payment plan is a scam. Go look at their website. All the phones are $100 more than the price on their Monthly4G site. Just buy it outright and avoid the monthly EIP.

    • Sprite

      High end, low cost devices like the Nexus 4 should become the norm, or at least a regular occurrence. Hardware has reached a plateau, and costs to produce should start going down.

      Or, just buy an older model phone. The S3 spec wise will last for more than 2 years. The GSM Galaxy S2 can be had for $250 from Wal-Mart.

      • PiCASSiMO

        Where can I get an S2 for $250 without contract?


        Their website states Samsung Galaxy S II 4G White for $489.99

        • The mobile

          Buy the prepqid version swap sim cards ;)

        • PiCASSiMO

          I’ve found the prepaid SGS2 at Walmart for $329 that comes with a $30 prepaid card. Assuming you can sell the $30 card for cash, the net cost is $299. Still not the $250 that ST7 is claiming.

      • Dakota

        also of you wait a few months after launch, you’ll usually find a sale that will save you $$

    • 21stNow

      What are you doing to your cell phones? I have had several last more than two-years prior to the current smartphone era. Even my Vibrant is still in use (by my mother) after almost 2.5 years. I personally like the latest and greatest too much to be patient enough to use last year’s technology, but the phones should last at least two years if you want it to.

    • Dakota

      my phones last longer, but people who are avid users who read these blogs feel they need a new phone with the latest and greatest all three time. I had my last android for 3years, I have friends still using iPhone 3Sor4. One option is to get a Nexus device… since you’ll get the new android versions immediately, there’s not that immediate urge to get a new phone just for that upgrade.. But carriers +manufacturers have no incentive to update because they want you to buy that new phone.

    • srr79

      If your worried about paying 600 every two years, the value plan is even better for you! imagine what you would really pay for that subsidized phone with any other carrier in just the cost of your service!! either way, T-Mo is the best option out there to save $$

    • Scott Walsh

      You obviously don’t take care of your phones.

  • Richard Yarrell

    It’s great to see Tmobile leading the way in this instance. Bottom line here either you purchase the device or you don’t. This will be an industry standard on all carriers by the middle of 2014. I applaud tmobile on this one.

  • Dion Mac

    Im a lil concerned. The other three are keeping an “eye” on what happens tmobile. So if tmobile does well, then they will do the same. Meaning they will lower their plan prices as well giving tmobile less of a competitive edge. I think tmobile should pull an “apple” move and patent no subsidies on a nationwide network :p

    • Dakota

      doubt you can pact something like that.. it’s like patent ING a $99 subsidized price

      • setzer715

        I think he was taking a stab at Apple, about the ridiculous patents they have.

        • Dion Mac

          correct my friend

    • 21stNow

      One can dream. I’m trying to imagine AT&T and Verizon Wireless lowering their plan prices. Alas, my imagination is not that vivid.

    • UMA_Fan

      This is where Tmobile has the edge into the future. The LAST thing Verizon and att will do is lower plan prices because this means much lower revenue attained from service plans. Those guys are not focused on customer growth but only monetary growth. T-Mobile and Sprint are customer growth focused so their primary goals right now are to increase their market share.

      The way things work now operators take a loss on the phone and hope to recoup that on the service plan over two years. This scheme really only benefits companies with the most expensive plans. Its pretty much proven now that purely giving the same subsidy as the big guys coupled with a cheaper rate plan is not effective. T-Mobile is smart to try another approach and this is it. If it works it puts the big two in a bind because its tough to justify to investors why they are taking a hit on revenue.

  • colombiatulua

    if you do not get a lower price phone why they make you sing 2 years contract? that’s happening with the value plan.

    • bob90210

      The Value plans are priced lower than the Classic plans. As for the phones themselves, you can go buy the phone from who ever you want. That’s the beauty of the Value plan. Unfortunately, 2 year contract is the ugly of the plan.

      • Dakota

        I’d you’re paying full price why not so prepaid WO a contract as long as you can pay the full amount up front. you also avoid extra contract plan fees, and now they also offer unlimited for those who need that on a prepaid. I wouldn’t purchase my own unlocked phone and then sign a contract

        • conservative_motorcyclist

          Correct me if I am wrong, but I thought that buried in the fine print T-mobile Prepaid didn’t allow off-network roaming (roaming into “extended coverage” areas). I thought that was the main appeal of postpaid vs. prepaid.

        • Whiskers

          From what i was told you just don’t get Data Roaming on Pre-paid .

        • PiCASSiMO

          You may have a point there…

        • Larry

          What about family plans that don’t need unlimited minutes? The Value Plans are much cheaper than 4x prepaid individual plans.

    • If you are satisfied with the service/price then what’s bad about the 2 year contract?

      Of course there is always Monthly 4G for those who do not wish to have a contract too.

    • Bajamin

      Easy, there is no roaming on a pre paid. Also they are letting people pay off phones INTEREST FREE for two years. That’s why the contract. They would just confuse people even more if they said “you pay full price right now there’s no contract, but if you make payments it’s two years.” Also they get you for two years to make back some money. Remember the phone may not be discounted but the rate plan is.

  • Dakota

    if it works for T-Mobile they’ll all follow. if not, they’ll slam them in commercials

  • it’s a VERY risky thing to do .. consumers are inherently stupid when it comes to how contracts and subsidies really work. all they see is that “hey we’re getting a cool phone for $200”. they don’t care about the bill being loaded with the offset.

    and now you’re taking that away from them.

    TMO needs to put some serious muscle behind educating people on this. they need to push the fact that customers can still spend the usual $200 and make the $20 or so a month thing seem not such a big deal because it’s a limited time.
    people need to be on Value Plans but upgrade obsessed people on Classic will be hard pressed to find the value.

    • Bajamin

      I agree and this is why most American’s are in debt. “I only make $20k a year but if I put the down payment on my credit card I could totally afford this $50k SUV, because the monthly payments will only be $600! Interest? Who cares I can afford the monthly payment!”


    Thought I’d share this…

    Subsidized model makes money for the carriers.

    Assuming that you are normally paying $20 a month on a 2-year contract to pay off your phone, that works out to $480 total + the initial cost of the phone when setting up the contractual agreement.

    So let’s look at 3-phones that T-Mobile carries:

    LG L9
    Subsidized: $0 down + $480 = $480 total
    Prepaid: $200 (Net profit of $280 for T-Mobile)

    Samsung Galaxy S2
    Subsidized: $0 down + $480 = $480 total
    Prepaid: $500 (Net loss of $20 for T-Mobile) -> But this phone can be purchased from Walmart for $300 (Net profit of $180 for T-Mobile)

    Samsung Galaxy S3
    Subsidized: $150 down + $480 = $630 total
    Prepaid: $550 (Net loss of $80 for T-Mobile)

    So you can see that in order to make your contractual agreement with T-Mobile (or any other carrier), you need to a phone that has a retail (full price) of at least $480 when getting it for free. Additionally, if you don’t renew your 2-year contract with a new phone, you will continue to pay $20 for a phone you’ve already paid off and given a profit to the carrier. That’s why value plan works so well, and I’m hoping people start realizing that a “free” phone isn’t exactly free on a subsidized plan. Take the L9, for example.

  • Fabian Cortez

    That’s the wrong T-Mobile logo David.


    The only bad thing with this, is that us spoiled americans are used to “free phone” upgrades. When really, you pay well over the full retail price of the phone over the course of a 2YC. The difference between us and other phone companies is that we actually show you that your paying for the phone and you get a discounted rate plan in return. I hate when people don’t want to finance a phone. I mean it’s 0% interest and you will be able to get a new phone sooner than if you were to go classic with normal upgrade. Not to mention a lesser cost out the door compared to classic.

    • 21stNow

      Do you hate it when people don’t want to finance a phone, or when they don’t want to convert to a Value plan? I don’t finance the phones I buy; I pay all at once. But, I won’t convert to the Value plan either (I use EMP and Monthly 4G).


    I’ve been working at T-mobile for a year. This whole time we been focusing on Value plans. It’s sad that Sprint is looking to see how good it does. It just goes to show that they don’t have their own route to go. They are just followers, the executives don’t know how to answer the question. “Why Sprint over T-Mobile?”

    • SouthernBlackNerd

      Just followers?

      Who was the only nationwide carrier to actually keep unlimited data?

      Who started the whole AnyMobile?

      First carrier to announce HD voice?

      First carrier to announce their network modernization with MultiModal base station, RRUs etc?

      All of that was Sprint. Sprint is the last carrier I would call a follower. Heck, if we didn’t have sprint, half the stuff tmobile is announcing wouldn’t be around.

  • Marc OKelly

    I’m only buying nexus devices, I just got Android 4.2.2 on my Galaxy Nexus

  • T2K

    Activate a line when they have a super sale on the phone you want for free or super cheap on a classic plan, then immediately switch to a value plan pay then pay the $200 migration fee, what you now have is a subsidized value plan. Way better than paying $20/mo for 20 months plus a down payment

    • Bajamin

      That option is basically no longer available because they are moving to 100% value plans. Which means no more huge sales. Should be happening around March.

    • thepanttherlady

      You’d only be able to do that once. Once the account is converted to Value, you can’t go back to Classic.

  • GinaDee

    My only fear is that T-Mobile reps are making their explanations for the Value plan too complicated. I was in my local T-Mobile store over the weekend. The store was crowded and the wait times were long.

    I watched and overheard the reps try to explain the Value Plan option to customers sometimes spending 20-25 minutes going over and over what they previously stated with customers having this bewildered look on their faces like they were getting scammed?

    T-Mobile needs a simple, catchy way to Market this and it will take off.

    Give customers the option to trade in their smartphones and use in store credit towards new smartphones so customers can upgrade every year if they want to without breaking the bank.

    No more 2 year contracts for changing rate plans.

    And for goodness sakes! Include tethering in your unlimited data plan. Stop making it complicated with your 5G/10GB and Truly Unlimited Options.

    • You can’t include tethering in an unlimited data plan or else you open the network up to serious abuse by those who would use it as a replacement for home internet. What I think they should do is allow a tethering add-on to the unlimited plan for like $10 but cap tethering at 5GB but still allow unlimited data use on the phone itself.

      • Whiskers

        Then they should atleast allow hotspots or tethering within your allotted data on your plan Without an extra charge.
        If your plan allows 5GB of data/month , then they should let you tether or hotspot all you want within that 5GB that your paying for that month.

        • 21stNow

          Tethering/Mobile hotspot is included in the 5GB and 10GB data plans.

        • Whiskers

          Noted , but you would burn through 5GB or 10GB with ease if you tethered watching any videos.
          So those plans are useless in my book.

        • 21stNow

          I’m not arguing with you but if those plans are useless to you, why did you bring them up in your response to Mr. Hill?

  • MatthewMurawski

    I hate contracts and contract plans. I pay full retail and use the $30 a month monthly4G plan and never once went over any of my limits.

  • ant

    yea i was wondering y since my contract is over until april i was able to get any phone now for new customer price like usually a note 2 was 540 now i pay the 369 and i get the rebate even thou im considering the nexus 4 for 50 bucks im liking tmo for the change

  • Value Plans are pretty much all we have been selling at my store for the past 6-8 months. I believe this will work out for T-Mobile and eventually the other carriers will follow. Value Plans are cheaper for the customer and also allow the carrier to sell the device with no loss on the price of it. Then customers also get the flexibility having a cheaper rate plan by bringing their own phone. The big question is will AT&T and Verizon really lower their rate plans by $20 or more per month to allow financing of the phones? Hard to imagine that happening but we will see.

  • Cam

    As much as I’d love to see T-Mo succeed with this model, I don’t see it being an overwhelming hit, and may be bad for business if the Classic Plans are completely retired. I realize that with a spreadsheet and five minutes of time you can show that it saves someone 80.00 from month 21-24 (please don’t reply with scenarios, I’m being facetious), but its not going to sound as nice as a 199.00 smartphone, even if the subsidy is hidden in the monthly rate. Just for kicks I’ve discussed this with people who, unlike you and I, aren’t in the know, wirelessly speaking, and they either don’t like it or don’t understand it. Many people just think new smartphones cost 199.00 and you can get one every 22 months for 199.00. They aren’t registering that it costs 500.00 and they are getting a discount, as crazy as that sounds!

  • wilde_ride

    I made a terrible assumption with this plan. I assumed this meant no contract (like my current plan). I’m not the least bit interested in getting no subsidy and still having a two year locked in contract. Absolutely not. The argument for the contract was always “you have to stay until we’ve paid for your phone”. What is it now, “you have to stay two years because we are Nazis.”?

    • Bajamin

      Uhh because they let you pay off the phone over two years…..Interest free….

  • Sharklover

    I think it is a big mistake. It will not get any new cuatomers but may cost a lit of customers. I guess tmo is used to losing customers. I hope they keep both.

    • Bajamin

      Retail stores have been selling almost only value plans for the last 6 months to a year already.

  • I’m on prepaid now, I wouldn’t mind signing up for a value plan, given its san two year agreement.. carriers should just offer this in addition to those who want a two year commitment with lower upfront cost. Versus those who rather bring their own device and be month to month

  • Scott Walsh

    Don’t you all get sick and tired of arguing about cell phones & who has the best plan & who has the best coverage on a daily basis? Geez! Find another hobby please.

  • MuthaFuckinStephen

    One word… Trendsetter.