Summits Yellow

T-Mobile Abandons Subsidised Handsets

Alex Spencer

As of next year, T-Mobile USA will be ditching the traditional prepaid model of a subsidised handset cost up front, made up through a more expensive monthly contrast, in favour of its 'Value' plans. The move was revealed by T-Mobile USA CEO John Legere, speaking at an investor conference.

T-Mobile is currently the smallest national carrier in the US, and the only one that doesn't currently offer an LTE network, but it's hoping that its 2013 strategy will disupt the US telco market, giving it a boost in the process.

This will bring all future contract subscribers onto its pre-existing 'Value' plans, meaning smartphones are more expensive initially, but that customers won't be locked into a higher subscription for the following two years.

Customers will also have the option to pay for their handset in smaller installments alongside their contract. At first glance, that might not look too different from a subsidised approach, but the separation of handset and contract costs means more transparency for customers, and sets a clear endpoint for the raised charges. Customers will apparently also have the option to trade in the device at any time for a fair value.

Legere also confirmed that T-Mobile has made a deal with Apple to start selling the iPhone for the first time, starting next year. The devices will also come under the 'Value' plan, and be available for a upfront cost of $99 (£62), and then installments of $15-20 over 20 months.