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T-Mobile prepares break with subsidies

Fourth US cellco will add 'Uncarrier' plan to existing 'Value' offers, offering financing instead of 'free' handsets

By CAROLINE GABRIEL

Published: 20 March, 2013

READ MORE: US | T-Mobile USA | Handset

Mobile operators have been toying for a decade with ways to reduce their reliance on subsidies, but real efforts have either been halfhearted or, like last year's in Spain, a step too far for the market. However, the US majors, led by T-Mobile, are leading the way and the fourth US cellco is expected to announce its 'Uncarrier' range of tariffs at an event next Tuesday.

This will be a step towards fulfilling the pledge it made in December to eliminate subsidies on cellphones this year, which could radically change the relationship with major handset vendors. Of course, it is easier for TMo to make this move then the big two, since the bulk of its base is prepaid and therefore pays upfront for most of the device cost. When it concludes its merger prepaid-only MetroPCS, this balance will be even more marked.


However, TMo has also pioneered some creative thinking about alternatives to subsidies for postpaid users, mainly centered on various financing options, which could also help pay-as-you-go users to afford higher ticket handsets - and probably end up paying for more data and services too. And major postpaid rival Verizon Wireless has also vocally said it expects to reduce the role of subsidies significantly from this year onwards.

According to a TMoNews, next week will see the unveiling of two groups of plans - the 'Uncarrier Classic', to be offered through retailers like Best Buy; and 'Value', to be provided by in the cellco's own outlets.

For the Uncarrier option, plans range from $60 a month for 500Mbytes of data to $130 a month for 12GBbytes. Unlimited talk and text come free and there is an unlimited data option at $90 a month, though without a hotspot function. Customers will pay for their devices by the month, or bring their own unlocked handsets, entirely cutting ties with the traditional two-year contract plus subsidy.

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