T-Mobile To Announce It’s Dumping Phone Subsidies And Service Contracts On March 26th

Senior Contributor
03.19.13 6 Comments

The rumblings have been going around for a while now, and apparently T-Mobile is going to make it official next week: They’re going to pretty much fire an entire business model right out the airlock.

As much as we rip on T-Mo around here (full disclosure: I’m actually a T-Mo customer), they have actually been working fairly hard to shore up their business, and getting a bunch of spectrum from AT&T as part of the failed merger has meant they can shore up their network. They’ve even shown a little feistiness in the form of buying Metro PCS.

Now, though, is when things really get interesting; T-Mobile is finally getting the iPhone, but it’s not going to subsidize it. You want one, you’re paying the full sticker price for it. And come March 26th, they’re likely announcing the end of contracts, as well.

Judging from a T-Mobile press conference invite that just crossed our desks, the carrier apparently has big changes in store. Scheduled for 11 a.m. ET in New York, the March 26 event will supposedly demonstrate the wireless provider’s intentions to not act like a typical “wireless company.”

It’s a bold move; it would essentially mean customers could come and go from T-Mo as they pleased, tweak the services they wanted at any time, and change anything else at a whim. It puts the company at the mercy of its customers.

T-Mobile is essentially gambling on two things, and at least one of them is a slam dunk: First, that unlocked phones like the Nexus 4 will continue to proliferate and hit the market, catering to T-Mobile’s lack of contracts, and secondly, that consumers are getting tired of the way mobile carriers do business.

The first is pretty much a given, and T-Mobile is smart not to peg business on getting the iPhone, which generally ruins profit margins. The second is a bit more up in the air: One of the reasons cellular carriers put up with the iPhone’s margin destruction is because customers get a new phone, which locks them into another two year contract, and Apple rolls one of those bad boys out every year.

One way or the other, we’ll have a better idea what’s up March 26th.

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