In an ideal world, the nation’s fourth largest carrier would have consumers paying for the full cost of the device up-front and in return T-Mobile USA will offer them cheaper rate and data plans. Currently, in the U.S., users are accustomed to paying under several hundred dollars in exchange for a slightly increased plan rather than upwards of $500 for the full price of a high-end smartphone. According to T-Mobile’s chief marketing officer Cole Brodman, subsidies like this is now helping the industry.
“It actually distorts what devices actually cost and it causes OEMs, carriers — everybody to compete on different playing fields,” Brodman says. “And I think it is really difficult, especially from a consumer perspective, because it causes consumers to devalue completely the hardware they are using…. It is amazing hardware, but it has become kind of throw away. So, it is unfortunate, you’ve got dual-core, multiprocessor devices with amazing HD screens that get thrown away at 18 months.”
When pushed by Swype in a panel at the GeekWire summit in Seattle as to why T-Mobile doesn’t lead the industry with its own plan–or in Google’s lingo, eat its own dogwood–Brodman says that its hard to adopt this plan when the three largest carriers don’t want to switch to a contract-free system. The carrier says that it has attempted to do this in the past, however, with limited success.
Though it makes sense to have a lower rate plan–which really adds up over 12 or 24 months of service–than a lower upfront cost of ownership of a new device, consumers typically are drawn to cheaper devices and would rather spread out the payments over time in the form of higher rate plans over the life of a contract, much like a ‘loan.’ In Europe, Asia, and other countries, users would pay for their devices and not be subjected to a long-term contract and are able to have data and voice cheaper.
And despite not offering the iPhone on its network and a recent loss of subscribers, T-Mobile says that it offers many great alternatives on its network.