To be honest I was going to go in an entirely different direction with this opinion piece. On its face, T-Mobile’s proposition to eliminate subsidized phones sounds really bad for the consumer. But once you couple it with a reduction in the cost of consumer plans, I believe the consumer should make out on this deal – or at the very least break even.
When I first read about T-Mobile’s plan to take away their mobile phone subsidy, it reminded me of when Verizon eliminated yearly subsidies. I used to love having the ability to buy a new subsidized mobile phone every year and did not mind paying a small fee to do so. Verizon taking that option away really annoyed me (and, quite frankly, still annoys me). So when I first heard about T-Mobile’s plan I viewed it as a kick in the nuts to consumers. After getting to the meat of the policy change, it really started to make sense to me.
T-Mobile is actually going about this change in the right manner. In conjunction with eliminating subsidized mobile phones, T- Mobile is only going to offer its economy Value Plans which are much more cost conscience than most other provider plans. In order to be more accommodating to its customers, T-Mobile is looking to allow consumers to finance the cost of the smartphone over the terms of the contract (approx. 20 months), along with a down payment. T-Mobile believes the costs to consumers will be $15 to $20 a month in addition to the cost of the plan. Customers will also be able to buy the phone from T-Mobile outright or purchase a phone from another venue. T-Mobile customers will still be required to sign a 2 year contract – even if they do not purchase their smartphone from T-Mobile.
So why is this change good for the consumer? It should in theory save consumers money because T-Mobile will not have subsidize the handset, thus making it easier for them to pass the savings onto the customer. This new system will take power away from the carrier and put more power in the hands of the consumer. If a consumer is not forced to purchase a mobile phone from the carrier and buy a Nexus device straight from Google then the carrier no longer controls the update schedule.
I am hopeful that this may reduce the amount of bloatware which is added to a smartphone, but I have a feeling that the manufacturers will pick up the slack for the carriers. One can only imagine that smartphone manufacturers may see adding bloatware as a way to reduce the cost of the smartphone, thus making it more attractive to consumers. People are still going to want top rated phones at a cheaper price.
It will be interesting to see how this all plays out when T-Mobile decides to roll out their new system. I am also interested in seeing if the other carriers follow suit – since this is probably not a step in the direction the other carriers want to move in. This move will also benefit Google should it decide to get deeper into the smartphone design and distribution business. Should Google decide to release multiple Nexus smartphones,at similar low costs as they have with both the Galaxy Nexus and Nexus 4, the consumers will be the winner along with Google.
So what do you think? Do you think T-Mobile’s plan to eliminate subsidized smartphones phones is a good one? Do you think the other carriers will follow suit? Please leave your thoughts in the comments section below.