When T-Mobile decided to rebrand itself as the "Uncarrier" and do away with the 2-year contracts we've all been used to and offer paying off a device over time instead of up front was a huge risk. Wireless carriers in the U.S. depend on locking in customers to a 2-year contract and think that offering a device for $199 (now the norm for a high-end smartphone) is a fair deal. The problem is when you're a gadget lover and want the latest and greatest, 2 years is a long time to wait to upgrade.
T-Mobile's new way of doing business alleviates that problem to an extent by allowing you to buy a popular smartphone; we'll use the iPhone 5 for example. T-Mobile gives you the option of putting $99 down and then tacks on $20 per month to your bill for 24 months. T-Mobile doesn't consider that a 2-year contract because once you pay off your device in full, you're no longer obligated to stick with T-Mobile. This was a huge gamble for the wireless carrier and its rivals all released statements when T-Mobile made the announcement that would begin to change the way wireless carriers in the U.S. do business.
Sprint's response: "Sprint gives its customers the best of both worlds with Truly Unlimited 4G LTE data on smartphones and the best value for customers with a savings of $110 over T-Mobile when comparing the total cost of ownership over two years for the 16 GB version of the Samsung Galaxy S III. In addition, true no-term contract options are available with Virgin Mobile, Boost Mobile and Sprint As You Go."
AT&T's response: "Whatever."
Verizon's response: "Verizon Wireless customers have for years enjoyed the ability to purchase a phone at full retail price on month to month contract. Phones on our website are offered at full retail price as well as the discounted price to give customers a choice in how they purchase their mobile devices."
All carriers were against the idea of T-Mobile's "Uncarrier" model until they began to see customers liked the idea. Slowly but surely T-Mobile's risk is paying off and it's not only changing the way it does business, it's having an effect on its rivals. Verizon is the first carrier to publicly acknowledge that T-Mobile is chipping away at the way carriers have been doing business for years and it's now open to follow:
"Verizon CEO Lowell McAdam said it was 'pretty easy' to change up the model to eliminate contracts, and added that he would watch the consumer response that T-Mobile gets from its recent decision to drop contracts and phone subsidies altogether. He indicated a willingness to follow suit if consumers start asking for it."
Verizon Wireless just made even more of a public acknowledgement that T-Mobile's new way of doing business is changing the way it must do business. Verizon Wireless just announced it would begin allowing customers to pay for certain devices over a 12-month period.
"Customers also have the option of purchasing a phone at full price at any point before their contract expires and beginning April 21, some devices will be available for purchase through the Verizon Wireless Device Payment Plan."
While Verizon's device payment plan is not the same as T-Mobile's it shows the carrier's willingness to be open and change the way it has done business for years, and it's all because of T-Mobile. T-Mobile took a huge risk and it's shaking up the wireless world and the way all carriers will do business in the future, the risk was well worth the reward for all of us.
