Third-ranked US wireless carrier T-Mobile has announced a radical restructuring of its rate plans that includes the elimination of annual contracts, in a move that CEO John Legere says is designed to address consumer frustration.
"This is an industry filled with ridiculously confusing contracts, limits on how much data you can use or when you can upgrade, and monthly bills that make little sense," T-Mobile CEO John Legere said in a statement.
But he saved even stronger language for the stage at a launch event in New York on Tuesday, when he exhorted the wireless industry to "stop the bullshit."
Under T-Mobile's new Simple Choice plan, every pricing tier gives customers unlimited talk, text, and data for a flat monthly rate – though how much high-speed data they can use depends on how much they pay.
The basic rate costs $50 per month and comes with 500MB of high-speed data (either HSPA+ or LTE, depending on equipment and coverage area). After those 500MB are used up, the carrier will throttle the data rate down to 2G speeds for the remainder of the billing cycle.
Customers who want more high-speed data can pay an additional $10 per month to get 2.5GB, or for an additional $20 per month they can get unlimited data.
The new rate plans also do away with the subsidized handsets that are typical of two-year carrier contracts, meaning T-Mobile customers will have to pay full price for their phones.
The change won't mean much for how most customers shop for phones, though, because T-Mobile will offer payment plans to customers who pass a credit check, allowing them to add the price of the phone to their wireless bill in monthly increments over two years. That's more or less what the other carriers do, too; they're just not up-front about it.
The difference, according to Legere, is that T-Mobile customers are never tied to the carrier's network. If they don't like the service, they can leave at any time – provided, of course, they pay off the phone.
The carrier is not adding a surcharge to the monthly payments, either. So, for example, a Samsung Galaxy S II from T-Mobile costs $414 up front, or you can pay a $30 down payment followed by 24 monthly payments of $16. Either way, you end up paying the same amount, in total.
New network, new handsets – including the iPhone
Also on Tuesday, T-Mobile said that it would soon offer a variety of popular new smartphones and it announced pricing for two of them – most notably the iPhone. T-Mobile has long been the only major US carrier not to offer Apple's mobe, but in December it announced that it had reached an agreement with Cupertino at last.
The iPhone 5 will be available on T-Mobile's network beginning on April 12 for $100 down and 24 payments of $20 per month, or $580 up front. The carrier said it would begin taking preorders on April 5 via a special website.
In addition, T-Mobile customers will be able to get the iPhone 4S for $70 down and $20 per month ($550), and the iPhone 4 will be available for $15 down and $15 per month ($375). T-Mobile did not give a launch date for these models, however, and it added that they will be available "in select markets."
Curiously, T-Mobile's prices for the iPhone 4 and iPhone 5 are actually less than what it currently costs to order them direct from Apple, while its price for the iPhone 4S is the same.
While T-Mobile customers will have to wait until April to get their mitts on the iPhone, however, the hotly anticipated BlackBerry Z10 is available as of Tuesday for $100 down and 24 monthly payments of $18 ($532).
T-Mobile said that it also plans to carry the Samsung Galaxy S 4 beginning on May 1, and that the HTC One will be available at an unspecified date.
Many of these new devices are LTE-capable, so it is fitting that T-Mobile also chose Tuesday to formally announce the launch of its 4G LTE network. For now, that network is available only in Baltimore, Houston, Kansas City, Las Vegas, Phoenix, Washington DC, and San José, California, but the carrier says it expects LTE to be available to "100 million Americans by midyear and 200 million by the end of 2013."
Phones that support LTE will switch to T-Mobile's HSPA+ network in areas where the faster service isn't available.
Beginning on Tuesday, T-Mobile is also offering its first LTE Wi-Fi hotspot, which can provide internet access to up to eight devices for $30 down and $5 per month for 24 months, or $150 up front.
Expect to hear a lot more about all of these announcements soon; the carrier says it plans to launch a new nationwide ad campaign around its new tagline, "T-Mobile un-leash," beginning with a TV spot to debut on Wednesday. ®