Verizon and AT&T CEOs unsure if T-Mobile ending subsidies will work, but they could adopt if it doesAlex Wagner - Senior News Editor
T-Mobile announced last year that it plans to make a full switch to Value plans in 2013, a move that'll see the company move away from the traditional subsidy model that other major U.S. carriers employ and instead allow a customer to get cheaper monthly rates by paying for a new phone in full or spreading much of the cost out over several months. The other big operators in the U.S. haven't said much about T-Mobile's plans since they were announced, but Verizon Communications CEO Lowell McAdam and AT&T Mobility CEO Ralph de la Vega recently took the time out of their busy CES schedules to speak to The Wall Street Journal about T-Mo's Value switch.
McAdam described T-Mobile's plan as "a great thing," adding that he likes the idea of ending subsidies altogether. However, McAdam feels that most U.S. customers are now accustomed to getting cellphones at low prices and that they may not be ready for a change like T-Mobile's. If the public were to get behind a move like T-Mobile's, though, McAdam says that Verizon could make a similar change "very quickly."
AT&T Mobility CEO Ralph de la Vega told the WSJ that while his carrier is keeping an eye on T-Mobile's actions, it's not a huge focus. "Our research says that they [customers] don’t like paying upfront for the phone," de la Vega said. Of course, if T-Mobile's Value plan switch takes off, the AT&T CEO said that his company could also make a similar change.
T-Mobile is unsurprisingly confident in its plans, with CMO Michael Sievert explaining that most new customers already choose a non-subsidy plan and that he feels that others will follow when they realize that Value plans can save them money. I agree with Verizon's McAdam that T-Mobile has a tough road ahead of it when it comes to spelling out the benefits of its Value plan to customers that are used to subsidy pricing. It'll certainly be interesting to see how T-Mo fares in this endeavor, though, and I'm sure that there are many folks (both execs and customers) that'd like to see the T-Mo's plan take off. What do you all make of T-Mobile's decision to go all Value, all the time? How do you think T-Mobile will fare in its effort?