Earlier today, our counterparts at TmoNews broke a rumor from a trusted source that the Magenta network could be dropping the word "contract" from their vocabulary. That's right, there may not be any such thing as a 2-year commitment at T-Mobile. The same goes for Early Termination Fees. Rumor has it that this could go into effect later this month.

The rest of the rumor says that existing customers can finish out their current contracts, or upgrade to a new device without a contract, whichever comes first. Also, there will be a new equipment installment plan tier presumably to differentiate between budget, feature, mid-range, and flagship smartphones. TmoNews also reports that the carrier is looking to keep all smartphones under $99. This up-front fee is the down payment in what is a long engagement (up to 20 months) of flat-rate payments. If you're interested in a $699 smartphone (unsubsidized price), you can pay $99 up-front followed by twenty $30 payments. The result would bring the total right back up to the unsubsidized $699 price tag.

However, these are rumors, and even though the basis of them aligns with T-Mobile's announcement of a no-contract approach to the 2013 year, be careful what you wish for.

So, what could this mean for you and I?

Basically, T-Mobile is in the midst of a serious rebranding. It could mean a few things for the company. We recently caught wind of T-Mobile's branding as the "uncarrier" in Las Vegas at the Consumer Electronics Show. At their press event in January, they also announced a nationwide roll-out of HD Voice. They raised the blind again by announcing themselves as the first carrier to offer Nationwide Unlimited 4G without a contract, but did so without any inclination as to when.

I was intrigued, but didn't know how it would be possible. Contracts protect the carrier at the expense of the customer's flexibility. The contract commits customers to their network, payments, and a smartphone for a certain amount of time. In short, I was skeptical as to how one of the big four wireless carriers could pull this off and still am. So, essentially, since T-Mobile will have less protection, how far will they go to ensure their own safety?

As with most contracts, T-Mobile will need to protect themselves. I'm expecting a protection plan to kick in alongside any pending "no-contract" announcement, as well as a simultaneous update to the return and damage policies. T-Mobile would not take this big of a risk without implementing protection plans to shield themselves from an influx of damaged devices that are still technically owned by the carrier.

Just the thought of a customer not paying their monthly bill could turn into a tricky situation for the carrier. What would happen if the device is sold second-hand without fulfilling the payment term? Will T-Mobile be obligated to replace any devices? Is the company preparing for more returns and exchanges? Will the deductions on payment plans go up to deter customers from going case-less? How will upgrades be handled prior to contract fulfillment? Do you pay-out the rest of the term, and own the device, or can it be exchanged for its remaining value? Can you return smartphones like a lease program?

Clearly, it's about to get cray. Not only are we looking at a radical change to the contracted mobile industry, we are looking at an increased amount of responsibility on the part of the consumer. T-Mobile is playing a blind hand and I think it has some serious consequences if it does not play out.

The idea of not having a contract eludes me. Regardless of the rumor, the idea is now implanted in my mind. I've been locked into one contract or another for a really, really long time. First it was AT&T and their unlimited data. That lasted for the better part of ten years, and my parents are still with them. Then I divorced that carrier for a younger, flashier one: Sprint. I've been with them for less than a year and a half, and I've had six devices: the Samsung Epic 4G Touch, HTC EVO 4G LTE, LG Optimus G, another EVO 4G LTE, a Samsung Galaxy S III, and finally, my Samsung Galaxy Nexus.

In hindsight, this would have been so much easier without a contract.

Aside from the implications a no-contract approach holds for the uncarrier (T-Mobile), I'm expecting the prices of second-hand smartphones to tank in the process. The average consumer would choose $99 over $699 ten days a week, but I'm no cardiologist, so test it yourself.

If you're a customer of T-Mobile, and you want to get rid of your smartphone, but have already paid the $99 up-front and 10-months of $30 payments, your smartphone is no longer worth any more than $399 regardless of it's condition or popularity. As a frequent buyer and seller of smartphones, this is almost a good enough reason for me to avoid T-Mobile like the Plague. Never lock yourself into a product that has a set value at the end of it's life. There's no room for profit.

I can hear it already. "I have had the phone for 6-months and I've paid $400, but I'll take $200 because that's how much I need to pay off the phone." "You've had your phone for 5-months and want $550 to pay it off? But the Galaxy S IV just came out and Galaxy S III's are selling for $250 now. How about $200?"

That's a big no, with a side of no.

The second-hand market is about to get really silly. I worry how the no-contract and monthly commitment pricing will be enforced, and what it will do to people who frequently switch between smartphones.

All these rumors and questions aside, I'd pay to hear how T-Mobile's CEO John Legere announces this. T-Mobile has the disadvantage in coverage and subscribers. Normally, this would mean trouble, but the Magenta-colored network has never had the upper-hand. They've practically invented the underdog mentality. And their new CEO John Legere doesn't give a damn about the politics and tactics of his competitors. Maybe that's why he calls other networks "crap" and shrugs off the severity of insults as simply "swagger" and "fun." There's just something about Legere's casual and cool mentality that engages you. Here's to hoping he can sell us a $99 Samsung Galaxy S IV without sketching us out in the process.

We've all been there. It's that moment when the next device comes out and you have to have it, but can't without breaking your 2-year commitment. Sometimes, you'll pay to have that device at the subsidized rate. Other times, you wait out the rest of your contract. Do you think T-Mobile is doing right by eliminating contracts altogether? What could it mean for new customers? Are you interested? Let me know what you think in the comments below!

Image via TmoNews.

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61 Reactions to this post

"A rumor is circling that T-Mobile might be getting ready to launch Nationwide Unlimited 4G with No-Contract. Would you jump ship from your current carrier for T-Mobile if this comes true?"

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Chase Ros The rumor is true everyone! Check it out for yourself http://pdog.ws/XS0ftu
Mark Belkowski now if they would get rid of this pay per month crap on phones id be happy.
Damian Butler Going pick up my no-contract Galaxy S3 today! (: !!!
Bob Fitzgerald Well, since Verizon is too smug about 'Droid' to sell the One? Yes, I may give it a shot.
Raj Sinyor No.been there and done that
Mike Cooper ya it supports lte
Mike Cooper and nexus 4 sales skyrockets
Chuk Anyanetu I have att so no. Since they have dif 4/
Bo Abe Vorachack Love it n they have good coverages in the big cities I go 2.
Micah Watkins I seen the commercial on cable tv already, yes it's true.
Randy B Hoopes In a second! Hate Verizon
David DiPilla I love them but their prices are high
David DiPilla Verizon is amazing has outstanding service
Don Stephen Strada II That wouldn't mean a thing...they'll just put their phone prices higher like metro pcs.
Chase Michael Vandiver Has anybody noticed that (with the exception of MVNO's) all the unlimited data carriers have bad coverage?
Howie Eastin Heck no!
Daniel McCarthy I pay $45 for pre-paid unlimited text/talk and 5GB of "high speed" HSPA+ @ 42mbps. I paid $300 for my Nexus 4, off contract, unlocked and according to the math, I will save $1200 over the course of two years compared to the basic smartphone plan on Verizon, I also get better coverage than I did with Verizon in metro Phoenix and I travel quite a bit so I've only seen one place (up in the middle of no where) when I didn't get coverage.
Larry Ayonn Sorry, meant Steven is spot on.
Larry Ayonn Kenneth is spot on. With these changes in TMobile, you can upgrade as often or as little as you want. The way it was explained to me is that the "plans" will be cheaper than they currently are, so really the "extra" payments on the phone average out to around what you're already paying. So, this will be beneficial to those who don't upgrade often, and even for those of us who upgrade often, since we were paying high prices for off contract phones anyway, but all at once.
Luis Robles Figueroa It depends on the benefits.
Steven Saltzman Many people don't understand they're paying full price or more for the phone over the 2 year contract and let's not forget about an extra $15 a month in taxes. Most of those taxes nobody has a clue to what they are even. When you get an iPhone for $200 all you're doing is subsidizing the phone over the course of your contract. It's all about the way people think. People see $200 and say wow soo cheap compared to paying $600 for the phone (which is what it actually costs).
Kenneth Maneeley Maby! Depends on the coverage. I am with sprint. Semi good coverage. And signal depends on how close to the towers you are. Thinking a Note 2 with T-Mobile to try it out.
George Millhouse Eli you miss the prices? You DO know you arent paying full price for your phones right? and that will be added to the cost of your plan each month and if you leave you owe the rest on your next bill immediately. In other words you are still on contract they just do it differently.
Fabian Toti yes and no..... is hard because I love att ... in my area att is very good. but you might never know
George Millhouse mommy pay for your new phone every 6 months Anthony?
Anthony Ruiz I always had this, I can't be on a contract because I like getting a new phone every 5 or So months.
Eric Rogers No coverage in iowa
Jeanne Donnelly If they could get me Verizon service unlimited then I'll switch.
Edward Gonse There will still be some sort of contract for this situation. People will still require a credit check to be eligible for this monthly payment of the phone until it is paid off in full and if it isn't, hello friendly consistent phone calls from bill collectors. Tmo may also tack on some sort of interest rate for such a deal. They may very well also slightly raise their plan rates. We will just have to wait to see what happens. I also hope that Tmo will open up more markets for 3G and 4g coverage for the iPhone.
Jordan Brown Its already true. I'm already on T-Mobile Prepaid and have considered it.
Jeremy Carter T-MOBILES coverage is awful. You only get 4g or even 3g only in city limits. If your traveling in small towns or on an interstate with nothing around you either get EDGE/2G or no coverage. I will stick with sprints 3g which I get EVERYWHERE where theres sprint coverage. The hell with this 2g crap
Dalton Aeschlimann No because T-Mobile has NO COVERAGE AT ALL where I live... well very little...
Anonymous I've never understood American telecoms. I've always bought my own phones and used an unlimited prepaid service.
Jim Mccoy Already plan on switching when att contract is up in August. Can't wait to get my new nexus 4!
Al Le verizon's coverage is still the best...so that's why the high price! 4get AT&T...Go for the hybrid wifi network- Unliimited everything- REPUBLIC WIRELESS- $19 or $29/mo no contract!!!
LaToya's Page Thats all I'm waiting for
Bobby Delaney The need rural America coverage. That is how Verizon won first place. Not pricing, customer service, or even speed because they became number when during 3G dominance. It was coverage. They cover 90% of America with at least two bars or more. T-Mo has great big city coverage but when you get to big towns and small towns of 200k people or less, you get nothing.
Abram Wenevermet Dennis No.. t-mobiles network here is not much better than Sprints in my city.. unlimited is not worth it if its 2 slow 2 use..
Robert Wellington Clubine III TMO has been doing this for years in Europe but TMO's U.S. coverage sort of sucks.
Jordan Brown They already did
Jason Vargas I don't see the benefit in switching. I wouldn't want to pay $400-700 for a new phone. I see it exactly like Cricket in my area. Overpriced phones and ok plan prices. Sprint offers the same prices and I can get a phone for $199. I don't see why contracts are such big deals. Just pay ur bill and there's no problem
Tim Davis I'd love to support T-Mo for ending subsidies on phones, but the coverage is lacking where I need it. So, Straight Talk for me with an AT&T SIM.
Frank Enstein No, t mobile sucks harder than at&t. I'll stick with Sprint.
Ravin Schmidt That's why my bf uses T-Mobile. Att makes u pay another $15 for a data package. T-Mobile is better for prepaid
Eli Thegreat Parker I just might! I love Verizon, but I miss T-Mobile prices
Anthony Evans Jr supposed to be at most 99 down 30 a month for 20 months at least on the extreme if you want a note 2 or something high end
Gabriel Ramiris Hell No they need to get LTE software like Verizon then I'll switch back again til then my answer says Hell No!!!
Jeff Jones Depends on the price and how bad their throttling or the like is.
LaTanya Anderson Smith But, we have no coverage where I live.
Cal-Gene Johnson Mobile is getting way more accessed via wifi... No more plans for me. I use google voice and a home phone ;)
Randy Walker Sr. Nope. They don't have coverage in Western Montana.
Sean Reece I like T-Mobile they have lied about some things but my sales rep wasn't very nice but the store manager straightened it out ever since I have liked T-Mobile I came from Verizon and see no difference in speeds and my bill is $40 less
LaTanya Anderson Smith If the phones are reasonably priced.
Andrew Hernandez It is true I just talked to a representative today about that same topic.
Robert Salender I'll believe it when I comb through the fine print, not seeing the word 'throttle'.
Eric Hook Coverage is fine. Has been for 5 years.
Chris Roberts I would definitely tell every single person I know or met and would try to get them to switch service providers to T-Mobile
Frederick Suleiman Yeah, if they only fixed their coverage.
Anthony Evans Jr and once tmobile gets LTE in my area.. I may try them

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