Rumors are ablaze that T-Mobile is planning on ditching their 2-year contracts altogether, and although there hasn’t been official word given from the company that this change will in fact happen, many people speculate that it’s only a matter of time before the company makes the move whether it’s in a couple of weeks, months, or years. While T-Mobile already offers non-contractual agreements to purchase phones on a subsidized plan, they would be the first major network in the U.S. to completely ditch the 2-year contract model. The question now is: would other companies be forced to follow if they made such a bold and game changing move?
This business model is not something completely new, as T-Mobile was already testing the waters by offering this plan as a secondary option. I can see this playing out to be an enriching move for the fourth largest carrier in the U.S. One of the biggest complaints stemming from those who commit to carriers who issue contracts is that we feel locked in by signing said contracts – yet we keep coming back every two years to sign again because of the “huge discount” we seemingly get on phones. Key word there: seemingly.
Everybody knows we’re not really getting a discount so much as a masked subsidized plan that was made to look like we’re getting great discounts on our phones, but then we pay $30-$40 more every month for “premium” service. I’ll admit that sometimes I feel like the biggest fool for this as my iPhone 4S (still not in commission, by the way) only runs on 3G. I’m paying the same price per month that people with 4G and LTE phones pay – I see nothing “premium” about that. I would be saving a good chunk of money if I had just paid for the device outright and used it on an MVNO network where I’d be paying half the cost per month for the same service.
Essentially, the route I take by being a customer on a network that binds you with contract just means I’m taking a phone out on loan, and paying some serious interest over the next few months. I can’t justify spending $650 on a phone in one big chunk, but I can justify spending $700 more than I would if I had done so over the period of a year or two; the perks of being a simpleton, I guess.
This whole thing is all about perspective. Often times our minds work as opportunists, and we take the best deal that is offered to us right then and there. I’m going to use Sprint as an example simply because I know how they work. When we walk into a store and they tell you that you can have everything you ever wanted for only $100 when the device really retails for $499 or higher, you think wow! What a great deal! Plus, they advertise a great monthly price of $79.99 for unlimited data, text, and mobile to mobile calling – that’s $25 more than Virgin Mobile costs for their Unlimited Beyond Talk plan, but hey! At least you get a bigger selection of phones.
$79.99 doesn’t sound that bad at first, but sometimes they forget to tell you about that $36 activation fee, or the proration on your first bill that still makes absolutely no sense (they’ll charge you a month in advance, but you still have to pay them for the next month – I still haven’t met a representative who can explain this and make perfect sense). Then you have to figure in the taxes, and of course your $10 premium data charge for anything that uses 3G or more. Don’t forget about insurance if you even give a hoot about your phone, because we all know if we’re willing to go through all these hoops to get the initial discount on the handset it would just be a shame to have to fork over that $499 to replace the device anyway.
So what started off to be a relatively decent price of $79.99 (still highway robbery when compared to other companies offering $45-$60 flat rate plans for unlimited everything, but looks good when compared to other carriers like AT&T and Verizon who start off at $90-$100 for a single line with less ‘unlimited’) actually turns out to be over $100 a month – probably not what the customer thought they signed up for BUT since you only have 14 days to return the phone or cancel your plan you’re probably stuck at this point and it’s game over unless you’re willing to pay that hefty termination fee, which you also agreed to.
Taking the time to realize just how greedy these companies are makes me realize (even more) how important this move from T-Mobile could be. While it’s true that this business model is currently used by the company, it’s not that well-known by everyone and people still snuff the company for not being one of “The Big Two” (because while Sprint and T-Mobile are major carriers, they're still several million subscribers behind AT&T and Verizon). I think if more people read about the basis of this model, they might be more willing to leave their current carrier because that’s what’s keeping this current way of cell phone life alive. We just keep buying into it, and we keep throwing our money at them because you know what? I don’t really need this extra $40 this month. I’m feeling like a high roller. Here phone company, why don’t you take it off my hands?
I think it’s only a matter of time before the hive mind starts to realize that the way we’ve been purchasing cell phones and plans are way overpriced. Before reading too much into this T-Mobile deal where they might completely get rid of the 2-year contracts I never really thought there was anything wrong with the company I was with. Sure, I’d been with prepaid carriers before and I admit they’re getting ridiculously tempting with how much money I could save every month, but I kept making excuses as to why I should be with Sprint, and it’s mostly out of comfort of knowing how the company works. But that doesn’t necessarily justify how much extra money I’m throwing at them each month. I wonder if other people will start to question their carriers as much as I have and start to reconsider their options.
I also wonder if this will have a domino effect with other companies if this happens. Will companies like Sprint, AT&T, and Verizon start to see an influx of people leaving in search of a more compassionate carrier, in turn forcing them to adopt this new way of subsidizing phones? Or will we continue to buy into what we’re already comfortable with? I’ll be honest, even I don’t know what I want to do right now, but this potential move from T-Mobile is really putting a lot of things into perspective for me.
Readers, what about you? Does this possible model switch from T-Mobile make you question whether you want to stay with your carrier or not? Would you want your carrier to adopt the same business model or are you happy with the way things are being run? Let me know your thoughts!