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!


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45 Reactions to this post

"Has T-Mobile's potential model switch made you rethink your carrier's contractual ways?"

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David DiPilla Ya that's nice but I love Verizon service
Roberto Abarca Hey @David DiSpam TMO said they are getting rid of contracts and subsidies and that means all that gibberish you are stating. They said "Why wait 2 years for a new phone? W/o subsidies costumers will be able to get the next phone they want, whenever they want, as many as they want". With the money a person would save from switching from Verizon they could buy 1 flagship smartphone a year or depending on your tastes two to three mid range smartphones. And thats from buying directly from them. Even more phones if we consider ebay, craigslist, online global unlocked phone retailers.
Justin Charles Reback I plan on going to T-Mobile or Ting next. I'd rather spend as little money as possible on phone service, and both of these companies give me that option with the options they have.
Lennes Shaw Need better phones
David DiPilla I just like having the best and the best is Verizon the day t-mobile is official number one I go to them and I bet the prices would go higher t-mobile is desperate to get customers that's why their prices are cheaper and you see a t-mobile commercial every 5 seconds
Odin Johnson I'm with TMO. I just save my money and pay cash for the phone up front. Screw the payments. I just bought 2 Galaxy Notes 2s for my wife and myself and paid in full up front. If I want a different phone I'll save cash and do the same. Doing it this way allows my to hold on to that extra money until I'm ready to dish or out. Unlimited everything and real unlimited data is cheaper than Verizon.
Mike Cooper Contracts are for morons
John N Crystal Greenhaw I love hearing people say T-Mobile needs a better network in Vegas. I was there a month ago with tmo SVC and not once below 20mbps.
Mark Belkowski I just want to be able to pay off my note 2. They won't let me do it separate from the gs3 I bought for my wife. Not dishing out 700+. I hope they get rid of the phone monthly financing.
Adam Folger Also you can call in and make additional payments on the device as long as your account is current. Thus adjusting the term of your payment plan.
Tito Cruz It should.
Tim Moore You can upgrade at any time though. You don't have to wait for the 20 months. So you get the iPhone 5S when it comes out and then a year from then you want the iPhone 6 you can go in and pay the deposit and then get another $20 (might be $25 for the iPhone) added to your bill. If you wanted to do that at Verizon you would have to drop the $650 when the 6 came out or wait until your contract was up to get the subsidized $200 price.
David DiPilla So you can't upgrade to a new phone until your current phone is payed for and that's 20 months the same as Verizon
David DiPilla Unless you can go to t-mobile and pay for some of the phone cause at 20 dollars a month its the same amount of time to upgrade for a new phone as Verizon
David DiPilla But with t-mobile that 20 dollars a month you pay for the phone takes over 2 years to pay for so your getting a new phone the same time as Verizon customers
Tim Moore Rob's right if you want to upgrade every year t-mobile is more for you from that stand point. Pay $130 down payment and the rest gets spread out over 20 months. You can upgrade whenever you want and not have to drop $500-600 up front.
David DiPilla I mean I was with sprint their call quality is good their data sucks and at@t I use to get drop calls all the time and I did have t-mobile but years ago and their service was ok but I remember being in some places I would not get service and other people would and that use to make me mad if I had to make an emergency call and I had t-mobile I would die lol
David DiPilla Ya they say t-mobile works good in the big cities but once you leave its not that good and I dont leave the big city to much. Right now but maybe later i will and I was really thinking about switching to them my contract was up this past weekend with Verizon and I had no idea what to do but I said I have Verizon I love their service. Have no probelems with them so why should I leave
Bobby Delaney As prices for everything else go up and budgets get extremely tight, people will look for alternatives than Verizon. It won't happen immediately or within the next year but if Verizon keeps the model of sucking the blood form their customers, eventually people won't have anymore to give and leave. T-Mo just needs to expand it's network, not increase speeds. Coverage matters first. That is what Verizon did in the mid 2000's with the can you hear me now. They covered big city as well as small town rural America and beat everyone else.
Jay Thee Articool Y wouldn't this plan was designed for people like u that want to upgrade every year because you can!
David DiPilla Ya I know some people dont get new phones after 2 years I could never do that I want a phone every year lol so that with t-mobile would never work for me
Jay Thee Articool I've been a T-Mobile for 11 years never any real issues and I travel quite a bit sure in the boonies I have issues but I'm rarely there long
David DiPilla Why you think t-mobile has wifi calling cause their service is not that good I can't deal with that I need great service all the time and that's what I get with Verizon
Jay Thee Articool Some people don't but it still saves u money and gives u the option to upgrade as you see fit and to control Ur monthly charge
David DiPilla I was thinking about switching to t-mobile cause you can save a good amount of money but I love Verizons service and they are king and I know if I went to t-mobile I know I wont have as good as service
David DiPilla Ya once your phone is payed for on t-mobile it drops a good amount thats after 2 years but who doesn't get a phone after 2 years lol
David DiPilla Saving about 240 dollars within 2 years I think
Jay Thee Articool Yes Ur dad paid regular price for his device and after its paid off he saves 30 dollars over Verizon... So regardless of how u look it paying regular price up front or just as a discount Ur still technically paying for that phone whether its upfront or not
Jay Thee Articool Your paying full price for your device whether u realize it or not... 100 bucks for unlimited on sprint with a 200 dollar s3 for the life of the plan or 98 dollars for unlimited plan including insurance and the 20 dollar phone charge on T-Mobile and 78 dollars after its paid off... Y wouldn't u want a tmobile plan?
David DiPilla My dad has unlimited everything on t-mobile its only 10 dollars cheaper then Verizon my dad has to pay 600 for hes note to on t-mobile and my niece just got the note 2 for Verizon for 200 your not saving much with t-mobile do the math and Verizon is number one and the best
Tim Moore It's a contract without a contract. Still takes 20 months to pay off the phone so that is right. But the plans are cheaper and you can upgrade at anytime and have the phone costs spread out over 20 months. No need to wait anymore. Sure your bill will be higher but it's still spread out you aren't paying the cost up front. And even if you did that you are probably still paying less than Verizon.
David DiPilla Paying full price for a t-mobile phone
Kyle Cordiano Their coverage is still spotty.
David DiPilla Your ssying between 10 to 30 dollars with t-mobile over verizon but your also paying full price with a t-mobile so your not saving much plus Verizon has the best service your getting what you paid for
George Millhouse Randy you don't think it's cheaper when you add the cost of the phone to your plan...essentially putting you on contract
George Millhouse Good luck with the majority when they find out that pay full retail. They want their cake and eat it too
Walter Pablo Pascuali Yes. As soon as they strengthen their service here in Vegas, I'm signing up.
Jay Thee Articool There will still be contracts it just won't be as in depth the payments for the device will be broken down as a means that of a contract
Rogelio Esquivel T mobile suck ball always losing service in san antonio tx
Zia A. Wahab I don't think the majority of customers are ready to accept the high price of phones and rather be on a two-year contract just to get a phone at a lower price. I was in a T-Mobile store in Long Island and a lady through a fit when she found out she has to pay full price for a phone to get it off contract; she just said "I never heard of such a thing" and walked out. After putting my friend on T-Mobile's $70 dollar unlimited everything contract I'm tempted to leave AT&T for it since I buy unlocked phones anyway.
Brandon Edward Glenn They will succeed. With the way the manufacturers want you to buy phones, being contractless is the only way to go.
Reese Woodson T-Mobile is kinda sucky here in LA. However, I might leave AT&T just for that $70 all you can eat prepaid plan Tmo has........
Anthony Evans Jr its still basically a contract without the name., But I like the dea makes it easier to get better phones and with LTE coming they will be a force for once maybe even bigger then sprint
Randy B Hoopes Heck yeah I hate Verizon Wireless prices
Alexander Dewitt I see it as a death sign

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