T-Mobile Unveils Aggressive Phone Pricing With No Contracts

The company on Tuesday said the Apple iPhone 5 would be available starting April 12 for $100 up front, with customers paying an additional $20 a month for 24 months for the handset. Other new smartphones, like the Samsung Galaxy S IV and the BlackBerry Z10, will be available with similar payment plans.

Although there would be no contract binding customers to T-Mobile, the No. 4 American mobile carrier by market share, customers would have to pay off the balance they owe on their phone to end service before the two years are up.

Also Tuesday, T-Mobile formally replaced its old phone contracts with new plans that do not require signing a contract. For $50 a month, customers can get unlimited minutes, text messages and 500 megabytes of data; they can pay an extra $20 for unlimited data.

Over two years, the effective price for a smartphone and phone service would be hundreds of dollars less than it would on ATT or Verizon Wireless. At $580, it would also be cheaper than buying a $649 unlocked phone directly from Apple.

At those two carriers, the most popular phone plans cost upwards of $100 a month with a two-year contract for limited data. The iPhone 5 costs at least $199 on their networks with a two-year contract.

The simplified phone plans are part of T-Mobile’s new campaign to be the “un-carrier.” By moving to contract-free plans, it says it is doing away with charging customers fees for surpassing their data limits or terminating their service early.

John Legere, T-Mobile USA’s new chief executive, said that over two years, an iPhone on T-Mobile will cost $1,000 less than it would on ATT. He said moving toward contract-free plans would make the price that people pay more transparent and save them money over time.

“Do you have any idea what you’re paying?” Mr. Legere said at a press event in New York. “I’m going to explain how stupid we all are because once it becomes flat and transparent, there’s nowhere to hide. You pay so much for your phones, it’s incredible.”

Article source: http://www.nytimes.com/2013/03/27/technology/t-mobile-unveils-aggressive-phone-pricing-with-no-contracts.html?partner=rss&emc=rss