T-Mobile CEO John Legere revealed the company’s pricing model Tuesday in New York.
MARY ALTAFFER • Associated Press ,
T-Mobile unveils aggressive phone pricing with no contracts
- Article by: BRIAN X. CHEN
- New York Times
- March 26, 2013 - 8:35 PM
T-Mobile USA, long trailing its rivals in the cellphone industry, is trying to catch up by changing the conversation: It is selling the iPhone cheaper than the competition — and customers would not have to sign a contract.
But it may not be enough to persuade smartphone users to abandon the competition.
Analysts said the new marketing strategy, which spreads the cost of a new phone over two years as a separate line item on the monthly bill, will still feel like a commitment to many customers, even if they can choose to pay it off early and walk away. And T-Mobile, which has a slower network than its competitors, is only just beginning to introduce major upgrades.
The company said Tuesday that the Apple iPhone 5 would be available starting April 12 for $100 up front, with customers paying an additional $20 a month for two years. Other new smartphones, like the Samsung Galaxy S4 and the BlackBerry Z10, will be available with similar payment plans.
Although T-Mobile’s new phone plans require no long-term contract, customers would have to pay off the balance to end service prematurely.
For several years, T-Mobile, the No. 4 U.S. mobile carrier by market share, has been bleeding subscribers to Verizon Wireless, AT&T and Sprint. The company has said that its main problems were consumers’ negative perception of its network and its inability to offer customers the iPhone.
Now that T-Mobile has landed a deal with Apple and turned on its new fourth-generation network, LTE, in seven cities, the company is hoping to mount a comeback. The big question is whether T-Mobile can lure customers away from its rivals. The carrier’s chief executive, John Legere, said that in advertisements the company would focus mostly on attacking on AT&T.
AT&T showed no sign Tuesday that it would change its pricing plans.
“It’s not complicated — we’ve invested nearly $98 billion on our wireless and wireline networks over the past five years, and today our customers enjoy the nation’s fastest 4G LTE network experience,” said Mark Siegel, an AT&T spokesman.
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