T-Mobile Becomes The Uncarrier
Which is why I was so excited when T-Mobile announced their “Uncarrier” plan earlier this month. You can read about the new campaign here. Put very simply, T-Mobile unbundled the cost of the phone from the service. As a result, wireless service will cost about $30 less than the other carriers.
You can pay for your phone upfront or in interest-free monthly installments (the combined monthly cost is still less than what the other carriers charge for their bundled plans). If you lose or damage your phone, you can buy a new phone anytime. And if you pay off your phone, you can enjoy a cheaper monthly bill as long as you want. If you don’t need your phone service for awhile–say you’re backpacking through Myanmar for six months to “find” yourself–you can cancel your service and just buy local SIMs in Yangon!
Of course, T-Mobile didn’t lower the price of the phones themselves. Phones are still way overpriced…but now that T-Mobile has shined a spotlight on that problem, it is just a matter of time before device makers rush in to fill the price gap.
The race to the bottom may have already started. The Google Nexus 4 costs half as much as an iPhone 5 or Galaxy 4. If Amazon comes out with its long-rumored Kindle phone, I’m sure the price of that phone will make the incumbents nervous.
And let’s not forget China. Huawei has already started making cheap Android phones for their home market. Foxconn, Quanta and others are sure to follow. They are not very good but give it time. Disruptive innovation.
The cheaper phones will start to slowly trickle into the US market. Consumers will win. Apple stock may have further to fall. I really hope T-Mobile’s new business model succeeds and eventually forces the dominant carriers and device makers to be more transparent with their pricing. But I hope it doesn’t succeed too much to the point where T-Mobile gets drunk on its success and starts acting like a toll-collecting utility rather than an upstart innovator.
One question I bet you’re thinking: am I getting paid by T-Mo to promote their new service? I wish! But sadly no. I just like to see an innovator succeed with a new idea against the incumbent bell-shaped heads! It comes down to this: if I can buy a 7 inch Android tablet with a cellular chip for under $300, shouldn’t a 4-or 5-inch smartphone cost less than that? Or at least not twice as much as that? And if we consumers suddenly have access to transparent pricing models, isn’t it just a matter of time before we start demanding lower cost monthly service plans to go with our lower smartphone prices?
Consider this: A petition to kill the bundle contract from Change.org needs just 30,000 more signatures before it can take it to Verizon. VZW CEO Lowell McAdams said he will consider it if customers demanded it. It looks like they are demanding it.
I really think that T-Mobile fired the opening shot of a smartphone revolution! If you don’t like the idea of carrying a cheap pre-paid phone and a 7 inch tablet as I recommended in my prior post, then T-Mobile may have introduced a really good alternative.
Or, Virgin Mobile (my other favorite carrier, MVNO owned by Sprint) has just introduced a pretty good option as well: LG Optimus F3 comes to Virgin Mobile with LTE and $180 price tag. This is the full price that you can use on Virgin’s prepaid service. We currently pay $35 for an unlimited plan.
And if you are outside the US reading this and thinking, “What’s the big deal? This is how it’s done in my country already.” You are right. The US system is antiquated and needs a reboot.
Finally, I will admit that I’ll miss the pretty T-Mobile girl in the pink dress though. She was a casualty of this new marketing campaign.