[telecom] T-Mobile Unveils Aggressive Phone Pricing With No Contracts

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T-Mobile Shakes Up Its Service

By BRIAN X. CHEN March 26, 2013

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 most important, 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 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 two years. Other new smartphones, like the Samsung Galaxy S 4 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 owed in order to end service prematurely.

For several years, T-Mobile, the No. 4 American mobile carrier by market share, has been bleeding subscribers to Verizon Wireless, AT&T and Sprint. In earnings calls, the company has said 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. If T-Mobile does not find a way to bounce back, it risks losing even more market share to Verizon and AT&T and becoming a small niche player like Leap or U.S. Cellular.

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