Tuesday, March 26, 2013

Will Move Away from Subsidies Really Help T-Mobile USA, or You?

Will consumers really care if the out of pocket monthly payments for T-Mobile USA service are marginally lower, in the case of services without subsidies but with an installment plan?

Put another way, will consumers actually even save money on T-Mobile USA's new "no contract" plans?

The answer might well be that most consumers will not save much money, if any money.  

In fact, some consumers might even wind up paying less, out of pocket, with a contract plan. 

If one assumes most consumers still are going to opt for device installment plans rather than buying their devices outright, the savings are relatively slight, on a recurring basis, for purchases involving high-end devices.

T-Mobile USA has a $60-a-month 2.5 gigabyte data plan is more than $300 cheaper over two years than an AT&T plan that offers 3 gigabytes and 450 minutes of talk time with the same device. For a user who opts for the installment plan, that works out to about $12.50 a month lower bills than for the rival AT&T plan.

There is an argument that T-Mobile USA plans will save more, compared to service from Verizon Wireless. A user buying that same T-Mobile USA plan, and using the installment plan, would save perhaps $20.83 a month, over two years, compared to a single-user Verizon Wireless plan with 2 gigabytes of data (though the Verizon Wireless plan also would offer unlimited talking and text messaging. 

Still unknown is whether bring your own device trends will get a boost, in addition to a possible shift of end user demand to installment plans or lower-priced devices. 

Vodafone has had unpleasant experience with a shift to "no device subsides" in Spain, leading the firm to reverse course. 

So if you are expecting T-Mobile USA to "disrupt" the U.S. market, you are most likely in a for a let-down. Many of us think the real potential disruption could come from a Softbank-lead Sprint, one way or the other.

Do you really think a "Google" mobile service would fail to be disruptive?

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