“This is the biggest crock of shit I’ve ever heard in my entire life,” said T-Mobile’s new CEO John Legere when talking about traditional wireless contracts and subsidized smartphones. “Do you have any idea how much you are paying? Everybody hates the high cost and crazy complexity of rate plans, and I hope I’ve been clear to you that this is on purpose. Rate plans are painful, so we have radically simplified them.”
A ton has already been said about T-Mobile’s new Simple Choice plans, some of it confusing and misleading, but there is only one thing that you need to understand about yesterday’s announcements — T-Mobile is separating the mobile device cost from the service plan.
This is a big effin deal because most carriers punish you for bringing your own device. For example, AT&T will allow customers to use an unlocked phone such as the Nexus 4 on their network, but they are still forced to pay the inflated rate plans that are meant to subsidize the high cost of devices.
“Customers don’t need another AT&T. Customers need carriers to stop acting like AT&T. If you come to T-Mobile you have signed your last contract. You’re done. They’re dead,” said Legere at T-Mobile’s event.
Some news outlets are arguing that mobile devices are still very expensive, so you won’t save much money in the long run with a no-contract plan. And they might be right if you are looking at the unlocked iPhone 5 at $659, but smartphone prices are falling at a rapid pace.
Google already sells the LG Nexus 4 for $299 without a contract. This summer we could see Motorola sell an unlocked phone for $199, and NVIDIA could help push the starting price of an unlocked “superphone” all the way down to $99 by the end of the year.
We haven’t seen any unlocked phones that will operate on multiple LTE networks in the US, but that is about to change. Apple’s latest iPhone 5 revision (model A1428) will support LTE on both AT&T and T-Mobile. Future unlocked Android devices (like the rumored Nexus 5 and X Phone) should also support LTE across multiple US networks.
T-Mobile’s new Simple Choice plans might not seem that revolutionary today, but wait till Google and their partners releases the next great unlocked Android phone with 4G LTE.
In addition to lower prices for devices and services, customers will have the freedom to switch networks at will. This should help speed up innovation as carriers are forced to start competing for our business. “If we suck this month, drop us,” said Legere. “But if we’re good, stay with us.”
A few years from now, we will look back at March 26th, 2013, as the day that T-Mobile killed wireless contracts. The old model of two-year contracts and high device subsidies is dead, and the market giants like AT&T and Verizon will be forced into changing or risk losing customers.
And anything that keeps the big guys on their toes is a good thing. Am I right?