Back in the pre-smartphone days, friends and acquaintances in the U.S. would sometimes ask me how handset vendors like Nokia and Motorola could afford to sell phones for one dollar. Of course, the answer is they can't and don't: subscribers are actually entering into an amortization scheme with the operator. Unlike in many European and Asian markets, few Americans ever considered separating the device from the service.
Might the American market now be shifting to mimic the old European ways? America's #4 wireless operator, T-Mobile, with little to lose, is taking a stab at sparking that type of change.
T-Mobile USA is positioning itself as the new bad boy of the U.S. mobile biz with one heck of an anti-establishment attitude. With a few cuss words here and there, T-Mobile USA's rather new CEO, John Legere, insists that it takes an industry outsider like him to shake things up a bit.
T-Mobile is moving away from the industry-standard two-year contact, and pushing month-to-month voice and data at very competitive prices. But the bigger point here is separating the price of the device from the cost of the service. This does make the device financing more transparent with a clear breakdown of hardware and service costs. (T-Mobile calls each payment of the installment plan a "phone fee" which is still a bit misleading in my opinion.)
T-Mobile USA President & CEO, John Legere: No more annual service contracts, all new plans, unlimited, LTE, unlimited 4G FaceTime...
So, are the days of penny candy numbered?