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Prepaid Wireless Tracker #58, April 2013 - T-Mobile Adds Confusion To Prepaid Market!
April 01, 2013

Prepaid Wireless Tracker - April 2013 Issue #58


Prepaid wireless is a growing and truly exciting industry.  At I try to provide you with in-depth information that isn't readily available anywhere else.  Its content is original, and created from firsthand experience working in the prepaid wireless industry.

This monthly email provides you with a quick glance at what's in the news so that you can easily keep informed.  I believe in brief, to-the-point summaries/commentary so that you can move onto other tasks in your day.  Each snippet includes a link to the original story should you be interested in the full details.

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T-Mobile's New No Contract Plans Are NOT Prepaid!
So March prepaid wireless news was virtually dominated by T-Mobile's new no contract Simple Choice plans.  Ironically, however, these new plans are in fact not prepaid plans.  This is a critical distinction, as any services that aren't included in the plans will result in customers seeing such charges on their bills, and there are telecom tax implications to customers' bills.  In other words, the benefits of pure prepaid, like no surprise bills don't factor into these new plans.  So while their plans include the most common services as unlimited, that's certainly not the case for all features.  While T-Mobile has clearly made a move away from classic postpaid, they seem to be doing a great job at confusing customers and the market in general.  The great element of their new plans is that you can choose to buy your phone outright (or bring your own phone) and avoid signing a contract.  Or you can choose to finance a phone, and enter into a financing contract (i.e. not a service contract, though they are intrinsically related).  You can payoff your phone anytime, and leave the carrier with no penalties.  Regardless, unlike prepaid wireless, T-Mobile still does credit checks on all customers.

What T-Mobile has done is basically unbundle the cost of the phone from the plan.  This is different from some postpaid carriers that allow you to buy your phone outright to avoid a contract, but keep the price of your plan as is.  In other words, they do not reduce the plan price to back out the phone subsidy cost that they hide within the plan.  Rest assured, this is a good thing, however, lets not confuse it with prepaid.  The reason it took over the news this past month is because of the frenzy it has caused prepaid carriers, who are rushing to define/re-define their customers segments, position their own financing programs, and generally untangle the confusion that T-Mobile has introduced.  Ultimately, this will settle down and result in an overall simplification of plans, and an overall increase in competition; all good things.  The articles below get into more detail around what's going on with T-Mobile, which will help prepaid wireless customers to sort out T-Mobile's position in the market, and how/if this new approach affects your individual options.

T-Mobile Shakes Things Up Including Introducing Some Confusion
Computerworld (blog)
With T-Mobile's large marketing around its "no contract postpaid" plans, it begged the question, "What's going to happen to its prepaid plans?"  Well it looks like while its burying them on their site, they're still available, and aside from the $30 plan, the higher priced plans are less compelling than its new no contract postpaid plans.  However, customers need to be careful.  Although these new plans are no contract, their billing functions like postpaid, meaning that using additional services (ex. international calls, downloads, etc.) will cost you extra, so be careful that you understand what could result in additional charges.  Also, additional telecom taxes are added to your bill, whereas most prepaid carriers include these in the plan price.  Note that sales tax is applied across all plan types and can't be avoided.  Overall, T-Mobile has been shaking up the market (a good thing), however, the positioning of its prepaid and postpaid no contract plans is confusing.  I expect that over time they'll need to consolidate these programs, though there are some challenges in moving in that direction.  Perhaps they'll keep their prepaid plans as a National Retail play, where the ability to cash-and-carry is critical.

T-Mobile's Strategy Brings Smartphone Cost Awareness To Increasingly Savvy Customers
Yahoo! News (blog)
With T-Mobile, you can now avoid a contract by paying full price for your phone.  Or you can choose to finance your phone and sign a financing contract.  This certainly gives customers options, and does "reveal" the approximate cost that postpaid carriers have baked into their plans to recoup the subsidy that they charge to allow you to leave the store with a $500+ phone for $0-$250.  In fact, most postpaid carriers make money in the long term on phones they subsidized upfront.  The one point that this articles misses, is that prepaid carriers still do subsidize phones, which accounts for the price difference between what T-Mobile is charging for the same phones prepaid carriers are selling for less.  In other words, T-Mobile is not inflating phone prices, but are simply charging the full unsubsidized price.

Prepaid Carriers Need 4G LTE To Compete
With T-Mobile's push to a no contract plans, coupled with the pending merger with prepaid provider MetroPCS, there's a lot of activity around who can steal customers by attracting the droves of customers seeking to avoid contracts.  No doubt customers are highly focused on data performance, thus enter 4G LTE.  Sprint has invested a lot in prepaid with its own brands, as well as MVNOs.  We've also seen them begin to open up LTE to its prepaid brands and partners at a much faster rate than they did with 4G WiMAX.  Regardless, now that wireless penetration is virtually saturated, carriers are focusing on performance and customer service; imagine that!  The last few days of the March included news that certain MetroPCS shareholders are against the merger with T-Mobile.  Look for an update on that in next month's newsletter!

What's New At

  • Updated PTel name, logo, and denominations on Compare PAYG
  • Added MetroPCS LG Spirit & Huawei Premia to 4G Phones

Comments? Ideas? Feedback? I'd love to hear from you. Just reply to this zine and tell me what you think!

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