Prepaid Wireless Tracker
- April 2013 Issue #58
wireless is a growing and truly exciting industry. At
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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,
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,
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
that you can choose to buy your phone outright (or bring your own
phone) and avoid signing a contract. Or you can choose to
a phone, and enter into a financing contract (i.e. not a service
contract, though they are intrinsically related). You can
your phone anytime, and leave the carrier with no penalties.
Regardless, unlike prepaid wireless, T-Mobile still does
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
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
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
result in an overall simplification of plans, and an overall increase
in competition; all good things. The articles below get into
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
With T-Mobile's large marketing around its "no contract
plans, it begged the question, "What's going to happen to its prepaid
plans?" Well it looks like while its burying them on their
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
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
added to your bill, whereas most prepaid carriers include these in the
plan price. Note that sales tax is applied across all plan
and can't be avoided. Overall, T-Mobile has been shaking up
market (a good thing), however, the positioning of its prepaid and
postpaid no contract plans is confusing. I expect that over
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
financing contract. This certainly gives customers options,
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
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,
is not inflating phone prices, but are simply charging the full
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
performance, thus enter 4G LTE. Sprint has invested a lot in
prepaid with its own brands, as well as MVNOs. We've also
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
of the March included news that certain MetroPCS shareholders are
against the merger with T-Mobile. Look for an update on that
next month's newsletter!
New At Prepaid-Wireless-Guide.com?
- Added MetroPCS LG Spirit & Huawei Premia to 4G Phones
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