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Why T-Mobile's new plans won't end contract madness

Evan Dashevsky | April 1, 2013
In a bid to escape from its basement slot among nationwide cellular carriers, T-Mobile has unveiled a radical new pricing system that departs from the contract plans mobile users have grown used to hating.

As stated earlier, the new unsubsidized, unlimited T-Mobile plans may benefit some consumers, but they certainly don't mark the end of the monthly contract for everyone. Why? Four reasons come to mind:

" T-Mobile's LTE network is fledgling. The service is only launching in seven markets for now and it may be a while until users throughout the country can access all that tasty 4G goodness. If you don't live in one of the seven metro areas in T-Mobile's initial offering or want to travel and need your data on the road, then T-Mobile may not be for you--at the moment.

" No-commitment doesn't necessarily mean no catches. Many consumers will probably take advantage of T-Mobile's layaway plans that allow customers to pay a relatively low down payment and chip away at the cost of their phone on a monthly basis. For example, a new T-Mobile customer has the option of paying $589 for the Galaxy S III at check-out, or they can put $110 down with a $20 monthly payment for up to 24 months. (Sounds a lot like a two-year contract, huh?). Now, if that user were to leave T-Mobile early, they would be on the hook for the rest of the price of that device. It doesn't matter at what point they break off the relationship. In contrast, if the same customer were to leave their current carrier before the end of the contract, the early termination fees would be capped at $350.

" Existing device owners don't get much of a break. Already own a compatible smartphone you are happy with? T-Mobile has the option to bring it onto their unlimited no-contract plan starting at $70-per-month or $60-per-month for two phones. As you may notice, those prices aren't radically different than what the other carriers offer.

" Smartphones tend to only live for about two years. We've all heard the conspiracy theories about how expensive gadgets always seem to go belly-up at the end of their warranty or when our coverage content ends. We've probably experienced that a few times ourselves. It's not even just a matter of hardware--update cycles in mobile operating systems could mean the phone you buy now may not even be able to support new features in a few years. If you decide to opt for T-Mobile, you should factor in the cost of buying a whole new crazy gadget in a few years.

Again, this new T-Mobile plan gives consumers more options. And options are always a good thing that will lead to more competition among carriers as they look for ways to convince us to part with our money. So while we should give a tip of the hat to T-Mobile's way, don't expect contracts and subsidized smartphones to disappear any time soon.

 

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