Angela Colley, dealnews contributor
T-Mobile has long frustrated customers by carrying every other brand of smartphone but the iPhone. That is until the carrier brought aboard the iPhone 5 last month, at a discount to boot. Back then, new customers could buy the iPhone 5 for $579.99 if paid for in full upfront, or with a $99.99 down payment and $20 payments over the course of 24 months.
Then last week – a mere 31 days after starting iPhone sales – T-Mobile surprised customers by dropping the iPhone 5 discount altogether, thereby raising the price for a 16GB iPhone 5 to $629.99 if paid in full, or a $149.99 upfront deposit and $20 monthly payments for 24 months. Customers looking at larger capacity iPhones won't be getting a discount either. For the 32GB iPhone 5, the price increased to a full payment of $729.99, or a $249.99 down payment with 24 months of $20 payments. For the 64GB iPhone 5, the price went up to $829.99 paid up front, or a $349.99 deposit again with 24 months of $20 payments.
Discounted iPhone 5 Price Was Only to Entice New T-Mobile CustomersBraxton Carter, T-Mobile's Chief Financial Officer, said at the JP Morgan Tech Conference that T-Mobile "activated over 500,000 iPhones" in the first quarter of 2013. He then went on to say that the huge number of activations was only one part of T-Mobile's strategy, and the company saw "no need to continue with the initial promotional pricing." In fact, according to Carter, the lower price was really "to create momentum."
While most people didn't expect the lower price to last forever, the short-lived promotion still came as a bit of a shock to most consumers, considering major wireless carriers tend to offer longer-running promotions on devices for new costumers.
But then again, T-Mobile customers may be getting accustomed to surprises. In April, T-Mobile's new "Un-leashed" contract-free phones saw the company drop the traditional two-year contract model. As such, new customers can sign up with the wireless provider and get a new phone (sometimes at a subsidized price) without having to sign a contract with T-Mobile. However, customers aren't entirely obligation-free. T-Mobile offers two smartphone payment plans: Customers can buy a new phone upfront, or they can make small monthly payments for two years after a down payment.
While two years of small payments may feel an awful lot like a contract, T-Mobile assures new customers that they are free to leave anytime – after they pay the remainder due on their phone. This setup may pose a problem for customers who have signed up for the "Un-leashed" plan, made a down payment, but in the future may not be able to afford to pay off their smartphone should T-Mobile raise its monthly prices. And such a scenario is not far-fetched: T-Mobile, or any month-by-month wireless provider, is free to change its terms at any time since there is no binding customer contract.
Still, this option does offer monthly savings over traditional contracts. Currently, T-Mobile's individual plans start at $50 a month for unlimited talk, text, and 500MB of 4G data (with unlimited, albeit slower, data after customers reach the cap). This option is cheaper than Sprint's $109.99 unlimited plan, and AT&T's unlimited minutes and texting plan with 300MB of data for $89.99, but those plans have locked-in rates and might seem less risky to new customers.
All in all, we wonder if T-Mobile's "Un-leashed" plan is really all that different from the Big Three. Or maybe it does satisfy the space between non-contract and subsidized phones. Perhaps more importantly, we want to know if any of you readers are still planning on buying the iPhone 5 through T-Mobile, despite its price increase. Sound off in the comments below.
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