T-Mobile USA shakes up contract strategy

27 March 2013 | Mitch Sayers


T-Mobile USA has announced plans for a shake-up of its mobile contract structure to shift emphasis onto the phone, rather than the tariff.

In a move to help ease financial difficulties, the US’s fourth largest operator will offer customers a mobile phone in a monthly instalment plan without being tied into a two-year deal with a specific network. The move comes as an increasing number of carriers and operators seek to find new ways to profit from the increasing emphasis on data.

The Deutsche Telekom-owned operator is also planning to sell the iPhone 5 handset, the popular Apple phone, and its rival the Samsung Galaxy in a bid to curb the decline in contract numbers that T-Mobile USA has faced in the past two years, with its larger rivals AT&T and Verizon having access to the phones.

“Customers love smartphones, everyone hates contracts,” said T-Mobile USA chief executive John Legere at a T-Mobile USA event, in New York, on Tuesday morning.

“This is an industry filled with ridiculously confusing contracts, limits on how much data you can use or when you can upgrade, and monthly bills that make little sense.

“T-Mobile is cancelling its membership in the out-of-touch wireless club,” he added.

Legere was also exasperated at the cost of mobile phone contracts, stating: “Unbelievable high prices. How can something cost that much, unless you’re going to drive it?”

The proposed contract ties the customer to the phone, rather than the network. The traditional model would see the network offer the phone as an incentive for the contract.

The restructuring of mobile plans was T-Mobile USA’s initiative and separate from any proposed merger with MetroPCS, according to the chief executive.

Legere also announced that T-Mobile USA’s new formed 4G LTE network would be available for the first time in seven areas.