By no means is this recent news, but it IS something consumers need to know about. When you sign up for a 2-year contract with any carrier, you are NOT getting a huge discount on that new phone. No matter what, you are eventually paying the full cost of that phone. The most common way carriers make up the difference is by bundling your monthly bill with a hidden phone pay-back fee. The problem is, because the monthly bill is bundled, you keep paying for the phone even after you’ve paid off the difference. So that money comes right out of your pocket and into theirs for no real apparent reason. Disgusted yet? Customers were getting smart about this vile scheme and T-Mobile just became the “good guy” whilst the others now look like vampires caught with their fangs in your neck.
How are T-Mobile’s UnCarrier plans saving our souls?
Primarily, T-Mobile’s new UnCarrier plans are cheaper. Let’s compare these similar plans:
- Unlimited talk & text, 3GB of data for $100 a month with a 2-year contract when you buy a new, discounted phone (hidden fees in monthly bill make up difference for discount). $35 activation fee with every new contract.
- Unlimited talk & text, 2GB of data for $100/month with a 2-year contract when you buy a new, discounted phone (hidden fees in monthly bill make up difference for discount). $36 activation fee with every new contract.
- Unlimited talk & text, 2.5GB of data for $60/month, no contract. For new phone, either pay full cost upfront or pay monthly installments ($20 minimum) till phone’s full cost is paid off. No activation fee.
So, even when you’re knowingly paying the full cost of your phone on a monthly basis, T-Mobile is still cheaper at $80/month than AT&T and Verizon’s $100/month for similar service.
Second, we are freed from the 2-year contract. However, the 2-year contract served little more than a way for carriers to ensure you pay the full cost of the phone you purchased. The “penalty fee” for breaking an AT&T or Verizon contract is actually the remaining amount you owe for your phone. It’s a similar situation with T-Mobile. If you chose to leave T-Mobile before your phone is paid off, you’ll be charged for the remaining amount you owe. Plain and simple. The major difference here is transparency and a more honest approach towards customers.
If AT&T and Verizon had simply told us they can’t make money by discounting phones in the first place, and that we would have to pay the phone’s full price regardless, we might have understood. It’s like a kid whose lie gets discovered and realizes telling the truth would’ve spared him deeper trouble.
The Verge got hold of rumors that AT&T is following suit on June 15th. But things aren’t looking hopeful for Verizon enthusiasts:
“During an interview at this year’s Consumer Electronics Show in Las Vegas, Verizon Communications CEO Lowell McAdam…questioned whether U.S. customers are ready for that type of shift because they have been conditioned to getting lower-cost phones for so long.”*
The BS, it burns! What
Count Mr. McAdam actually means is:
“U.S customers have been misled to believe they were purchasing lower-cost phones for so long when they’ve been paying full price without even knowing, and we’re not sure people are ready for the truth, so we’d prefer to keep them in the dark.”
Don’t bother with AT&T’s and Verizon’s current prepaid plans. They are atrociously bad deals because phone selections are miserable and/or 4G isn’t available on prepaid plans. Traditional prepaid plans simply don’t make economic sense next to a 2-year contract either.