Optus considers T-Mobile-style plans

T-Mobile has looked to end costly phone subsidies and two-year contracts as part of its launch of 4G services in the US, and Optus has said it will be looking to follow suit.

Overnight, T-Mobile announced new contractless plans for smartphones with "unlimited" voice and SMS services, and a range of data plans, starting at US$50 per month for 500MB with full 4G speeds and going up to US$70 per month for unlimited data at 4G speeds.

If a customer has a data limit on their account, once they exceed their monthly limit, their service will be throttled to 2G-level speeds.

Instead of locking customers into two-year contracts tied in with a free or subsidised handset that is paid off over the contract, T-Mobile has opted to let users pay for the device upfront, or pay for part of it and then pay a certain amount over a specified period of time. The catch is that the device is locked to T-Mobile until it is paid off in full.

In Australia, the telcos have begun shifting away from subsidised handsets with contracts, particularly for prepaid phones, but it is still heavily used within the post-paid market as a way to keep churn lower.

Optus, which has moved away from the subsidised prepaid handset completely, said that it would consider T-Mobile-style plans for its upcoming products.

"We constantly look to refresh our offerings to provide Optus customers with value," Optus said.

"Optus is looking to introduce a similar range to Australians for more freedom and choice when it comes to their mobile phone plan options."

Telstra said it is an interesting idea, but has no plans as of yet.

"We are always looking at different pricing and payment options that may appeal to our customers. While this is certainly an interesting development, we don't have any plans to announce at this point in time," Telstra said.

Vodafone had not responded to a request for comment at the time of writing.

The move by T-Mobile was greeted with much greater scepticism from the Australian Communications Consumer Action Network (ACCAN); spokesperson Elise Davidson said that it is just clever marketing, and there would be no difference from a consumer perspective.

"These new T-mobile plans are essentially the same as locking a customer into a post-paid contract as the handset is paid off over two years, as it is if you go post-paid. If you choose to switch from T-mobile during that two years, you have to pay for the handset anyway, which is more or less the same as a break-contract fee," she said.

"We wish this were the solution to those who want prepaid prices and flexibility and the latest smartphone, but, unfortunately, it's just another iteration of the 'confusopoly' that is telecommunications marketing."

Telsyte analyst Foad Fadaghi was doubtful about whether it will be brought to Australia. He said Australian consumers are comfortable with signing contracts, and handset subsidies are still a useful tool to lock in customers.

"Over time, carriers in Australia might look to remove subsidies. However, subsidies remain a critical lever to lock in customers and reduce churn rates," he said.

One push toward contractless plans, he said, might be consumers who want a new phone sooner than every two years. This would force telcos to find other ways of locking in customers.

"If the market shifts to less lock-in contracts, carriers will need to use offers such as family packs or bundles to create stickiness to their offerings, which T-Mobile is also using," he said.