T-Mobile's non-subsidy strategy stops the $20/month carrier scam

T-Mobile's non-subsidy strategy stops the $20/month carrier scam

Summary: US consumers buy subsidized phones because they are cheaper up front, but then the carrier makes that money back in increased monthly fees. However, when the phone is paid off, those monthly fees don't change, and consumers are left paying extra for nothing.


My pal Rich Brome posted a great article today on something I never really thought much about. I have been with T-Mobile for over 10 years now, and it turns out that was probably the right move as they are the only ones pushing a non-subsidy strategy that is the best for consumers.

As Rich explains, people in the US primarily purchase subsidized phones because they don't want to pay the actual high price. For example, you can get an iPhone for $199 subsidized, or pay upwards of $650 without a subsidy. Some of us buy unsubsidized phones so that we can keep existing plan features or continue using the service without a contract extension. However, there is something a bit more concerning going on here that, turns out, affects my strategy and has me a bit ticked off.

If you pay full price or bring your own phone to one of the four major carriers, you are still paying the extra $20 or so per month subsidy fee that people who buy new phones every 20-24 months are paying. The carrier is not giving you a break because you bought your own phone, and is just pocketing this subsidy fee without providing anything additional to you.

T-Mobile is trying to change the game here, and after reading Rich's post and having my eyes opened to carrier practices, I am fully onboard with their strategy and plan to switch to their Value plan.

You can also go with one of the rising prepaid carrier options, such as Republic Wireless, to make sure you are paying for services you actually receive rather than just handing money over to carriers each month for no reason.

Update, 11.45am PT: Rich's article prompted me to check into options on T-Mobile. I have a very old grandfathered 3000-minute MyFaves plan with data on three of five phones that costs me about $208 per month. I talked with the customer service rep for a while and ended up switching to a Value plan with two phones getting unlimited talk and text while the other three have 500 minutes each. Four phones get data, mine also gets wi-fi hotspot, and I can add data (2GB plus throttled) for $10 whenever I want. The monthly total drops down to about $145, saving me about $65 per month with more voice minutes and data.

I did have to pay a $200 migration fee since I bought the Note II last fall as a subsidized phone (still works out to be a cheaper Note II than paying full price), but at a $65/month savings, that pays for itself in just over three months.

The great thing about these Value plans is that I am not paying anything extra for a phone subsidy. If I do decide that I want to buy the latest and greatest phone, I can do it with their no-interest payment plan for $20 per month over 20 months, with some up-front fee to offset the rest of the phone cost. This is the same fee other carriers charge you for an infinite time period, but T-Mobile does it just for the period to pay for the phone.

Topics: Mobility, Smartphones, AT&T, Verizon

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  • Sounds great

    now just get att to offer a the lowest data plan of 300MB and change it to 1-2 GB, as next up is 3 GB with no price change. Also to stop the looting for a text plan, $30/month, come on att!
  • Prices I saw were not good

    They were roughly the same as Verizon's Share your Paycheck plan. Where's the savings.
    • Would be nice to get a discount

      I've thought that before, why don't I get a break after my two years?
      As much as people bash the share your paycheck plan, it saved me $15 a month for my two lines, and now I get unlimited text and calls where I had 450 minutes before. And best of all, I really love all those cool devices floating around the living room in a circle....
    • regardless of the new options Tmobile is adding

      they have been offering amazing prepaid deals for years. I pay $30/month for 5GB data, 100 min voice, and unlimited texts. 5GB data is more than enough that I can use VoIP for all my calls, meaning I have essentially unlimited voice as well. I talk a good amount, and I'm only using ~100-200MB/month on voice.

      compare that to what I used to pay on verizon: $75/month. that's a savings of $45/month. over 2 years that's $1080; far more than any flagship smartphone.
    • Just let us ditch the cell phone totally

      Just convert our number to a Skype number(or similar) and just get a data plan and that's it.

      No minutes, no text plans , just data , honestly I'd be fine with just the 3 Gb I use now, theoretically my phone bill would be cut in half
  • But you are still stuck with tMobile.

    Worst 2 years of coverage I have ever had. If you never leave town of do other travel, I am sure they ate OK. Coverage on T-Mobile,however, is simply bad.
    • the last 2-3 years

      coverage has improved immensely. I dropped them 6 years ago after I moved out of the city and had no coverage, but I went back to tmobile last year and couldn't be happier.
      • They still have a long long way to go.

        When I leave town with a good friend who still is on TMob, he looses cell almost as soon as we leave town. Coverage outside of town is about 5% at best. AT&T is about 40% and Verizon is about 70%. TMob still has almost 0 coverage in the Northern half of the state.
    • T-Moble

      I have been w/ T-Mobile for almost a decade and can't complain about their coverages.
  • T-Mobile?

    Really dude? They have the worst coverage ever!

    When I was with net 10 I had the choice of 1.5 Gig cap for AT&T service (My line was supposed to be unlimited but, they lied) or using their T-Mobile service, I paid $25 more a month to use a Verizon 2 Gig LTE because T-Mobile has the worst reception ever!
  • Benefits for everyone.

    So they may not have coverage in your area. The point is they are pushing ATT and Verizon to change their ways. Given how many people already do their prepaid plans and how many more will once they actually launch their ad campaign, it's good for everyone. There is a huge percentage of people that rarely leave their urban/suburban area and if they do it's like to another urban/suburban area. The places my data coverage is zero is when I'm in the middle of a forest camping with family. With their agreement with ATT, you likely have voice coverage wherever ATT has coverage in addition to TMobile.

    Matt, I'm guessing you don't always read the comments section because I've asked to write an article like this for a while after mentioning the huge savings by not having subsidies. Regardless, thank you for finally writing it!
  • T-mobile still a scam

    T-mobile only offers their unlimited plan with no contract. Not everyone needs an unlimited talk plan, and would prefer the 100-600 minute plan which is much cheaper and add data on top. Any other plan with t-mobile requires a 24 month contract, and you don't even get the free phone. And I don't find that their price plans changed all that much altogether. Was with t-mobile for close to 10 years, and if they are going to hold me in contract with no phone, and give me no flexibility of plan changes I am going to rethink my options.