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T-Mobile Becomes First Major Carrier To Drop Contracts

Submitted by on April 4, 2013 – 1:14 pmOne Comment

In what could be a game changer in the world of mobile business, T-Mobile became the first of the “Big 4″ carriers to drop two-year contracts. If successful, the plan could open up competition in an industry known for low customer satisfaction.

T-Mobile’s new plans will reportedly be month-to-month, with no penalty fee for leaving the company. Phone handsets can still be paid for over time, but after the device is paid off, the customer’s rates will drop accordingly.

The company has also done away with overage fees, simply slowing down users who reach their data limits or offering to let them switch plans for the month.

The traditional cell phone plan involves a “subsidized” handset- for example, a $600 iPhone for only a down payment of $200. But the two-year commitment can end up costing more than buying the handset outright and getting cheaper coverage.

In a glowing write up of the move, the New York TimesDavid Pogue says the company has broken free of “The Great Cellphone Subsidy Con.” But he also points out that as the perennial last place carrier among the major players (Sprint, AT&T, and Verizon), T-Mobile had little to lose.

T-Mobile CEO John Legere must fancy himself as something of a “bad boy executive,” or is just trying to push the image that his company is an underdog that doesn’t play by your rules. Legere has taken the stage at major announcements in t-shirt and trucker hat; he publicly called AT&T’s network “crap” and recently called contracts “bulls**t.”

What do you think? Will T-Mobile’s gamble pay off?


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