T-Mobile has been getting a fair amount of attention for its decision to terminate smartphone subsidies.

I want to be excited about this. Or, more excited about this than I am. This is, to my mind (as with Yglesias’s) how things should work. And T-Mobile, as a company, has always done business the way that I want cell phone companies to do business. I am not a T-Mobile customer due to their complete lack of coverage in my part of the country. That’s a bit of a cop-out, though. There was a regional carrier that I could have signed with and chose not to. Good people though they were, they couldn’t provide me with the service I wanted.

I am currently under contract with The Dark Side. They were the only ones that could.

Anyhow, T-Mobile is in a similar situation where they are virtuous because they have no claws. It is not likely the other major carriers will follow suit. Further, for it to be really advantageous, we’d need common standards and unlocked phones so that I can take my phone from one company to another. If I were to switch to T-Mobile, I’d need to buy a new phone. So whether we’re buying our own phone or accepting a subsidy, we’re talking about significant barriers to exit.

My sister-in-law recently recruited my help to set her up with a modern smartphone and mobile plan for her relocation to Alaska. Alaska is a peculiar case as far as mobile phones (and many, many other things) go, but it got me looking at the various options out there. For a whole lot of people who aren’t me, the arguments in favor of prepaid plans are becoming stronger and stronger. It may even be something I look at when our contract with The Dark Side expires. The prepaid market works more closely to how I think things should work and are increasingly including things – like unlimited whatever – that keep me deciding between the big boys.

Now, most (all?) of those carriers rely on either AT&T and Verizon’s networks (do any of them use Sprint?). Which makes me wonder about the long-term viability of this, if their leasing out their lines is cannibalizing their own business. I don’t think such leasing is actually required (I remember reading that T-Mobile was approached but declined), so if the downmarket carriers get too competitive, the big two can put a stop to that.

Honestly, though, I’d actually consider it desirable to have two overlapping national networks if we ended up primarily having competition on the storefront level.


Category: Market

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6 Responses to The Future of Mobile

  1. David Alexander says:

    Which makes me wonder about the long-term viability of this, if their leasing out their lines is cannibalizing their own business.

    I suspect that there’s limits to that. The pre-paid carriers tend to have less coverage off the native networks, so for anybody that wants a robust widespread network without worrying about roaming, the post-paid carriers, especially AT&T and Verizon are still winners. And judging from personal experience, there are people who will hold out and pay more money for service in order to feel comfortable knowing that their occasional trips to rural areas will not suffer from a lack of cellphone service.

    OTOH, if you never leave your immediate area, then most of the pre-paid carriers should serve your needs. Page Plus is just about the only exception to this rule, but they’re not allowed to activate 4G phones, so there’s a bit of a crunch as the only smartphones that still operate on 3G for Verizon (or Sprint) are all older models that are only sold used or refurbished with the exception of the iPhone.

    I am currently under contract with The Dark Side. They were the only ones that could.

    I’m also under contract with them as well. They’re pretty much the best company around here, and their widespread coverage means that I don’t have to freak out about not having coverage if I drive upstate. I’ve considered other alternatives, but AT&T isn’t that much cheaper, T-Mobile’s coverage is a bit lacking, and Sprint has better than T-Mobile coverage, but while being cheaper, it’s slower in terms of 3G connectivity. Page Plus is stuck with stone age phones, and everybody else has similar compromises in terms of network coverage.

  2. trumwill says:

    The pre-paid carriers tend to have less coverage off the native networks, so for anybody that wants a robust widespread network without worrying about roaming, the post-paid carriers, especially AT&T and Verizon are still winners.

    Really? The maps looked pretty similar with I was looking it up for Ellie.

    Page Plus is just about the only exception to this rule, but they’re not allowed to activate 4G phones,

    You can’t activate 4G phones at all? Yeah, that makes it much more troublesome. There goes my plan for the father-in-law.

    I’ve considered other alternatives, but AT&T isn’t that much cheaper,

    I looked it up recently and the prices were exactly the same. I can’t remember if that was because of the discount we get from Verizon.

  3. David Alexander says:

    Of course, to return to the main thrust of the post, I wonder if T-Mobile’s strategy will work. Given that they’re seen by most as the “value brand”, I think they’re going to have a hard time trying to adjust people to the idea of selling the phones without a subsidy unless the ads are rigged to show only the upfront payments with the rolled over monthly price. Otherwise, people are going to see high prices, so-so coverage, and a contract. At least with Straight Talk or Simple Mobile, you’re paying full price with a month to month contract…

  4. David Alexander says:

    You can’t activate 4G phones at all?

    Some people have hacked the hell out of the Galaxy SIII and the RAZR, but you end up with a phone that doesn’t even have 3G which makes it pointless unless you want the phone for show and tell. It’s been a major complaint that some people have had, which is leading some to go to Straight Talk, but Verizon has zero interest in allowing any of their MVNOs to have 4G coverage lest they undercut their pricing.

    Really? The maps looked pretty similar with I was looking it up for Ellie.

    I remember at Howard Forums people noting that depending on the MVNO operator, either you’ll get no coverage or you’ll simply have to pay extra for the roaming, or the data is turned off. Regardless, for most carriers, the post-paid coverage and the pre-paid coverage is not the same.

  5. trumwill says:

    I’d assume that the ads would focus on the monthly cost, which would be their strong-suit. Alternately, focus on the monthly payments. Own your iPhone for only $50 a month for a year. I guess I can see how that might be confusing.

    Maybe it’ll work, maybe it won’t. I’m hoping it does. I want to see more downward pressure on phones. It is a problem that the notion of buying your own phone is just not something that people are used to doing.

    I totally understand why they would bar 4G connectivity. I am a bit at a loss as to why they would bar 4G phones. There are technical ways around this, I am pretty sure, based on the LTE SIM cards.

  6. Peter says:

    Cell phone coverage maps = fiction.

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