By Larry Magid

SAN FRANCISCO – The days of buying a low-cost, subsidized cell phone in exchange for being locked into a service contract with a cellular carrier could be numbered if T-Mobile’s pricing strategy for 2013 gets any traction.

Come January, T-Mobile will offer only its Value Plan, which separates the service contract from the hardware, CEO John Legere announced this week.

KCBS Technology Analyst Larry Magid:

Customers have always been able to avoid the dreaded service contract by paying full price for the phone, but this almost always means coughing up hundreds of dollars right away.

It costs $650 to buy an iPhone over the counter, for example, whereas Verizon or AT&T will sell the same hardware for $199 with a two-year contract.

The idea T-Mobile is considering would maintain a long-term relationship with the customer, but on different terms.

Subscribers either sign up for a service plan with a phone they already own, or they put up a down payment on new phone that gets paid off in installments over the course of a year or more.

The idea is to go after customers who want the iPhone but are turned off by AT&T. Switch with the phone you have, or buy a new one without spending a lot up front.

You can hear Larry Magid Tech Report Monday through Friday at 3:50 p.m. on KCBS All News 740AM and 106.9FM.

(Copyright 2012 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)


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