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Tech Watch: T-Mobile Revamps The 2-Year Plan

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A T-Mobile store sign. (Peter Macdiarmid/Getty Images)

A T-Mobile store sign. (Peter Macdiarmid/Getty Images)

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SAN FRANCISCO (KPIX 5) – T-Mobile is doing away with the traditional and onerous two-year contract to get a low price on a new phone. But, of course, it isn’t that simple: In many ways they are simply re-casting the old subsidy/tying system.

First off, notice the basic plan: Unlimited talk and text with 500 MB of high speed data (which is enough for most users, by the way) for just $50 a month. That’s cheap. If you want to add more data, its $10 a month per each 2 GB additional.

Now the phone. Instead of a two-year commitment to stay with T-Mobile, you earn your discount price with a two-year commitment to, in essence, financing the phone with them. For example, a Samsung Galaxy S3 from T-Mobile costs $69.99 PLUS a $20/month fee for 24 months. That comes to a total of $549.99 once the phone is “paid off”. You also have the option of paying for the phone up front at $549.99.

Also note that T-Mobile charges a fee to use more than 500MB of data per month as a mobile hotspot, which may be higher than other carriers.

The argument by T-Mobile here is why that the plan is much cheaper once the phone is paid off, you aren’t perpetually paying phone subsidy costs baked into the cost of service. But the value is mostly realized is you keep a given phone longer than 2 years and then stay on T-Mobile with it.

Bottom line, T-Mobile is cheaper but no less complicated, just playing the commitment phobia people have. Their 4G LTE rollout lags other carriers as well. This announcement doesn’t change the game so much as give them a unique set of talking points.

(Copyright 2013 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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