HOME TECH TRENDS ONLINE SAFETY SOCIAL NETWORKING APP COLLECTIONS HOW-TO THE ONLINE MOM BLOG ARCHIVE EN ESPAÑOL
Technology A-Z
 
The Internet
 
Tech Hardware
 
Tech Software
 
Video Games
 
Protecting Your Children
 
FAQs
 
Getting Help
 
The Online Mom Network
 


Learn about The Online Mom Network
Join The Online Mom Network
How Do I Become An Online Mom?


The Online Mom provides internet technology advice and information to help parents protect their kids, encourage responsible behavior and safely harness the power of technology in the new digital world. Social networking, photo sharing, video games, IM & texting, internet security, cyberbullying, educational resources, the latest on tech hardware, gadgets and software for kids 3-8, tweens and teens, and more.

T-Mobile’s no-contract plan attempts to shake up the wireless market



There are two ways to look at yesterday’s announcement by T-Mobile that they are scrapping the two-year phone contract and replacing it with what the company calls its Simple Choice Plan. Some could argue that it’s a long-overdue move, designed to shake up the U.S. wireless industry and make devices more affordable. However, others could claim that it’s a desperate move by the smallest of the four major carriers; a move that could lead to a further decline in market share, as consumers take advantage of their no-contract status to switch to glitzier phones and faster networks.

Whichever way you view T-Mobile’s announcement, it’s unlikely to have the impact of Verizon’s groundbreaking Share Everything plan, which was introduced last June and which was quickly matched by AT&T with a share plan of its own. No-contract plans are already offered by Boost Mobile and MetroPCS (and by the major carriers through their pre-paid plans), and anyone who wanted to escape the limitations of two-year deal has had ample opportunity to do so.

What T-Mobile’s plans might do is switch the conversation back to the overall cost of a smartphone and the increasingly problematical issue of smartphone redundancy.

It’s no secret that we pay a lot of money for the pleasure of using our smartphones on one of the top three carrier networks. In exchange for all those payments over the life of the contract, the carrier sharply discounts the upfront cost of the device. Here’s an example: buy a 16GB iPhone 5 with a two-year contract from Verizon, AT&T or Sprint and that phone will cost you $199, plus tax. Buy that same phone unlocked and contract-free and it will cost you $649.

Naturally, most people opt for the upfront savings but this where T-Mobile CEO John Legere says we are getting ripped-off. He claims the carriers more than make up for that upfront discount by loading up on monthly access fees, data plans and other charges. To convince consumers that the T-Mobile plan is better value, he needs us to focus on the long-term benefits rather than the short-term savings.

Despite the logic of the cost-savings argument – and the overwhelming popularity of no-contract plans in Europe and Asia – the major carriers have had no trouble sticking to their traditional two-year model. Perhaps it’s the buy-now-pay-later mentality of the U.S. consumer, or maybe it’s the security of knowing that once you buy a phone you don’t have to go through the experience for another 24 months! (T-Mobile has needlessly muddied its argument against two-year deals by allowing consumers to pay off the upfront cost of a phone over a maximum period of, you guessed it, two years!)

If T-Mobile breaks through with its Simple Choice Plan, it might be because of the issue of smartphone redundancy rather than cost. At the moment, there is a clear disconnect between the average smartphone manufacturing cycle and the major carrier plans. This results in, say, an iPhone owner suffering through a year or more of using an outdated model, while he waits for his contract to run out.

Any Samsung Galaxy S III owners who purchased their device within the last 12 months will soon be facing the same situation with the release of the Galaxy 4. While the higher profiles phones tend to get the majority of the press, smartphone redundancy is often even worse for less popular phones, with consumers putting up with outdated phones for 18 months or more of their existing contracts.

T-Mobile’s plan hopes to change all that, freeing up consumers to buy phones whenever they want, without having to pay early-termination fees or other penalties. In exchange, T-Mobile gets a fairer price for each phone but can continue to discount certain models based on supply and demand.

As we suggested earlier, T-Mobile’s plan is unlikely to revolutionize the U.S. carrier market but, at this point in time, anything that prompts a discussion about the way phones are bought and sold has to be good for the public interest.



Permalink | Print | Email

Share this article!
Partner with Online Mom Media
Online Mom Media specializes in building powerful communities of influencers! [read on]
Join the BUZZ!
Join @theonlinemom and friends TODAY at 12 noon PT (3pm ET) as we Spring into Green! Great prizes! #VZWBuzz
[read on]
The Online Mom Blog
Connecting Your Mobile Lifestyle [read on]
Cómo encontrar en línea las mejores ofertas
Visite La Online Mom en Español!
[read on]
Stacey Ross on The Online Mom
Catch up on the digital lifestyle with Stacey Ross! [read on]
PlayStation 4 vs. Xbox One: Parental Controls
Which of the new gaming consoles offers better parental supervision?
[read on]
How To Make the Most of Those Daily Deals
Take a closer look at those daily deals to make sure you're getting a bargain! [read on]
Watch Out! Your Wristband Is Tracking You…
New ways to monitor two of the most important elements that factor into our overall health: exercise and sleep
[read on]
How To Beat Spam with Disposable E-Mail Addresses
There's an alternative to giving out your online information (or turning into a digital recluse): the disposable e-mail! [read on]
Managing Your Online Reputation
There are some simple steps we can take to safeguard our online reputations
[read on]
7 Apps for Finding Stuff Online
Loking to buy and sell online? Your smartphone can help! [read on]
How to Manage Your Cell Phone Bill
Don't be overwhelmed by that cell phone bill. We offer 7 tips that can help
[read on]
7 Social Networking Tips for Graduates
About to graduate? It's time to clean up those social networking accounts! [read on]
The Best Apps for Staying in Shape
10 great apps for turning your smartphone or tablet into your workout buddy!
[read on]
7 Steps to Smartphone Safety
Buying that first smartphone for your child? Make safety a top priority! [read on]
10 Essential Apps for the Busy Mom
Turn your smartphone into your very own personal assistant!
[read on]
Tweens and Facebook:
Do you think children under the age of 13 should be allowed on Facebook?

Yes
No
Not Sure




© 2011 the online mom, all rights reserved | site map ABOUT     MEET THE TEAM     CONTACT US     ADVERTISE     PRESS     PRIVACY     LEGAL