T-Mobile Kills Classic Plans and Subsidized Devices

December 6, 2012 - Written By Alexander Maxham

Today, T-Mobile had a few big announcements. Including one that most of us Android fans don’t really care about. T-Mobile will be getting Apple products in 2013 to sell. But that’s not the real point of this article. T-Mobile’s new CEO, John Legere, announced that T-Mobile is getting rid of subsidies, and moving away from their classic plans starting in 2013. So basically your only choices will be a value plan or pre-paid plans. Both of which require you to buy your device at full price. Now let’s do some basic math and see if this is better or worse for the customer.

Samsung Galaxy S3: $549 full price

Value plan (500 minutes, unlimited texting and unlimited data): $59.99/month

At one year that would cost you: $1288.88, and for two years: $1988.76

Samsung Galaxy S3: $279 subsidized price

Classic plan (500 minutes, unlimited texting and unlimited data): $79.99/month

At on year that would cost you: $1238.88, and for two years: $2198.76

So as you can see, after one year the Classic plan is still the better value for the same plan. And the longer you stick with your phone, the better the value plan is. Leger said that customers on the Value plan tend to stay 2-months longer than those on Classic plans. So it makes sense to T-Mobile to switch to Value plans only, and not offer Classic plans. They will also save money from the costs associated with subsidized devices.

It’s kind of shocking to see T-Mobile doing this, but we kind of saw this coming. With the Galaxy S3 and Galaxy Note 2, T-Mobile was charging more for than other carriers. But people were still buying them at that price. For Example the Galaxy Note 2 is $369 after a $50 mail-in rebate. Meaning you won’t get out of the store without paying $419 plus taxes. While other carriers are charging $299 on-contract for the Note 2.

T-Mobile will be keeping the installment payments method that can be used for Value plans right now. So you could get a device for $99 down-payment and pay $15 or $20 monthly payments to pay it off. But T-Mobile is starting to look more and more like a Nexus-only carrier. With T-Mobile already having truly unlimited data, and getting ready to start their LTE network in the coming months, the carrier is able to actively compete with AT&T, Sprint and Verizon. But being a GSM carrier is having its advantages for T-Mobile. Customers can come over to the operator with their phone and just pop a T-Mobile SIM in. It’s really simple.

Are you a T-Mobile customer? If so, are you on a Classic or Value plan? I am on a Value plan, and I love it. Only reason why I’m not on pre-paid is because of the unlimited (unthrottled) data the Value plan offers. Let us know what you think of this change by T-Mobile in the comments below.