This new year will bring more wireless options for enterprises as T-Mobile USA will stop offering subsidized cellphones and instead sell them at the full retail price with less expensive airtime plans. It's a risky move for T-Mobile, and it will have ramifications for enterprises.
In December, T-Mobile announced that this year it would stop subsidizing the cost of cellular phones and require users to pay the full retail price. Currently, T-Mobile offers consumers prepaid and postpaid plans with subsidized and non-subsidized phones, as well as corporate plans. Its "Classic" voice and data plans include subsidized handsets for postpaid customers.
Its current postpaid "Value" voice and data plans are for users who either buy a handset for the full retail price from T-Mobile or bring their own unlocked handsets. These plans are less expensive than the Classic plans. In addition, T-Mobile offers a variety of no-contract prepaid plans.
This year, T-Mobile will eliminate traditional subsidized phone plans and users will have to pay full price for handsets. The payment options will be similar to today's Value plans, including paying with a T-Mobile installment plan. The cost of the phone is added to the monthly airtime rates. For example, a subscriber who wants a $500 phone might have to pay $100 immediately, and then $20 per month for 20 months for a two-year contract. For the remaining four months, there's no hardware charge, and for the entire 24 months of the contract the cost of the voice and data should be significantly less than the discontinued plans with subsidized handsets.
All the top US cellular operators offer prepaid plans with handsets costing the full retail price. However, the hardware selections typically are much less extensive than postpaid plans, with few high-end smartphones. These types of plans typically are considered lower-end services for users who don't have the income or credit score to use postpaid contracts.
However, for years some savvy US consumers, especially techies, have been buying their own unlocked phones at the full retail price because they understand the advantages. For example, without a contract, it's easy to switch among GSM cellular operators without paying the dreaded early termination fee, which can be more than $300. Also, there's no problem using a local SIM card in an unlocked phone when traveling to another country, which is often much less expensive than using a US-based rate plan.
In addition, customers who buy the Nexus unlocked phones from Google know they are guaranteed the latest version of the Android operating system and will receive OS updates quickly from Google.
Large enterprises with hardware and airtime contracts from cellular operators might not think T-Mobile's new handset strategy won't affect them. But it could. For example, enterprises will need to look closely at whether the new T-Mobile plans will be significantly less expensive, especially for data. If so, enterprises might consider moving to T-Mobile or at least using T-Mobile's prices as leverage to try to obtain lower corporate deals from other cellular operators.
Also, enterprises should examine the value proposition of purchasing phones outright versus on contract. T-Mobile might not be the only company to offer installment plans. Handset vendors and electronics retailers might be sparked to offer better and more varied purchasing options to business customers. This could lead to a greater variety of smartphones in the US from less well known vendors, such as Acer, Asus, Huawei, Lenovo, and ZTE, which might offer special purchasing options for enterprises.
If more employees begin purchasing unlocked phones, enterprises could see an increase in the number of different models being used. And don't forget that a SIM card from a unlocked GSM phone could work in most cellular "MiFi"-type modems as well as tablets with compatible GSM modems. The upshot is that IT departments might find themselves confronting more employees clamoring for support for more unfamiliar devices with hardware and software quirks that could present difficulties for implementing enterprise applications and IT policies.
If T-Mobile's strategy becomes popular and other cellular operators offer more unsubsidized phones with less expensive airtime, IT departments will have additional options but also more difficulties.
— Alan Reiter, President, Wireless Internet & Mobile Computing