T-Mobile Eliminates Contracts

But company's new wireless plan also nixes phone subsidies

By Matt Cantor,  Newser Staff

Posted Mar 26, 2013 6:30 AM CDT

(Newser) – T-Mobile is ditching a once-inescapable part of wireless life: the contract. The company had been offering contract-free plans as an option alongside two-year contracts, CNET reports; now, according to the T-Mobile website, contract plans are a thing of the past. An example of a new plan: For $50 a month, you get unlimited talk, texting, and web, plus 500MB of high-speed data. Unlimited high-speed data will run you $70 a month. But that's not the full picture: You've also got to pay for your phone without the subsidies normally associated with contract plans, which knock pricey phones (new models can cost $600 to $700) way down (typically to around $200 with a two-year contract).

Now, T-Mobile will now charge an upfront fee ($60 in the case of the $550 Galaxy S3) and tack the remainder of the cost onto the monthly bill for two years (in that case, $20 per month). The fees stop once the phone's paid for, and at that point, you own the phone. The Wall Street Journal observes that the move could prod customers to choose cheaper phones, as they do in Europe, Japan, and other unsubsidized markets. But it adds that it's a risky move for the fourth-place carrier, which has lost 4 million contract customers in the last two years.

In this Wednesday, Sept. 12, 2012, file photo, a man using a cellphone passes a T-Mobile store.   (AP Photo/Mark Lennihan)
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