T-Mobile Kills Annual Contracts, Finally Gets iPhone In Bold Comeback Move


T-Mobile Tuesday announced plans to nix annual contracts and finally start selling Apple's iPhone in a move representing the struggling carrier's latest attempt to fight back against rivals Verizon and AT&T.

Terms of T-Mobile's new pricing strategy -- called the Simple Choice Plan -- eliminate the need for customers to sign an up-front annual service contract when buying a new phone and allow them instead to pay on a month-to-month basis.

When the iPhone 5 becomes available from T-Mobile for the first time on April 12, for instance, users can purchase the device for $100 and then pay monthly installments of $20 per month for 24 months. The iPhone 4S will also be available through the Simple Choice Plan for $70 up front, with the same monthly payment plan.

[Related: T-Mobile, MetroPCS Merger Plans Now Official]

Data plans will also follow a month-to-month model under the new plan. T-Mobile is offering a base rate of $50 for unlimited talk, text and Web with 500 MB of 4G LTE data. Users can add 2 GB of data to a particular line for $10 a month or get unlimited 4G data for an additional $20 a month per line. T-Mobile said no data overages apply.

Users can also add a second phone line to their plan for $30 per month, with each additional line running them $10 a month.

T-Mobile is offering the Simple Choice Plan across its full portfolio of smartphones, which now includes the new BlackBerry Z10 and will include the Samsung Galaxy S2 when it launches this year, the company said.

According to Mike Roberts, principal analyst for Americas at Informa Telecoms and Media, T-Mobile's new Simple Choice Plan will give the company a serious pricing advantage over competing carriers like Sprint and Verizon.

"In the most aggressive part of its new strategy, T-Mobile is significantly undercutting its rivals on price," Roberts wrote in a report Tuesday. "With the new plans, customers buying a Samsung Galaxy SIII smartphone and unlimited voice, text and data plan from T-Mobile would save US$1,330 over two years compared with the closest package from Verizon Wireless and US$510 over two years compared with Sprint."

Meanwhile, T-Mobile also announced Tuesday the official launch of its 4G LTE network in seven cities and outlined plans to have that network reach 100 million people by mid-2013 and 200 million people by the end of the year.

Currently the fourth largest U.S. carrier, T-Mobile at the end of 2012 had a market share of 9.6 percent, a number that fell short of Sprint's 16.1 percent, AT&T's 31.2 percent and Verizon's market-leading 33.5 percent, according to Informa.

But while T-Mobile has a hefty comeback to stage, Informa's Roberts said its new flexible pricing structure, coupled with its LTE rollout and long-awaited offering of the iPhone, may just give it the boost it needs.

"T-Mobile is finally making the type of bold moves necessary to shore up its competitive position and end the slow bleed of subscribers leaving for rival operators which has weighed on its results for years," Roberts wrote.

PUBLISHED, MARCH 26