Among the motivators for T-Mobile's change of heart is the notion that people hate contracts; there are none in the new T-Mobile value plans. But is it really contracts per se that they hate, or obligations? Fundamentally, the new T-Mobile and its leading competitors are still looking for ways to defray the huge upfront cost of top-tier smartphones. Acquire the handset via other means and T-Mobile will be happy to start charging you for service, but so will its competitors.
One novel twist in all of this is that T-Mobile will offer to purchase back your phone if you don't want to keep it.
Alternatively, you could opt for what will likely be a growing selection of top-tier phones for T-Mobile's reduced out-of-store price. T-Mobile gets some credit for addressing the negative connotations of a legally binding agreement and an early termination "fee," but if you want to keep the phone you obtained at the discounted price, you'll have to keep paying monthly installments until it's paid off. One novel twist in all of this is that T-Mobile will offer to purchase back your phone if you don't want to keep it. As Tim Stevens noted in his recent Distro editorial, the appeal of that deal will come down to T-Mobile's "fair market value" buyback prices. Given the speedy depreciation of technology, though, one shouldn't expect an exceptional bounty.
T-Mobile is making the payment cost a bit more transparent. However, the cost of unlocked phones is readily available, and from there the math is simple to figure out how the remainder of the phone price breaks down over two years. In contrast, prepaid operators such as Boost Mobile or Leap Wireless either focus on second-tier phones or offer top-tier phones at a price that is generally out of reach for their customer bases. Score a point for T-Mobile on this, as the easiest to explain of its plan advantages. On the handset side, consumers that are less price-sensitive are looking for good deals on advanced smartphones and the chance to pick up a Galaxy S 4, iPhone 5 or HTC One for $99 should prove alluring.
However, early adopters not only want the latest in smartphones, but also a network that will feed it. T-Mobile notes its data-pricing advantages over Verizon and AT&T, but it is just starting to build out its LTE network. By the time it has 200 million POPs covered at the end of the year, as it says it will, Verizon may well have begun to deploy LTE-Advanced. It's easy for T-Mobile to compare its network prices to those of the Big Two. At least in the near term, though, it faces the tricky task of continuing to claim that its apples are comparable to AT&T's oranges, touting the speed of its HSPA+ network while also selling the advantages of LTE over it and the benefits of the fallback.
Then there's the simplicity argument. At its launch event, T-Mobile CMO Mike Sievert pulled out a small library of AT&T plan pamphlets. The array of options thematically mirrored a funny video loop played at the event showing the stars of IFC's Portlandia trying to buy a cellphone plan in a hurry, but getting bogged down by a mad maze of plans and double-talk. (One option presented was "free" after you paid a "one-time fee" for it every year.) Whether T-Mobile has succeeded in its effort to simplify depends on the group with which you compare it. The carrier has made headway against its larger competitors, but its plans are not as "get up and go" simple as those of leading prepaid offerings as they offer more options such as second lines and installment plans for which some details have yet to surface.
Ultimately, T-Mobile is making a stronger push toward Bring Your Own Device while acknowledging that many consumers still look to their carrier as a way to acquire leading-edge technology for a low upfront investment. It's made immediate progress on differentiation and devices with the promise of a more competitive network in the offing. The most impressive aspects of its new positioning are the flexibility that it's been able to provide without excessive plan complexity and greater transparency as it closes in on a network-capacity expansion boon in MetroPCS.
Ross Rubin is principal analyst at Reticle Research, a research and advisory firm focusing on consumer technology adoption. He shares commentary at Techspressive and on Twitter at @rossrubin.