The latest Un-carrier announcement sounds great on paper, but we break down whether any of us would actually take advantage of these freebies. Even if it’s a nice gesture to buy goodwill, T-Mobile’s latest move is a far cry from earlier Un-carrier events, which shook the the industry by abolishing subsidies and contracts.
Also, how would you look after a steady weekly diet of Domino’s Pizza and Wendy’s Frosty desserts?
We also talk about whether Samsung’s rumored foldable phones will finally get people excited about mobile again. Ben is, unsurprisingly, ecstatic.
The 3:59 gives you bite-size news and analysis about the top stories of the day, brought to you by CNET Executive Editor Roger Cheng, Senior Writer Ben Fox Rubin and Producer Bryan VanGelder.
Is T-Mobile running out of ideas? (The 3:59, Ep. 57)
Google’s device line could end up having a particularly important moment in 2023. The company usually announces new Pixel products throughout the year. Google is expected to release its first foldable phone this year, however, which would directly compete with Samsung’s proven line of Galaxy Z Fold devices. Google also introduced its own ChatGPT rival, …
T-Mobile’s new offer of unlimited video streaming could be a great deal for Netflix and HBO Go fanatics. It may also set a bad precedent.
The nation’s third-largest wireless carrier on Tuesday took the wraps off Binge On, a program that lets some customers stream an unlimited amount of video from certain services to their smartphones without busting their monthly data caps. The program, which is similar to T-Mobile’s Music Freedom service, launches Sunday with access to video from 24 popular sources, including Netflix, Hulu and ESPN.
The Bellevue, Washington, company is billing Binge On as a win for consumers. But it also raises the question of whether this sets up wireless service providers as app gatekeepers, which could in the long run inhibit the creation of new services and limit consumer choices.
“In the short term, it might be benefiting some consumers,” said Matt Wood, policy director at the consumer advocacy group Free Press. “But the fact that they’re willing to do this at all calls into question why there’s a data cap if T-Mobile can give exemptions to whole categories of applications.”
It’s the control over which applications are exempt from data caps and which are not that troubles Wood and other critics, many of whom question whether the practice also violates the Federal Communication Commission’s Net neutrality rules. These rules, adopted in February, are based on the principle that traffic on the Internet should be treated equally and that Internet service providers should have no say in which services and applications consumers use.
T-Mobile’s new offer is an example of a practice known as “zero rating,” which allows Internet service providers, such as wireless companies, not to count data usage for certain applications against a customer’s monthly cap. The FCC has not taken a strong stand on this practice. Its Net neutrality rules deliberately don’t prohibit such deals, allowing instead the FCC to review complaints case by case.
“There are ways that zero rating can be done badly and ways it can be done well,” said Doug Brake, telecom policy analyst for the Information Technology & Innovation Foundation, a Washington, DC-based think tank that has encouraged the FCC to remain open to alternative business models. “I think the way T-Mobile has structured this is smart.”
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T-Mobile CEO: Binge On is ‘completely compliant’ with…
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T-Mobile CEO John Legere described Binge On as “completely compliant” with Net neutrality rules. The company will allow any legal streaming service to join the program, Legere said in an interview, as long as these services meet its technical standards.
“The same people that raise that issue think that breathing the air is a violation of Net neutrality,” Legere quipped.
One of his key arguments is that neither the consumer nor the services are paying to be part of Binge On. Consumers can also turn the feature off.
“How can consumer choice be bigger than yes or no?” he said.
The T-Mobile service works by using proprietary technology to downgrade the resolution of the streaming service to “DVD quality,” less than one would expect on a large-screen TV. Industry watchers generally agree that customers viewing video on smartphones won’t notice a difference in resolution because the screens are so small.
Critics say the fact that streaming companies need to adapt their service or seek permission from T-Mobile to be included in its program is itself a barrier to competition and ultimately will lead to fewer choices for consumers.
“One of the key principles of the Internet is that it offers innovation without permission,” said Barbara van Schewick, a law professor at Stanford University. This means developers can create applications and those applications just work, but T-Mobile’s program interferes with that principle because new entrants must meet the company’s technical requirements, she said.
“The program has the effect of making certain video apps more attractive than others,” she said.
Legere said these fears are overblown, but T-Mobile has not released details of how its technology works or what requirements need to be met.
“You know who I think can meet the technical requirements? Anyone who wants to,” Legere said. “If it’s proven not to be [easy], we’d adapt.”
Still, Wood questioned why T-Mobile is singling out streaming video rather than including other data-intensive services like online video games. In other words, why does T-Mobile need to offer unlimited data for particular applications when it already offers a data plan that provides unlimited access to all applications? (T-Mobile increased the cost of its unlimited data plan by $15 a month on the day it announced Binge On.)
“What is the point of a cap if certain uses are exempt?” Wood said. “We don’t see the rationale for a cap if you magically lift it depending on what kind of service you’re using.”
The lines may not be as long as they typically are for the launch of a new iPhone, but T-Mobile customers and those looking to jump ship to the maverick wireless carrier are excited that the iPhone is finally coming to T-Mobile.
The company began selling the iPhone 5 in retail stores and online today. The carrier is selling the device at a discount compared to Apple and its other carrier rivals. The full price of the device from T-Mobile is $580, compared to the full price of $650 from Apple and other carriers. T-Mobile is also letting people finance their new iPhone 5s over two years with no interest. The down payment, which doesn’t require a contract, is $99 with 24 payments of $20. AT&T, Verizon Wireless, and Sprint sell the new iPhone 5 for $199 with a two-year contract.
To entice loyal iPhone fans from other carriers, T-Mobile is offering a trade-in program. In exchange for relinquishing an older iPhone 4 or iPhone 4S, customers can get credit for the new iPhone 5 from T-Mobile. But how does this plan stack up against the many trade-in sites on the Web?
That’s one of the questions answered in this Ask Maggie. I also explain whether iPhones from other carriers can be used on T-Mobile and why I think T-Mobile’s plan is better than AT&T’s offer.
Where can I get the most bang for my buck when trading in my iPhone?
Dear Maggie, I am currently a Verizon Wireless customer. But I am thinking about switching to T-Mobile’s new plans. I have an iPhone 4S from Verizon. Will I be able to take it with me to T-Mobile? If not, I have heard that T-Mobile has a trade-in program for the iPhone. Do you think this would be a good deal for me, since I was thinking about upgrading to the iPhone 5 anyway? The only thing I am concerned about is that Apple will come out with a new phone in the next few months. Also, I’d like to get the best trade-in value for my old iPhone.
Let me know what you think.
Thanks, Dave
Dear Dave, As I’ve written in the past, I’m a big fan of the new T-Mobile plan for people who are looking to save money. But keep in mind that T-Mobile’s coverage is much more limited than Verizon’s. So before you make the switch make sure that you are able to get service where you live and work. If the coverage is there, go for it.
Composite by Joe Aimonetti/CNET
Now onto your question. Unfortunately, you will not be able to take your existing iPhone 4S from Verizon to T-Mobile, because the networks are incompatible. Verizon has built its network using a technology called CDMA and T-Mobile uses a technology called GSM. The two technologies will not work together so a device designed for one network won’t work on the other, even if the devices are carrier “unlocked.”
That said, unlocked iPhones from AT&T should be able to work on T-Mobile. And AT&T devices should be able to get similar speeds on T-Mobile as they’d get on AT&T’s network. AT&T is also a GSM carrier, which is why the devices are compatible.
Should you trade in your old iPhone 4S for a new iPhone 5? Given that you must get a new phone if you want the T-Mobile service, I would say that this is a good idea. There are rumors that Apple may come out with a new iPhone 5S as early as this summer. But right now that’s still speculation, and I can’t tell you for certain when it will launch.
This leaves you with two choices. You can continue on Verizon’s service until the new iPhone is released and then buy that new device on T-Mobile’s network, or you can move over to T-Mobile and buy a new iPhone 5. If you feel you need the newer iPhone when it hits the market, you can sell your iPhone 5. Apple iPhones tend to hold their value very well so it’s likely that you would be able to get a very good price on the iPhone 5 just after a new iPhone is released.
This would then allow you to offset the cost of buying the new iPhone from T-Mobile.
Let’s say you choose this route. Where are you going to get the best value for your old iPhone? T-Mobile is offering a trade-in program to help offset the cost of a new iPhone. Remember under T-Mobile’s model, you can buy the device up front or finance it over 24 months.
Under T-Mobile’s trade-in program, the company is waiving the $99 down payment, and you could get a $120 credit for a 16GB iPhone 4S, according to the company’s press release. T-Mobile sells the iPhone 5 for $580. T-Mobile says that that the credit for the trade-in can be used toward monthly payments on the new device, an existing T-Mobile bill, or the purchase of accessories or another device. So this would mean you’d pay $360 for your new phone. If you apply the remaining $120 credit toward lowering your monthly payment for the device, you reduce your monthly bill by $5. which brings it to an additional $15 per month for 24 months.
This is a pretty good deal. If you go to a reseller site such as Nextworth.com, you could sell your 16GB iPhone 4S for $210. An 16GB iPhone 4 would net you $148. These prices could be less, since the Verizon iPhone typically resells for less than a GSM version of the same phone. Of course, the difference between using the T-Mobile trade-in offer and a trade-in site, is that with a site such as Nextworth, you actually get cash in your pocket. T-Mobile’s offer is for credit with T-Mobile, which can be applied in several ways.
Also, keep in mind that T-Mobile’s trade-in program is a special promotion. It’s only offering the program through Father’s Day on June 16. Another thing to remember, if you want to finance the device, you must be considered “well-qualified,” which essentially means, you had better have good credit.
One thing to keep in mind when comparing any trade-in sites is that the prices quoted depend on the condition of your phone. Devices that are in better condition have a better chance of qualifying for the top resale values than those with scratches or cracks.
Bottom line: My advice is go ahead and switch to T-Mobile now. The sooner you make the switch, the more money you will save in terms of your contract. At this point, it looks like T-Mobile is offering the most bang for the buck when it comes to trade-ins. But I’d also recommend checking out reseller sites, such as Nextworth.com and Gazelle.com. Prices change regularly. And T-Mobile’s plan is for a limited-time only.
My guess is the new smartphone Apple introduces, whether it comes in the summer or the fall, will not be a major change from the iPhone 5. I imagine many of the new bells and whistles will come as part of the next iOS software upgrade. And it’s very likely that many of the new features will also be available on the iPhone 5. Still, you always have the option to sell your iPhone 5 if a new one comes out. And that surely will pay for a big chunk of your next device.
What’s the big deal about T-Mobile’s new no-contract plans?
Dear Maggie, Dear Maggie, Thanks for your article about T-Mobile’s no-contract price options. I have been with AT&T for over 10 years. Usually my phone always breaks down right around two years when my current contract is up. I am confused because if you go to AT&T’s Web site, the company lists options for purchasing the phone at full retail price on a month-to-month service. Or you can get a two-year contract. I just don’t see what’s different about this than what T-Mobile is doing. Can you please explain?
Thanks, Percy
Dear Percy, You are correct that you are able to buy a phone from AT&T at full price and not sign a contract for your service. This is also true of T-Mobile. But the fundamental difference is that if you buy a device at full price from AT&T, the monthly service contract is exactly the same as if you had taken the subsidy for a new phone and signed a two-year contract.
A T-Mobile executive explains the financial benefits of T-Mobile’s new no-contract plans during the company’s “Uncarrier” event in New York City, where the company officially introduced the concept to consumers.
In other words, there is no incentive to buy the device from AT&T or any other major carrier at full retail price, because your monthly service, which supposedly helps offset the cost of the phone subsidy, will remain the same regardless of whether AT&T is paying off the subsidy. When you don’t take the subsidy, you are essentially providing more profit for AT&T. It’s like making a car payment to the bank for a car you already own. It’s free cash.
Of course, if you buy the device at full price from AT&T, you won’t have contract. But what are the real benefits of not having a contract? The biggest benefit is that you can switch to another carrier anytime you want. But you’ve already been with AT&T for a decade. Do you really anticipate you will change carriers in the next couple of years?
Unless you plan to change service providers within two years, it doesn’t make sense to buy the device at full price simply to avoid a contract. The only reason why I would consider buying a device at full price from AT&T is so that I could get it unlocked. AT&T recently changed its policy, and it no longer unlocks smartphones that are still under contract.
But again, if you plan to use AT&T’s service, I don’t see this making financial sense unless you travel overseas regularly. In that case, you would probably want an unlocked phone so that you could use a local SIM card in your phone when you’re traveling. Using AT&T’s international roaming plans can get expensive.
By contrast, T-Mobile’s plan is different. There is a set price for the service, which by the way is less expensive than a comparable service from AT&T. And if you want to finance your phone over two years, you can make a down payment and then add payments to your monthly bill. The finance charge depends entirely on the cost of your device. A more expensive device will cost you about $20 more a month.
This plan looks very similar to the subsidy model that the other carriers use. The big difference is that once the T-Mobile device is paid off, you stop paying the extra finance fee. What’s more, if you buy a used phone or you find a cheaper device to use with your service, your overall cost of ownership will be less.
This is not true of subscribers on AT&T, Verizon, or Sprint. There is only one price for the service. If you bring a used device to the network or buy a cheaper device, you will pay the same amount each month as if you bought the most expensive device in the carrier lineup.
Of course if you plan on upgrading your device every two years and you plan on getting the most expensive phone on the market every time, then AT&T’s model may still work for you. But in most cases, T-Mobile is still less expensive than either AT&T or Verizon. That said, price isn’t everything. If AT&T’s coverage is better where you live and work, then T-Mobile’s no-contract, no-device subsidy plans aren’t worth much. Having a phone that works when and where you need it is still the most important thing to look for when deciding on a carrier.
I hope this clarifies things for you. Thanks for your question!
Ask Maggie is an advice column that answers readers’ wireless and broadband questions. The column now appears twice a week on CNET offering readers a double dosage of Ask Maggie’s advice. If you have a question, I’d love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put “Ask Maggie” in the subject header. You can also follow me on Facebook on my Ask Maggie page.
Correction 10:50 a.m. PT An earlier version of this story did not account for the fact that T-Mobile is waiving the $99 down payment on iPhones when people trade in their old devices. With this factored into the overall savings of the trade-in, T-Mobile’s trade-in program actually offers consumers a better value than other trade-in sites such as Nextworth.
T-Mobile shook up the wireless industry this week with the introduction of its new no-contract service plans. But is the service really a good value for consumers compared to what the other big guys are offering?
In this edition of Ask Maggie, I answer that very question. A reader wants to know if he should ditch Verizon’s wireless service for T-Mobile. While some people seem to balk at the notion that wireless consumers will have to “pay”for their smartphones under these new T-Mobile plans, I do the math to explain why even buying a device at full price on T-Mobile is still a better deal than a Verizon subsidized two-year contract.
And for another reader, I clarify some of the finer points of T-Mobile’s device financing program.
If you are interested in learning more about T-Mobile’s new plans, check out an in-depth FAQ that my colleague Kent German and I wrote earlier this week. It should answer many of your questions.
T-Mobile vs. Verizon Wireless
Dear Maggie, I am a Verizon Wireless subscriber whose contract is up later this year. But I am considering switching to T-Mobile since they announced their new plans. I live in the Washington, D.C. area so I’d be one of the first markets to get T-Mobile’s LTE. From a value standpoint, would you recommend T-Mobile or would you recommend I continue to stick with Verizon?
Thanks, Ike
Dear Ike, The short answer to your question is that I think T-Mobile’s new service plans are a terrific deal compared with what the other nationwide carriers are offering. Still, to be fair, I must point out that T-Mobile’s CEO John Legere may have exaggerated his claim that consumers will save $1,000 over two years with T-Mobile’s plans compared to a plan on a competitor. As I will explain in this column, when comparing similar plans, the cost difference isn’t that great. But it’s significant.
T-Mobile executives claim that consumers can save big bucks with new T-Mobile’s new contractless service plans when compared to services from competitors.
But there is a caveat. It’s only a great value if the service works where you live, work, and travel. So the first thing you need to do is ask your friends, family, and colleagues who use T-Mobile how they like the service. As far as I know, T-Mobile has pretty decent service in the Washington, D.C. area. And you are correct that D.C. is among the first cities to get the T-Mobile’s new LTE service. So that is good news for you.
I also know that if you travel outside of Washington, D.C. in some areas, you may not get such great service or any service at all. In that instance, it doesn’t matter how much money you can save with T-Mobile’s new plan. It’s not a good deal if can’t make or receive phone calls or update your Facebook page when you are out of town for a weekend.
But let’s assume, that most of the places where you travel in and around D.C. and other parts of the country get decent T-Mobile coverage. If that’s the case, I don’t see any reason why you shouldn’t switch right now.
Before I go further, let me just preface this by saying that I don’t know how much you currently pay for your Verizon Wireless service, since you didn’t indicate that in your question. So as I run the numbers and compare the services, I am going to compare T-Mobile’s new plan with Verizon’s current plans that it sells to new wireless customers. If you have a different plan, you will have to compare the pricing yourself to see how much money you could save.
The comparison
T-Mobile’s plans start at $50 a month for unlimited voice and text messaging service. At that price you get 500MB of data at full 3G/4G speeds. If you exceed 500MB of data in a month, you aren’t charged an overage fee. But the speed of your service will be slowed until the beginning of the next billing cycle.
Meanwhile, the least expensive service from Verizon is $90 per month ($50 for 1GB of data and $40 for a smartphone.) If you exceed the 1GB of data in your plan, you will be charged overage fees. Overage fees start at $10 for 1GB of data.
But let’s compare apples to apples and see what the price difference is between the two services. Let’s say you want at least 2GB of data at full 3G/4G speed. On T-Mobile’s new plan that service will cost you $60 a month. Verizon’s service is $100 for 2GB of data ($60 for 2GB of data and a $40 smartphone fee.)
The difference in cost between these two plans is $40 per month. In one year, you will save $480 on the T-Mobile plan. (If you’re willing to live with 500MB plan and possibly get slower service when exceed 500MB of data, you could save $600 in one year.)
Of course, this comparison does not account for the fact that you need a phone that can operate on T-Mobile’s network. Verizon uses different technology for its voice services, which are not compatible with T-Mobile, so your old Verizon phone won’t work on T-Mobile.
As we compare the cost of adding a new T-Mobile device into the mix, let’s assume that you would upgrade your device on Verizon too. And I’ll use the iPhone 5 as an example.
T-Mobile If you buy a new iPhone 5 from T-Mobile, you can either pay full price for the phone when you sign up for service, or you can pay for the device in monthly installments over 24 months. If you pay over 24 months, you will tack on another $20 a month to your service. But in reality, it doesn’t matter whether you pay for the device upfront or if you pay for it over 24 months. The cost of the device will be the same, since T-Mobile is offering zero percent financing.
Let’s say that you want the 2GB data service from T-Mobile and the 16GB iPhone 5. The cost of the phone is $580. And the service fee is $60 per month. Over two years, you will have paid $2,020 for the iPhone 5 on T-Mobile’s 2GB plan.
Verizon A brand new 16GB iPhone 5 on Verizon costs $200 if you agree to a two-year contract. The 2GB service is $100 per month. This means that over two years, which is the standard contract period, the total cost of ownership on Verizon is $2,600.
The result: In just two years, you will be saving $580 by using T-Mobile instead of Verizon. But the savings don’t stop there. Regardless of whether you financed the iPhone over 24 months or you paid for it in full when you bought it, after two years, the device is paid for. And you are no longer paying your carrier for the device.
Bottom line
When you compare the total cost of ownership between the two carriers, it’s easy to see that you will save hundreds of dollars with T-Mobile over the course of a typical two-year contract.
I think some people are confused by the fact that T-Mobile is requiring customers to pay for their phones. But the reality is that every carrier makes its customers pay the full price of their phones and then some. You may only be paying $100 or $200 for a new phone when you sign your contract. But over the life of your contract, you are paying for the device, since that cost of the carrier subsidy is bundled into the price of your monthly service. And if you leave your contract early, you are socked with a hefty early termination fee.
The biggest difference between T-Mobile’s plan and the rest of the carriers is that with T-Mobile once you’re done paying for your phone, your out-of-pocket expense goes down. Meanwhile, Verizon and other carriers that subsidize phones continue to charge the same service fees they charged when they were recouping the cost of the subsidy. What this means is that once you have paid back the cost of the subsidy, the portion of your monthly bill that had paid for that subsidy is now profit for the carrier.
What’s more if you bring a device you already own to the network or you buy an unlocked device at full price to use on that network, you will pay the same monthly service charge as someone who bought a subsidized device.
I am the first person to admit that I don’t trust wireless carriers. It always seems like they are trying to squeeze more cash out of their subscribers. But when I look at the new T-Mobile plans, I can honestly say that I don’t think T-Mobile is cheating anyone.
The reality is that no carrier can afford to give devices away for free. That doesn’t make good business sense. But the subsidy model that we’re all used to in the U.S. only encourages customers to tie themselves to two-year contracts. And it penalizes customers who either want to keep an existing device once their contracts expire or want to buy unlocked devices at full price. Meanwhile, T-Mobile’s plans will encourage people to either keep their devices longer or search for the best deals on new phones. And as a savvy bargain hunter and self-professed cheapskate, I think that’s great.
The only reason that I am not signing up for one of T-Mobile’s new plans right now is because its service isn’t available everywhere I travel. If it were, I’d be first in line for this service.
I hope this advice was helpful. I hope you save a bundle!
Is T-Mobile’s device financing flexible?
Dear Maggie, I am pretty excited about T-mobile’s new service plans. I have been a long time prepaid customer with Virgin Mobile but have long been disappointed with the selection of phones they offer as well as those phones being locked to Virgin. What T-mobile has come up with in my view is a good compromise between pre and post paid payment models.
That said, I am still confused about a couple things regarding the cost of the phones. It appears that T-mobile allows you to either pay full price for the device and forgo any monthly payment, or you can pay a low upfront cost with payments broken up over the course of two years.
My question is will T-Mobile allow you to either lower the payment or lesson the term by paying more upfront? For instance could I pay $250 for a Blackberry Z10 instead of $100 to lower my monthly payment or to have a shorter payment term on the phone? Also, will Tmobile allow customers to pay off phone sooner than two years all at once if they so desire?
Thanks for the clarification, and keep the great column coming!
Thanks, Dave
Dear Dave, You can put more money down when you sign up for the service, but T-Mobile will not allow you to reduce the monthly payment.
That is a set price depending on the device you buy, a T-Mobile spokesman told me. That said, if you increase the down payment, you will pay off the device in a shorter period of time. As an example, if the BlackBerry Z10 costs $580, and you put $250 down, you’d pay the regular $20 a month fee to T-Mobile for 16.5 months instead of 24 months.
Also, you are free to pay off the balance on the device at any time during the finance period. In other words, let’s say you put $100 down when you bought the phone, you could pay the remaining $480 anytime you like and there is no penalty.
I hope this answered your question. And good luck.
Ask Maggie is an advice column that answers readers’ wireless and broadband questions. The column now appears twice a week on CNET offering readers a double dosage of Ask Maggie’s advice. If you have a question, I’d love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put “Ask Maggie” in the subject header. You can also follow me on Facebook on my Ask Maggie page.
