March 26, 2013 at 9:00 AM
T-Mobile shakes up wireless, adds LTE and iPhone, drops contracts
The wireless industry is broken, consumers are being shafted by carriers and they’re paying outrageous prices for phones.
That’s according to John Legere, chief executive of T-Mobile USA, who rolled out a dramatically new strategy to revive the Bellevue-based company. Highlights include the launch of its LTE service; simplified, no-contract billing plans and a version of the iPhone 5 coming to T-Mobile on April 12.
In an expletive-laced opening to a press event in New York, Legere said the “industry is broken” and “we’re going to fix it.”
“This is about what the consumers want and need,” Legere said, sporting a blazer and T-Mobile T-shirt and delivering a sassy monologue from a simple stage. I’m following the event via webcast.
Legere took repeated shots at rival AT&T and poked fun at reporters who questioned his relative lack of industry experience, saying nobody but an industry veteran understands “why this mess works this way.”
The centerpiece of the strategy is a set of new plans that include unlimited talk minutes, text messages and data transfers, for $50, $60 or $70 per month, depending on the amount of high-speed data access. The plans run month to month, meaning there’s no obligation to keep the service for two years. (Here’s an earlier post examining the new plans and whether they’re truly cheaper.)
Customers don’t want to sign up for two-year contracts and they shouldn’t have to, just to get the latest phones in the store, Legere said.
“When you sign that contract you’re locked into the rate plan and that phone,” he said. “By the way, that phone that seems so beautiful when you walk into the store – how long until it’s a dinosaur?”
T-Mobile plans to run TV commercials teasing other carriers, including one with four cowboys riding into town, representing the four leading wireless companies. One of them decides he no longer wants to boss people around and then dons a magenta hat, representing T-Mobile.
“We’re canceling our membership in the carrier club,” Legere said, adding that “customers don’t need another AT&T — they need somebody to stop acting like AT&T.”
Unmentioned was T-Mobile’s 2011 attempt to merge with AT&T, a marriage that was derailed by regulators.
Legere also disclosed that T-Mobile will finally begin offering the iPhone on April 12. T-Mobile will sell the iPhone 5 for a $99.99 down-payment, making it the only U.S. carrier to offer the iPhone 5 with no-contract unlimited plans and 4G service, Legere said.
T-Mobile is getting a special version of the iPhone 5 that works with both LTE and T-Mobile’s HSPA+ network, which provides speeds up to 42 megabits per second. It will also offer the iPhone 4S and 4 in select markets, according to its marketing chief, Mike Sievert.
Legere also announced that T-Mobile’s LTE network is now turned on in seven cities: Baltimore; Houston; Kansas City; Las Vegas; Phoenix; San Jose, Calif., and Washington, D.C. The company plans to reach much of the country with LTE by the end of the year.
T-Mobile will also be offering the HTC One and BlackBerry Z10 for upfront payments $99.
The pricing reflects T-Mobile’s new approach to phone hardware. Rather than fold the hardware cost into the customer’s wireless contract, T-Mobile is selling the hardware separately, requiring customers to either pay its full price or enter into a two-year payment plan. Payments on premium phones are about $20 per month.
“It’s time to disrupt the status quo in this industry,” Sievert said.
During a question and answer session, Legere touched on T-Mobile’s pending merger with MetroPCS, saying it will be approved on April 12.
“It will be approved in spite of the several greedy hedge funds that are trying to take a double dip out of that process,” he said.
“This is the new T-Mobile going into that merger,” he added.
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