T-Mobile to cut out subsidies next year; moving completely to its "Value" plans

In an evident attempt to give momentum to its turnaround in the wireless industry, T-Mobile USA apparently has plans in place to become in first US carrier to discard the longstanding, and typically more profitable, practice of requiring subscribers to sign in to long-term service agreements in exchange for subsidies.

In a recent revelation of T-Mobile's imminent plans in this direction, the carrier's CEO John Legere said that T-Mobile - which is a Deutsche Telekom subsidiary - will move completely to its "Value" plans in 2013; thereby totally eliminating subsidies altogether.

The new model will essentially require the T-Mobile customers to either make a full payment for their smartphones, or to pay in monthly installments till their handset is paid off. Whatever the option selected by the consumers, the new T-Mobile approach will chiefly underscore a more transparent mechanism of operation, with the carrier no longer having to justify higher charges throughout the contract period.

The planned elimination of contracts by T-Mobile next year will probably be the first step in a series of shakeups which the wireless industry may witness in the coming year.

Moreover, according to Legere, T-Mobile's plans to cut out subsidies and push for increased transparency of its operations will be combined with a potential lineup of low-cost flagship handsets, which will help the carrier to help alter the perception about what exactly consumers get for the payments that they make.


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