updated 05:12 pm EST, Thu December 6, 2012
Initiative announced in company's annual investor conference
During Deutsche Telekom's annual investor conference, T-Mobile USA CEO John Legere announced his intent to do away with subsidies for cellphone purchases with contracts. Legere said that customers will pay an upfront fee for the devices, and pay the remainder of the phone's value in affordable monthly installments.
T-Mobile currently offers a "Classic" plan that subsidizes the device, requiring a two-year contract. The carrier's "Value" plan allows consumers to pay the full cost of the phone in exchange for lower monthly plan rates. Legere said the initiative to do away with the Classic plan will begin in 2013, and only the Value plan will be offered going forward.
Legere claimed that "We think there is a huge room for a carrier to change in a way that the larger players will choose to or will not be able to respond to." He added that consumers will be able to purchase the "most iconic device in the world," presumably the iPhone, for $99 and pay monthly installments of between $15 and $20 for 20 months after purchase.
Legere noted that T-Mobile will directly target AT&T in its forthcoming advertising, saying that he is "very certain in the coming months you are going to see dramatic change." Legere said that the tactic slams AT&T, while praising the iPhone, and to "get used to that tone because that is the way we're going to play."