Confirmed: iPhone Launching on T-Mobile USA

It took over five years to happen, but the iPhone is finally coming to T-Mobile. Deutsche Telekom has officially reached an agreement with Apple to launch its products on American subsidiary T-Mobile USA next year. The announcement was made as part of a press release outlining Deutsche Telekom’s financial plans for the next three years.

The golden words from the press release:

In addition, T-Mobile USA has entered into an agreement with Apple to bring products to market together in 2013.

T-Mobile USA CEO John Legere confirmed that one of those Apple products coming to the U.S.’s fourth-largest carrier will be the iPhone. The move will be part of a radical new pricing structure for T-Mobile, as the mobile provider will no longer be selling subsidized devices in 2013. Instead, GigaOM reports that T-Mobile will begin selling handsets like the iPhone at full price.

T-Mobile is eliminating all device subsidies in 2013, requiring new customers to pay full price for their phones up front, buy it on installment or bring their own unlocked devices, Legere said speaking at corporate parent Deutsche Telekom’s Capital Markets Day in Bonn.

Most carriers offer subsidized pricing to customers that purchase a new handset, only on the basis that they agree to a new 2-year service agreement or similar. Throughout the term of the agreement, the carrier recuperates any lost profits because most voice and data plans are outrageously overpriced. T-Mobile won’t cut you a deal on a new device, but will begin offering more affordable plans instead. 

T-Mobile will shift entirely to its unsubsidized Value Plans, which offer customers far cheaper rates for voice and particular data. Traditionally carriers factor subsidies into their normal contracts rates – basically you’re paying a mortgage on your phone. With the Value program, T-Mobile is keeping the contract, but passing what it saves on subsidies back to consumer.

It appears that there is strong demand for these types of unsubsidized plans, as T-Mobile reported that 80 percent of its activations in the previous quarter were for its new Value Plans. Nevertheless, it might be difficult for T-Mobile to convince customers that they will actually save money over the course of their service agreement, especially because devices like the iPhone 5 can start up $650 and upwards without carrier subsidies.

To combat that issue, T-Mobile will allow its customers to pay for handsets in smaller installments. For instance, a customer could pay $99 up front for the iPhone 5, and then pay between $15 and $20 per month until the handset has been paid off. It’s definitely an interesting concept that might garner consumer demand, but it might also backfire. I can see a lot of customers sticking with the traditional pricing model that carriers like AT&T and Verizon Wireless follow.

Despite the circumstances, Legere is enthusiastic about the iPhone and the new unsubsidized pricing model:

“When this device rolls out I can only tell you it will be a dramatically different experience, and I can only tell you that of all the reports that have been written about what’s going to happen when it comes out, they’re all wrong,” Legere said.

The barrier to T-Mobile carrying the iPhone in the past has been related to its network infrastructure. The iPhone is only able to obtain 2G speeds on T-Mobile’s network at this time, but the carrier is working quickly on its iPhone-compatible HSPA+ network in the 1900 MHz band. That transition should be completed by next year, in time for the carrier launching the iPhone. But it’s unknown at what point next year the iPhone will finally be available on T-Mo.

Apple might opt to wait until T-Mobile has its 4G LTE network in place, which isn’t until late next year. It’s also possible that Apple will wait until its Fall media event next year to introduce T-Mobile as an official iPhone carrier alongside its seventh-generation iPhone. It would be similar to when Sprint became one of Apple’s carrier partners upon the iPhone 4S launch.

T-Mobile has openly expressed its interest in carrying the iPhone, having previously claimed that it provides a no-compromise iPhone experience and embraces its over 1 million customers with unlocked iPhones on its network. In lieu of not carrying the iPhone, the magenta-flavored carrier has been urging people to bring their iPhone to the network and, at the same time, has been selling against the iPhone to better compete against AT&T and Verizon.

When the iPhone finally launches on T-Mobile at some point next year, the handset will officially be available on the four largest mobile providers in the United States. AT&T was the exclusive iPhone carrier until early 2011, when the handset launched on Verizon Wireless. Sprint, the third-largest U.S. carrier, began carrying the iPhone 4S in October 2011.

Are you excited about the iPhone coming to T-Mobile?

Sources: Engadget, GigaOM

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