T-Mobile to start offering iPhone 5 on April 12 (Update)

Mar 26, 2013

T-Mobile USA on Tuesday said it will start offering the iPhone 5 on April 12, filling what its CEO said was "a huge void" in its phone lineup.

T-Mobile, the fourth-largest of the national U.S. phone companies, has been losing customers to the bigger companies, which all sell the iPhone.

"This is a big deal for us," T-Mobile CEO John Legere said at an event in New York.

T-Mobile, a unit of Germany's Deutsche Telekom AG, is charging $100 up front for the iPhone 5, then another $20 per month for two years. That's on top of service fees for voice, text and data that start at $50 per month. The total monthly cost starts at $70 per month, a substantial discount to prices offered by bigger companies.

T-Mobile's network has, until recently, not been able to offer high-speed data service to iPhones. It's now able to deliver high-speed data to iPhones in some cities, and it has lured over 2.1 million off-contract AT&T iPhones, executives said Tuesday.

T-Mobile also said it will start selling the Samsung Galaxy S 4 on or around May 1. That's the successor to the Galaxy S III, which has been the chief competitor to the iPhone.

The announcement comes just days after T-Mobile ditched its conventional contract-based plans in favor of selling phones on an installment basis. It's separating the cost of the phone from the service, and when a phone is paid off, usually after two years, the monthly fee for the phone disappears from the billing statement.

On traditional contract-based plans, the buyer is deemed to have "paid off" the phone after a certain period, at which point the customer becomes eligible for a new, subsidized phone. The monthly payments, however, don't decline.

As before, T-Mobile's prices generally undercut those of the bigger phone companies. The chief weakness is that its data network coverage is poorer in rural areas.

"T-Mobile realizes that they have to change the rules of the game, because under the current rules, they're losing, and they're going to continue to lose," said telecommunications analyst Roger Entner at Recon Analytics. He's skeptical that the plans, alone, can change its fortunes.

"Even if they're $5 cheaper, will that be enough? They're already charging a significant discount to Verizon and AT&T, and they're losing customers," Entner said.

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