T-Mobile to Target AT&T Customers With iPhone Sales in 2013

NEWS ANALYSIS: T-Mobile CEO John Legere announced an agreement with Apple to start selling the iPhone in 2013 as well as significant acceleration of the mobile carrier’s 4G LTE rollout.  

In addition, MetroPCS customers, who already have LTE service, will be able to start using T-Mobile’s LTE much sooner than previously expected. On another note, T-Mobile executives did confirm that the MetroPCS CDMA network would be decommissioned as soon as existing customers could be migrated to GSM/LTE handsets.

Effectively T-Mobile has solved the wireless carrier “chicken and egg” problem. Carriers and device manufacturers have always been reluctant to incorporate devices and networks that weren’t fully compatible. This is why T-Mobile USA hasn’t been selling iPhone. T-Mobile’s data networks weren’t compatible except at slower 2G speeds.

But by refarming its 1900 MHz HSPA+ spectrum, which the iPhone can use as can most T-Mobile phones, and then launching LTE aggressively the company has made it possible for Apple’s iPhone to work normally. The opened the door to striking a deal with Apple to sell the iPhone. But there’s more. During his presentation Legere said that T-Mobile will be aggressively targeting AT&T customers to attract them to T-Mobile.

To accomplish this, Legere said that T-Mobile will be creating a different kind of environment for wireless customers. Legere said that wireless customers are irritated by high bills, contracts that lock them in and difficulty in upgrading their devices. He said that T-Mobile was launching Value Plans, which let customers bring a device to the company and get very low-cost service.

He also said that T-Mobile would sell devices and provide financing which in turn would let customers get the phones they want at an out-of-pocket cost lower than what a traditional plan would cost. Legere also said that customers will be able to upgrade their devices at any time and that T-Mobile will take trade-ins.

The net result, from what Legere disclosed in his presentation is that customers would be able to make a low down payment for what he called “an iconic device” of $99 and pay for it for 20 months for “15 or 20 dollars a month.” What this probably means is that T-Mobile will start selling iPhones 5s at their full price, but offering financing and a value plan. Legere said that T-Mobile will be switching to 100 percent Value Plans in 2013, which means that when the iPhone sales start, they’ll be sold without a contract.

But there’s more to come in 2013. T-Mobile will start selling non-contract iPhones, but it’ll also start attacking AT&T. “You love your iPhone, you hate AT&T,” Legere said, describing a new campaign. So there will be an iPhone for T-Mobile customers, and there will be better coverage, and lower prices. This in itself will shake up the traditional high-cost, slow moving mobile market in the U.S. It’s about time.