T-Mobile: Adds iPhone Ditches 2-Year Contracts

Transcript

RENEE MONTAGNE, HOST:

Mobile phone carrier T-Mobile is trying to lift itself out of fourth place. At a press conference yesterday, it announced it was adding the iPhone to its line up and ditching two-year contracts.

But NPR's Laura Sydell reports that may not be enough.

LAURA SYDELL, BYLINE: T-Mobile took a lot of digs at the two-year contracts all mobile carriers offer at its Manhattan press conference. It opened with real woman on the street video.

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ANNOUNCER: Would you rather sign a two-year mobile contract or get a root canal?

UNIDENTIFIED WOMAN: I'd rather get a root canal.

SYDELL: Then, T-Mobile CEO John Legere fired his own shot.

JOHN LEGERE: The rate plan's so complicated they make no sense.

SYDELL: By contrast, Legere says the new T-Mobile plans are simple. Three tiers - $50, $60 and $70 a month for unlimited service. And you can quit whenever you want. You can get a new iPhone for 99 bucks up front and $20 a month to pay it off over two years.

Gartner analyst Hugues De La Vergne was skeptical that the new pricing plan would draw more customers.

HUGUES DE LA VERGNE: T-Mobile's simplifying the rate plan side of things. But they're actually confusing the device side.

SYDELL: So, you may not be locked into a contract with T-Mobile, but if you leave and want your phone, you have to pay it off in full or continue to pay T-Mobile 20 bucks a month.

De La Vergne says T-Mobile may have a problem with another announcement yesterday. The company says it will reserve the right to restrict so-called unlimited $70 a month plans if the customer starts hogging too much bandwidth watching HD videos and streaming music, which is after all, what everybody wants to do.

Laura Sydell, NPR News. Transcript provided by NPR, Copyright NPR.