T-mobile to end smartphone subsidies

T- Mobile USA has decided to bite the hand that feeds it, moving away from offering its customers smartphone subsidies.

Carriers and phone manufacturers have for many years worked hand in hand scratching each others backs in a bid to make cash, offering deals on smartphone handsets when customers sign up to specific contracts.

However, it seems T-Mobile has tired of these deals becoming the first company to make the split and shunning mobile subsidy deals.

It means that new and upgrading customers will have to pay a lot more for their handset.

The WSJ explained that for example a standard issue iPhone 5, sells for $199 with the subsidy and a two-year contract, but it costs consumers $650 if bought without carrier support.

The paper pointed out that the split could drive consumers to opt for a smartphone cheaper than Apple’s and Samsung’s offerings, just like the trend seen in countries that don’t offer subsidized deals. Of course this could end up damaging the big brands with cheaper handsets filtering into the market and forcing prices to drop.

However, savvy consumers could end up saving money as part of the plans, snapping up the   Samsung Galaxy Note II for around $20 a month for two years with a $200 down payment as opposed to a subsidized deal which could see a two year contract costing on average $680.

The company is currently teaching staff how to explain the new deals, investing in around 20 hours of training per person.