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T-Mobile to carry iPhone, but without subsidies

Yes, the iPhone is officially coming to T-Mobile in the U.S. But the device will probably be much pricier--at least upfront--than it is at competing wireless carriers.

John Legere, CEO of T-Mobile's parent company, Deutsche Telekom AG, told Reuters this week that the U.S. wireless carrier would begin carrying the iPhone "in three or four months." But the phone will arrive at the same time that the company eliminates subsidies for smartphones--meaning that the basic 16GB iPhone 5, which sells for $200 at AT&T, Sprint, and Verizon, might go for the full $649 cost that Apple charges for unlocked and contract-free phones.

The upside? Normally, those companies get the subsidies paid back during the life of the two-year contracts that they require customers to sign when buying the phones. Without the upfront subsidies, Legere suggested to Reuters, T-Mobile can offer cheaper and more flexible smartphone service plans than its rivals: Some customers might decide it's worth paying more upfront in exchange for cheaper rates or shorter service contracts.

Another difference-maker for T-Mobile: It offers unlimited data plans--an option that, among its iPhone-carrying rivals, only Sprint has. The result? T-Mobile might be selling the same device as its rivals, but it might end up offering a very different customer experience--one that can help it gain ground after more than a half-decade on the iPhone sidelines.

Legere said that his company's different way of doing business could help T-Mobile increase its smartphone market share by 5 percent, he said. "If the old industry structure chooses to ignore what we do," Legere told Reuters, "That's a potential."

Legere's comments come a month after Apple and T-Mobile acknowledged they were forming a "product alliance" but declined to offer details. Left unsaid: How the iPad and iPad mini might factor into all of this. We speculated last month that the tablets might factor into T-Mobile's partnership with Apple, but nothing in Legere's comments this week pointed in that direction.

Either way, Legere's comments qualify as big news--and the end of an era: T-Mobile's addition means all the major American carriers will soon offer the iPhone.


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