Deutsche Telekom’s (DTEGY.PK) T-Mobile is still trying hard to do whatever it can to attract customers and draw them away from competitors, and a new deal involving Apple’s (NASDAQ:AAPL) iPhone 5 is the company’s latest push.
AT&T (NYSE:T) and Verizon (NYSE:VZ) may be simply just too dominant in the U.S. market for T-Mobile to continue competing with directly. Just recently, the mobile carrier decided to differentiate itself from its bigger competitors by dropping the industry standard, a pricing model based on 2-year contracts and cellphone subsidies. Instead, T-Mobile customers will buy their phones outright, or pay for them monthly, while the company will implement month-to-month contracts.
The plan could allow T-Mobile to pull in more hesitant customers that are perhaps unfamiliar with or untrusting of large mobile carriers and don’t like the idea of a 2-year contract. However, it does put the burden of the initial phone cost on the customer, although there are many low-cost options available for consumers to test the waters without paying too much upfront.
The iPhone 5 has been one key item T-Mobile has tried to leverage in order to draw in customers, as it isn’t easy for consumers to get their hands on an iPhone 5 without a 2-year contract or a heavy price up front. T-Mobile had been planning to offer the device for $100 up front, with $20 monthly installment payments over 2 years…
But now the company has plans to offer customers a chance to own the device at an even lower price. T-mobile announced a trade-in program, where users can trade in an old iPhone and get reduced upfront price — that could even be dropped to zero — plus smaller monthly payments. So, now T-Mobile may have the means to draw in new customers seeking out the iPhone, pull in customers from other carriers, or appease current customers who just want to get the latest iPhone and are willing to part with their older models.
T-Mobile still will have to contend with AT&T and Verizon, which both have more network coverage throughout the U.S. Furthermore, the fact that some customers may see monthly payments for a device extend over a two-year period, may make its no contract policy feeling a bit like a 2-year contract. Nonetheless, being able to offer the iPhone 5 in a way that differs from the competition may be able to pull in customers that the other companies couldn’t get, which could be a boost for T-Mobile and Apple.