T-Mobile USA wants to move away from subsidized devices

Cole Brodman, Chief Marketing Officer, T-Mobile has said in a comment on the company blog that they want to move away from subsidized handset business model.

US market is largely about contract based plans. Users pay a small amount for the phone initially but signs a contract for a long term (2 years usually) to stay with the company.

The mobile service provider recovers the money of the mobile phone from the monthly payments.

Brodman spoke about the problems with this model:

Purchasing phones at steep discount (subsidized by wireless carriers) devalues the incredible technology innovations coming to market. It distorts the cost of devices and creates an uneven playing field for OEMs, carriers and retailers alike. Many Americans don’t realize the actual cost of the phones they’re purchasing with a two-year contract because the cost of that phone is included in the cost of their data plan and the fees associated with their contract. We’ve also unwittingly created a disposal marketplace for some pretty amazing products.

The company recently launched T-Mobile Value Plans that are targeted at consumers who buy their phones at full cost. These plans cost them a lot less on a monthly basis and there are no contracts to sign.

This is how mobile phone market works in countries like India.