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back to article T-mobile US in invisible handset handcuff contract smackdown

T-Mobile USA's no-restriction contract turns out to have restrictions, and while they might seem obvious to some the state Attorney General in Washington feels they weren't obvious enough. The tariffs are designed to separate airtime and handset subsidy, which T-mobile described as coming without a two-year commitment. But while …

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Bronze badge

first step, transparency

Once customers can see the real cost of phone and airtime they should be able to make more informed choices. The present confusion-marketing business model will end, if not through consumer choice then via legislation.

The incentive to upgrade to a "free" new phone may diminish as the technology matures and most phones on contract are smartphones regardless of price -- witness the proliferation of £100 Android and new Winokia models.

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Raz

Re: first step, transparency

Exactly. Maybe then we will have a real phone market. I cannot believe that many phones these days are costing more than tablets, but they are certainly sold for more. E.g. latest iPhone or Samsung are $700. The problem is that the networks have an interest in maintaining these prices high so that they can charge a lot in monthly fees and explain that they have to do it to offset the cost of the phone.

I believe that they pressure the manufacturers of the phones to keep the prices high, or not sell under a specific value. The phone makers are happy to oblige, since they make more money this way. Sounds like collusion to me.

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Silver badge

Re: first step, transparency

Other way around. To take the most extreme example: Apple in the US advertise their phones at a subsidised price, and then bully the network operators into paying them much more than that for them.

Sure, the network operators are crooks, but that money they're paying to Apple is being taken away from providing better infrastructure. The infrastructure still needs to be put in place, so the money for that comes from... customers. As usual.

In Europe, handset pricing is a little more transparent, but it varies from market to market. Finns, for example, have always been on the model that T-Mobile are now introducing (you pay for service, but the operator will lend you money for a handset at zero percent), but the UK is closer to the US model than any other country, with very low upfront prices, at the cost of higher monthly tariffs.

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Facepalm

Silly Ruling

Aww, come on. T-Mobile has been great in offering this unbundled system for buying phones and paying them off over time (at zero interest, I believe). You can cancel the plan at any time, but you still have to pay for the phone that's in your possession. It should be obvious that if you buy something on credit (say, a phone), then you will have to pay off the loan.

Why do we waste our court's time on this? We should be going after the companies that really are cheating consumers out of millions each year through dodgy means: high-interest credit cards, banks full of hidden fees... and of course "free" handset offers that are coupled with high-priced two-year phone contracts.

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Silver badge
Thumb Down

Re: Silly Ruling

Waste of time? Obscure gotcha clauses and misleading adverting are not some kind of school yard insults. They are costly in both time and money to the customer and shopper and border on, if not outright cross over, bait and switch.

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Anonymous Coward

Re: Silly Ruling

So wait, I *can't* pay the first $20 installment on a $600 phone, quit, and keep the phone?

Yeah, they definitely have to make this "gotcha" more clear!

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Silver badge

Re: Silly Ruling

But the point he's trying to make is it's not an "obscure gotcha clause" or misleading adverting. It's a simple fact you need to repay your loan for the phone. And it's not bait and switch, T-Mobile is a lot more clear on their terms than AT&T or Verizon, in my personal experience, which is why they're now my provider.

We need to go after twats like Verizon, that refused 5 attempts to pay my ETF, to the point I had to file an FCC complaint.

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Re: Silly Ruling

The fact that you have to finish paying for your phone is obvious. The fact that the entire balance is due as a lump sum when you cancel the airtime is not obvious. The AG is saying that customers expected the phone loan and airtime bills to be independent of each other, and they are not.

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missing the point

If you cancel the service you need to pay for the phone *immediately*.

Ideally, the service and phone should be totally separate, so that if you cancel the service you just keep paying the (much smaller) monthly payment for the phone hardware. Of course, at that point they'll need to charge interest on the outstanding phone hardware balance or else cover their costs some other way.

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This is much better.

If you get a phone with a bundled handset in the UK, then it may cost £35 a month, compared to £15 a month for a similar contract SIM only. Obviously, that additional £20 is you paying off the cost of the phone.

However, after 24 (or 18, or whatever) months, the mobile network will continue charging you the full £35 a month every month until you tell them not to. If you ring them up and ask them to stop doing so, they are perfectly willing to (either by giving you a new handset to start paying off, or by cutting your monthly line rental if you don't want one), but you have to ask them. Lots of punters do not do this and end up paying vastly more to the mobile networks than they need to because they don't realise this.

This T-Mobile deal in the US explicitly separates the two things. You pay a monthly line rental, which potentially goes on forever, and you explicitly pay off the cost of the handset. After the 24 months, your monthly payment goes down to the line rental payment only. This is much clearer and much fairer on people who don't understand how the system works and just want to pay the bill that comes every month without talking to the customer retentions department. T-Mobile should be praised for it.

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simply wording

This ruling is about nothing more than using the right words.

No Restrictions - when there are restrictions (obvious to you or not) is simply wrong.

We have "unlimited" used alot in the UK in relation to broadband and in the last 10+ years no-one in power has accepted that this is not right.

Asda (owned by Walmart) were taken to court a little while ago for saying "low prices forever", when their pricing policy actually meant prices went up every 6 months.

It is simple lying. Do not use words that have very clear meaning that is not applicable, why is this so hard for people to get their head around.

If its not blue with green spots, dont say it is blue with green spots.

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Bronze badge

much edia are willing liers and crooks

the fact is that we keep getting headlined $99 and $199 smartphones which is a blatant lie.

t-mobile has simply been caught being innovative in the extremely low integrity sphere.

Sadly, I suspect those $99 headlines are chasing product promotion money making no integrity the norm.

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Silver badge
Paris Hilton

"Despite taking only a month the investigation racked up costs of more than $26,000"

What? If I'm on a project for a two weeks, it will cost upwards of 40'000 (even though I don't see a large part of that money). And I am not even of the legal profession. Sure there aren't a few zeroes missing?

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Words Eh?

So what I get from this is T-Mobile aren't exactly the devil, but they did lie a bit. So if the wording was corrected their plan does have a contract, but it's a much better contract than you normally get from a US carrier because you're getting your phone at 0% interest instead of the more usual 200%-300% the rest build into their premium phone contracts. Most of us can't afford the extortianate prices built into phones, apparently a 4G LTE chipset costs $400 a pop if the price difference between an iPod and iPhone can be used as a rough comparison. So given that we don't all walk around with $600-$1000 burning a hole in our pockets, we need some sort of financing if we want shiny and new. Financing comes with restrictions and their restriction is the same as everyone elses, you stop playing with us you pay the balance on your loan. The only difference is that the overall monthly charge is lower because you aren't paying the extra $15-$20 in finance charges.

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WTF?

Wait a minute here!

It truly irritates me to read an article like this. Instead of focusing on the positives and benefits of the fact that T-Mobile USA is the ONLY major carrier without contracts, there are articles such as these that support idiots.

When a customer purchases a device at T-Mobile on the no contract plan, they are told that they are only paying the down-payment upfront, they are told the full cost of the device and how many more payments they have to pay it off completely (which is currently 24). They MUST sign the Equipment Installment Plan agreement (EIP) when they are purchasing the device that clearly states the above mentioned. If someone is too stupid to understand that then they have many many more problems to worry about in life than having to pay off a couple hundred USD to leave a service.

Also, please note; to the people reading, writing, and publishing such articles that it is not mandatory to a) buy the devices from T-Mobile (they welcome your unlocked phone! and b) You have the option to either buy phone at full cost upfront or pay it off as early as you like!

This is what the focus should be on, and how T-Mobile is revolutionizing the highly deceptive and overpriced telecommunications industry in the USA. There is no company that can sell you a device for dirt cheap and give you a no contract plan. There will never be someone handing out iPhones in a store for $5.... We should really commend T-Mobile not bash them for creating a fair, clear cut, and budget friendly way to do business.

Sorry if you disagree, but this is my take on it!

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minor quibble

First, there actually is a contract, just on the phone instead of the service. So saying "no contract" is a bit disingenuous.

Second, if you cancel the service, the remainder of the outstanding balance on the phone is due in one lump sum. Many people had (arguably logically) expected that they would be able to keep paying off the phone at $20/month even if they cancelled the service.

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Silver badge

It's a step in the right direction - not the ruling, the principle behind being more open/honest about the overall charges. Very much like the finance industry has been made to do with loans.

Now if inkjet manufacturers could just do the same with their "accidentally" DMCA riddled cartridges and "accidentally" integrated designs that integrate vital components with the disposable ones to force users to only use genuine (aka extortionate) cartridges from them then the world will be an even better place. Platinum is cheaper than inkjet ink.

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Pint

"... like Apple have taken a bigger role in servicing customers."

Servicing... Like a bull services a cow.

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