T-Mobile USA Dumps Contract Plans, Reinvents Mobile Plans

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T-Mobile USA, a subsidiary of Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE), has just unveiled their planned changes to the way their phone plans will work. This is just one of the latest updates in a line of changes aimed at turning the struggling mobile provider around. The company’s merger with MetroPCS Communications Inc (NYSE:PCS) passed its final regulatory hurdle late last week.

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The new mobile phone plans were unveiled on the company’s website over the weekend, and a big event to explain the changes is set for tomorrow in New York. The struggling phone company has been offering two-year contracts for subscribers, but the new plans are somewhat of a hybrid of the company’s prepaid plans and contract plans. USA Today reports that T-Mobile USA’s prepaid plans have been better sellers in the U.S., although they aren’t as profitable as the contract plans.

In general, prepaid plans come with lower monthly fees, however, the subscriber usually pays full price for the phones. Under these new plans, T-Mobile USA is offering phones for the price of monthly installments. Subscribers basically pay a set amount for the phone up front and then a set amount each month to cover data, text and calls.

Included in that monthly fee is an installment, enabling the user to pay off the phone over two years. After the two year period is up, the installment part of the fee is completed, so the subscriber’s mobile bill actually reduces — if he or she keeps the same phone after two years.

T-Mobile USA isn’t completely avoiding the shared-data plans that its competitors are offering, although it isn’t embracing them entirely either. Instead, the company is offering data in three different tiers so that subscribers can decide how much data they want to pay for each month.

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