Why T-Mobile is the right fit for the $99 iPhone mini

T-Mobile iPhone 5

With both The Wall Street Journal and Bloomberg now reporting that Apple is considering a less-pricey iPhone for emerging markets with the unsubsidized price starting as low as $99, the question is arising which of the top wireless carriers will get the honors of launching the handset here in the U.S. And if by its very nature Apple’s upcoming new iPhone is targeted at the low-end where people are unwilling to buy heavily subsidized devices with long-term contracts, shouldn’t T-Mobile be the most logical launch partner?

Reuters yesterday reported that T-Mobile USA will start selling the iPhone “in about three to four months” and the carrier’s parent company, Germany-based Deutsche Telekom, told investors at the end of 2012 that it has “entered into an agreement with Apple to bring products to market together next year”.

Though T-Mobile acknowledged it “would love to carry the iPhone”, clearly it wanted “the economies to be right for us”. And in light of the renewed iPhone mini talk, I’m now beginning to read this as “we don’t want to bet the company by pre-paying billions in upfront subsidy to Apple, like Sprint did”.

So maybe T-Mobile was waiting for an unsubsidized iPhone, the iPhone mini, to curb subscriber churn?

Moreover, a senior RF engineer said in August 2012 that the iPhone “is a significant part” of T-Mobile’s $4 billion network modernization project. The carrier has been aggressively rolling out its iPhone-friendly HSPA+ network on the 1900MHz band, inviting owners of unlocked iPhones to visit its stores in order to test it out.

T-Mobile also has nano SIMs, offers free support to unlockers, hosts nearly two million iPhones and is getting ready to start rolling out 4G LTE starting with the Las Vegas market next month.

As if the afforementioned Apple-friendly infrastructure and service strides weren’t enough, last month came confirmation that the company was ending device subsidies ahead of the official iPhone launch. This means T-Mobile customers will be able to pay full retail prices for mobile devices in exchange for lower monthly fees.

subsidized iphone

And as other carriers like AT&T and Verizon are watching how the situation develops as they, too, might end device subsidies. Topping it all of, T-Mobile yesterday launched Unlimited Nationwide 4G data for prepaid plans. Priced at $70 per month and provided without an annual contract, the offering includes unlimited voice, text and data and is available right now.

T-Mobile USA’s marketing chief Mike Sievert was quoted in a statement:

Simply put, consumers want their data to be blazing fast, without limits and without overages. With our new Unlimited Nationwide 4G Data plan, that’s exactly what we’re giving them, and for the first time, we’re offering it without an annual contract. Other carriers want to lock customers in; we’re going to earn our customers’ business with an amazing 4G experience every day.

AllThingsD has more:

Unlike the company’s previous $70 prepaid unlimited plan, data speeds won’t be reduced once you reach five gigabytes. There will also be no overage fees.

Apple traditionally relied on AT&T to push new iPhones as the carrier has for years been an exclusive iPhone carrier in the United States. While the iPhone mini could launch at AT&T and Verizon, I don’t think a low-priced, contract-free Apple device makes sense for them right now.

Both carriers reluctantly offer chip Lumias and entry-level Android handsets to cater to the low-end of the market. See, carriers don’t make money by selling you the hardware – they profit from binding you to their pricey, long-term plans.

That said, AT&T and Verizon are not likely to risk loosing high-value subscribers to a less-pricey iPhone. Case in point: AT&T just announced best-ever Apple and Android device sales, with analysts estimating sales of eight million iPhones on the AT&T network during the holiday quarter.

So Why would AT&T suddenly sell the $99 iPhone mini without a long-term plan when $199 iPhones with two-year contracts are still doing so well? The same goes for Verizon and, to a certain extent, Sprint.

T-Mobile iPhone teaser

T-Mobile’s new business model of selling data to prepaid plans clearly indicates the carrier is positioning itself as the nation’s leading no-commit wireless offering. It’s not just forward thinking: smartphones sales are booming because the remaining 50 percent of the cell phone market is still expected to upgrade from feature phones to smartphones.

While we’re speculating, it could be blatantly clear now why T-Mobile has been the sole major US carrier without the iPhone. If Apple “has explored such a device for years”, as The Wall Street Journal noted, maybe the company purposefully kept T-Mobile on ice because it wanted the carrier to exclusively carry the prepaid, inexpensive iPhone.


And if that in fact was Apple’s thinking, what better way to incentivize such a deal than keep the sought-after handset off limits to T-Mobile for years, until the iPhone mini will have arrived?

In my view, this device is the perfect fit for T-Mobile’s strategy.

Of course, your guess is as good as mine so feel free to chime in with your thoughts down in the comments.