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Tuesday, March 26,2013

T-Mobile: iPhones and 4G LTE in, contracts out

T-Mobile has announced big changes to its business model, attempting to stake out new territory in the constant battle over mobile phones.

The company has announced it will no longer offer contracts. Instead, it will offer month-by-month plans in which customers receive unlimited voice and text messaging, as well as paying different rates for different amounts of data.

However, T-Mobile also will stop subsidizing customers' purchase of mobile phones, which is a major part of most contracts. In other words, mobile phones could now cost $600 or $700 for customers, when they may have cost $100 or $200 for customers signing up for a two-year contract.

This new structure will allow T-Mobile to now function with iPhones for a $100 down payment and no contract.

And lastly, T-Mobile announced it is launching 4G LTE service in seven areas (none in Colorado) and expects to reach 200 million Americans by the end of the year.

See the stories at CNET here (iPhones), here (4G) and here (contracts).

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Their strategy is targeting people who don't want the hassle of a contract, but only time will tell how successful their strategy will be. Individuals might be attracted to their strategy, but large companies are more likely to check out for communication solutions.