T-Mobile USA Tuesday officially launched its LTE 4G network and said it would drop device subsidies and finally offer the iPhone.
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T-Mobile USA can now finally say it has a real 4G network. LTE, long regarded as the benchmark 4G networking technology, has been absent from T-Mobile's offering until Tuesday. The new, faster network is available to T-Mobile customers in Baltimore, Houston, Kansas City, Las Vegas, Phoenix, San Jose and Washington, D.C.
Coverage will be limited for a while, as T-Mobile is still in the middle of a massive shift in its networking technology. The shift has to do with which network T-Mobile offers on select bands of airwaves. To-date, T-Mobile USA has offered GSM/EDGE service on its 1900-MHz spectrum, and 3G HSPA+ service on its 1700-MHz AWS spectrum. T-Mobile USA has been eliminating EDGE service on its 1900-MHz spectrum and replacing it with HSPA+. This is known in the industry as refarming. T-Mobile has been proactively announcing which markets offer 1900-MHz HSPA+ over the last few months. In fact, it says 142 million people use 1900-MHz HSPA+ in 49 markets around the U.S. T-Mobile says its LTE network will cover 100 million Americans by mid-year, and 200 million by the end of the year.
T-Mobile's refarming strategy is important for two reasons: First, it frees up T-Mobile's 1700-MHz spectrum holdings in those markets for LTE, which is why T-Mobile launched in the specific cities announced Tuesday. They mirror the markets in which T-Mobile's 3G network has shifted to its 1900-MHz spectrum.
The other, more important reason, is the Apple iPhone. By moving its HSPA+ service to the 1900-MHz band, T-Mobile can now offer 3G mobile data to Apple's iconic smartphone -- something it has not been able to do since the iPhone launched six years ago. The AT&T variant of the iPhone uses the same HSPA+ technology in the same 1900-MHz spectrum.
T-Mobile did not talk about wireless network speeds other than to call them "blazing fast."
In addition to the new LTE 4G network, T-Mobile has also taken bold steps in plan pricing and device subsidies. It revealed new, simpler wireless service plans that don't include device subsidies.
For example, the entry-level plan now costs $50 per month. It includes unlimited domestic voice minutes, unlimited domestic messaging, and 500 MB of data and -- this is key -- a mobile hotspot capability is included. Mobile hotspots will let customers use their smartphones as mobile modems and connect other devices, such as laptops or tablets, to T-Mobile's network via Wi-Fi. Worried about the small data allotment? Don't be. Those who surpass their 500-MB monthly data allotment are not smacked with high overage fees. Instead, data hogs will see their data throttled back to 2G speeds for the remainder of the billing period.
Need more than 500 MB of data? T-Mobile offers data packages that range from 2 GB to 12 GB of data per month (again, with mobile hotspot included). Pricing per month runs $60 for 2 GB, $70 for 4 GB, $80 for 6 GB, $90 for 8 GB, $100 for 10 GB, and $110 for 12 GB.
If you're not all that interested in the mobile hotspot feature, or don't think you'll use more than 500 MB of it, there is one more option. With the new plans, customers can choose unlimited voice, unlimited messaging, and unlimited data for just $70 per month, with 500 MB of mobile hotspot included. T-Mobile USA appears to be placing a premium on the mobile hotspot feature.
Don't expect to get any of T-Mobile USA's shiny new phones for just $100 or $200, though. T-Mobile is doing away with device subsidies. Subsidies, by nature, lower the cost of the handset at contract initiation from the full retail price -- generally in excess of $550 -- to a reasonable amount, usually between $50 and $299. The carrier then recoups the difference over the life of the service contract. T-Mobile isn't making anyone sign contracts anymore, but that means you'll have to pay full price for your phone up front. Or, if you so choose, you can provide a down payment and then make monthly payments for the phone, which are added to the service plan. For example, adding the Samsung Galaxy S 3 to any of the plan options mentioned above adds about $16 to the monthly cost. The monthly cost will vary by handset.
Last, T-Mobile will begin selling its own version of the Apple iPhone 5 beginning April 12. The optimized device will require a down payment of $99 and then monthly payments of $20 thereafter. T-Mobile will also sell the iPhone 4S and iPhone 4 with $70 and $15 down payments, respectively, but neither of these devices will be fully optimized for T-Mobile's networks.
With its new network, new service plans and newly eliminated device subsidies, T-Mobile is trying hard to compete with AT&T, Sprint and Verizon Wireless. There's no doubt it will attract contract-averse customers, but whether it can get its LTE 4G network footprint big enough fast enough is another story.
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