July 27, 2013 in Business

T-Mobile drops down payments

Anick Jesdanun Associated Press
 
Price shift

By eliminating down payments, T-Mobile will lower the cost of the Samsung Galaxy S4 by $30 and the Apple iPhone 5 by $2. Other total cellphone costs increased.

NEW YORK – T-Mobile said Friday that it is temporarily eliminating upfront payments on new phones, but it is increasing the prices for some models through higher monthly payments.

Unlike rival carriers, Bellevue-based T-Mobile charges the full retail price of phones, spread over two years, but reduces monthly service fees for voice, text and data. AT&T, Verizon, Sprint and others typically charge $200 or so up front for high-end phones and make up for the rest of the phone’s cost through higher service fees over the life of a two-year contract.

T-Mobile charges a down payment for the phone and monthly installments until the device is paid off in two years. For instance, customers pay $146 up front for an iPhone 5 and $21 a month for two years for a total cost of $650. That’s about the same price Apple charges when someone buys the phone without a two-year contract for use at another carrier.

In eliminating the down payment, starting today, some phones will be cheaper. For instance, customers will be paying $600 overall for Samsung Electronics Co.’s Galaxy S4, compared with $630 currently. Apple’s iPhone 5 will be $2 cheaper, at $648 overall.

But HTC Corp.’s One will cost $600, up $40. Other higher-priced devices include Sony Corp.’s Xperia Z and BlackBerry Ltd.’s Q10.

“Every time we have a chance to change pricing, we always make adjustments,” said Mike Sievert, chief marketing officer.

T-Mobile’s elimination of down payments is part of a limited-time promotion.

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