T-Mobile Is Ending Subsidies in 2013—That Means Expensive Phones and Cheap Plans

T-Mobile's CEO John Legere just confirmed that it will be ending phone subsidies next year. So while it's finally getting the iPhone, you're looking at a $650 entry level iPhone, instead of the typical $200 price for it and other premium phones.

That doesn't mean you're going to have to pay that all at once. Apparently T-Mobile is planning to offer the phone for as low as $100, and let you finance it over 20 months or so. How that cost plus the cost of the plan differs from current plans is yet to be seen. This could be a lot of noise over a negligible shift in actual cost.

Phone subsidies have been a priority for T-Mobile for a while now. It's already got low-cost unlimited "Value Plans" that offer price savings if you buy your phone outright, or just used your own phone. It will shift entirely to those plans next year. T-Mobile said that 80 percent of its activations last quarter were for those Value Plans, which suggests people really like this idea.

Other regions, like Europe, don't operate on a subsidy model, and T-Mobile makes some sense as the first mover to try out that system, given that it's owned by German Deutsche Telekom. Still, this is a big move for an American carrier, since some, like Verizon, have started shifting to using the subsidy as a blunt weapon to force customers into their new shared plans. [GigaOm]