A New Sheriff (Make That Business Model) Is Coming to Town For US Wireless Carriers, And He Won't Look Pretty!

Reggie Middleton's picture

This is one of those pieces where, after reading it you say "Damn, why didn't I think of that!".. By demonstrating how Google is transforming the telecomm landscape, I may actually save up to $5,700 for at least a quarter of the readers who are perusing this blog. Yes, it's for real, and its a benefit of the "knowlege how" mentality that I described in my previous pieces on education. You'll see where I'm coming from once you get to the long graphic below...

T-Mobile has had a serious problem competing with the big boys of US wireless carriers. They are the only one not to carry the iPhone. This, in my opinion, was a wise move for the subsidy game has been a money loser from the get go, and although the iPhone is still selling like hotcakes, those hotcakes are looking much cooler as Andrioid sales have taken off. Still, T-Mobile doesn't seem content, so it decided to do what most of the carriers should have done a long time ago. T-Mobile is breaking the wireless carrier contract hegemony and offering pure service without the BS. For ANYONE who can count, this makes the decision to go with T-Mobile as brainless a decision as the sneeze is a reflex reaction. Let me count the ways...

Rip Up The Contract & You Reduce The Risk For Both The Carrier & The Consumer. As A Matter Of Fact, Only Fat Margined Hardware Vendors Have Anything To Fear - Oh Yeah, As Well As Those Carriers That Still Rely On Contracts!

The grand disruptor, Google, has been trying to break the grip the carriers have had on the smartphone industry for years, starting with the introduction of the Nexus phone which it sold direct to consumers online. The propeller heads at Google figured they would offer a better product at a lower price and people would simply flock in to buy it. Said propeller heads apparently didn't understand people. They won't always do what's best for them, but they will buy what is sold to them. So this time around, with 3rd (or 4th?) iteration of the Nexus phone, Google has paired with a major carrier in addition to selling it direct. Now, Google sole the last Nexus through Verizon, but Verizon crippled the device in attempt at carrier lock-in - an old school, naive and ultimately self destructive move, in my humble opinion.

Now, T-Mobile will be offering the device (it's already in stores, just not officially selling yet) and will offer it unlocked, off contract, for its original (not inflated like other carriers) price of $299, and with its original capabilities. This device is state of the art, btw, and blows the iPhone 5 out of the water in practically every way. Keep in mind that an iPhone 5 would retail at your local carrier retail store for $200 to $300, subsidized, tied to a 2 year contract. You can buy a far superior device outright for just about the subsidy downpayment of an iPhone.

One of the best devices on the market, approximately  1.5x the device the iPhone 5 is for roughly half the price! $299

Google Now. Amazing Photo Sphere camera. Totally wireless... OR you can pick up a very good Chinese phablet for even less....

ZOPO ZP950 Phablet - 5.7 Inch HD Screen Dual Core 8MP Camera 1GB RAM Android Phone


Short Description

- 5.7 inch HD screen, 1280*720 pixel display
- 1GHz dual-core MTK MT6577 processor
- Support 3G network: GSM 850/900/1800/1900 & WCDMA 850/2100 MHz
- 8MP rear camera + 2MP front camera

Price: $279

OR you can pick up a smaller form factor for over $100 less...

These are actually very good devices , without compromise. They are, in my opinion, more desirable in terms of functionality than the iPhone 5. For less than the contract sign up price for an iPhone of ATT/Sprint/Verizon late model phone, you can fully purchase one of these devices and pay for the first month of service - contract free, free to leave the county, and free to change carriers or quiet at will. That's not the gist of it...

A Smart Mentality For Dumb Pipes

 T-Mobile may actually profit where other companies take a loss by eliminating the expensive and risk subsidy/contract trap. In addiion, it will pull head of the pack by recognizing what it is, and being aware of what it is not. T-Mobile, like the other carriers (they just don't know it yet) is a utility. It's a dumb pipe through which Goog;e's customers pump data. It is not a software programmer or development house like Microsoft (so it has finally stopped trying to skin Android), and it is not a transaction company (so it has stopped trying to compete with Google Wallet). It is not a content company (so it does not attempt to compete with Netflix, Amazon or iTunes). Unfortunately, the other carriers haven't realized this yet. As a result, although they are bigger and better funded, the new T-Mobile is posed to change the industry. In recognizing that it is a dumb pipe that should compete on data throughput, volume and quality, it is on the road to creating a new business model of being a smart pipe - just as handset makers moved from dumb phones to smart phones. In order to do that though, they will need a change in mindset.

The Performance Trap: Is LTE Really the next big thing or just a thing carriers use to charge you more?

Verizon, Sprint, Metro PCS (a MVNO reseller) and AT&T all market their 4G LTE services heavily. They also charge accordingly. I purchased a Galaxy 3 LTE phone and ran up a $150 bill within 18 days (that's right, I was just over halfway through the monthly billing cycle), without even trying. I called customer service, and they offered me a $50 credit, but the damage was done. I returned the phone forthwith. T-Mobile offers its HSPDA+ service as 4G, and it is actually quite fast for what is considered an antiquated technology. As excerpted from Fiercewirelss.com and Rootmetrics:

RootMetrics: Average download and upload speeds


To the average user, T-Mobile's speeds will barely noticeable in terms of difference from AT&T. Uploads may be noticeably slower, though. Verizon seems to blow them both out of the water, but there is this real life consideration of cost  real life perofrmance issues that comes into question. With that, the equation changes considerably. The battery life on T-Mobile's HSPDA+ is practically twice that off the same devices running LTE. Until better tech is released, LTE is not a valid all day, battery operated solution IMO. Then there's the issue of cost. Uh Oh!!!!...

Price vs. Performance

Let's look at the monthly cash flows.... Yes! You actually SAVE $5,500 per bi-annual cell phone contract. Read carefully and thank me later... Click to enlarge...

 Reggie Middletons Wireless Carrier PricePerformanceSpeed comparison chart


 Reggie Middletons Wireless Carrier PricePerformanceSpeed comparison chart

I will hold an interactive video chat on this topic at approximately 9:45 am, Friday the 11th in the Valuable Knowledge Community on Google+. I welcome all to attend.

Who ultimately benefits? 

First, you, the consumer. Thsi competition is very good. The second beneficiary also happens to be the one that started this mess in the first place, Google! You see, Google is a data company, and data companies need bandwidth. The more cheap bandwidth you have access to, the more data you will be prompted to move, access, save, search for, request and engage with. The cheaper the hardware, the more hardware you will use. The more advanced the hardware, the more you will do with it. "Do what", you ask? Do data! Do Google! This is what Android is truly all about. This is why its free! This is why Google is poised to take over the (data) world. All of those armchair pundits and silly sell side guys who constantly quip about Google not making money on Android sound similar to those who scream, "But that damn fox is not making a dime on the free trips the chicken taxi is making to the chicken coops!" "'Hens R Us' makes more fare on transporting those chickens to the fox hole than Mr. Fox does!" Yeah! Think about it for a few seconds. That's all it takes in terms of critical thought to comprehend the Google business model. Yes, sometimes it is hard to see that forest with all of the tree bark in the way...

Industry Leading, Subscription Based Google Research

All paying subscribers should download the Google Q1-2012 Valuation Summary, wherein we have updated the valuation numbers for Google using a variety of metrics. Click here to subscribe or upgrade

Professional/institutional subscribers can actually access a subset of the model that we used to create the sensitivity analysis above to plug in their own assumptions in case they somehow disagree with our assumptions or view points. Click here for the model: Google Valuation Model (pro and institutional). Click here to subscribe or upgrade.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Widowmaker's picture

T-Mobie has some of the worst coverage, which is the heart of any carrier regardless of the model.  No coverage no sales.

Not a buy.

dtwn's picture

There are also others that are bringing new business models to the table.  Republic wireless is $19/month, no contract, unlimited everything.  They put everything over wifi when it is in range, then hands off to cell towers when out of wifi range.

Also, PagePlus cellular is a prepaid provider that uses Verizon's network.  Way cheaper than verizon too.

Yen Cross's picture

 That Nexus Google(LG) phone is sweet if it's unlocked without a contract.

 Sign me up for that bad-boy.

Setarcos's picture

Has no one noticed that Google+ is quietly challenging FarceBook?

Not that I really applaud "social media" and all that shit, but I long-since quit FarceBook and do now use G+ to recommend various sites, without a requirement to obey the shifting rules of FB.

Besides G+ has YouTube and that is something FB can never compete with, so I endorse Reggies views on FB, on top of his present post.

BTW I have just commended this post in G+.

Yen Cross's picture
Sat, 01/12/2013 - 05:31 | 3146767 desirdavenir TURD BURGLER   The game runs 2 ways bitch
Yen Cross's picture

 Apps.  Great job .So I understand? I get junked for giving {ANCILARY} Thoughts?

desirdavenir's picture

Not new...


No subsidiees, unlimited calling and downloading pu to 3gb for 20€, or 15€ if you already have their 35€ adsl subscription...


firestarter_916's picture

I completely agree.  Have loved T-Mobile for over 12-years now but with certain employers requiring certain carriers, I had to dropped T-Mobile about 6-years ago and go with two losers, namely AT&T and Verizon.  I agree with the speed comment as well...I had a BB Pearl at the time and never ever had issues with data or call quality, nor did I ever have a dropped call.  You scoff at my Pearl but it was an insanely good phone and small and I could type faster on that device than I can with a standard laptop keyboard.  I'd sent text messages in early 2000 and people had no idea what to do when they got a text.  Also, they used to have what they called an "@home hot spot" where you could set up a T-Mobile wireless router at your house or business, or take it on the road with you, and for $10/mo you got unlimited calling minutes through wifi.  And that was either at home or at your local Starbucks.  Any wifi you could hook into would be a free call.  It was insane I tell you!  In fact, if everyone could talk over wifi you'd essentially have 100% reception at home 100% the time, assuming you had some sort of broadband or internet access.  And this was 8+ years ago! They are way ahead of everyone else in terms of technology. That was because of a very tight relationship with Google.  To give you one idea of being way ahead of their time, and I'm assuming this part since they are German owned, when I would get a call from a colleague in Europe, their actually number would show up on my caller ID.  That's right, a foreign caller # showed up on my BB so I could tell who was calling me no matter where they were calling from or what # it was.  This I remind you was in 1999.  AT&T and Verizon would show up as a blocked caller or unknown number or some other BS error message.  Wouldn't surprise me if even in 2013 this is still the case with these 2 lame ass telecom companies.  To give a second example, I could tether my BB to my laptop and surf the web damn near any place I could find cell service.  Again, this was in 2001, maybe earlier.  I'd get strange looks from people who had no cell signal or wifi available and I was on my laptop surfing away with no issue.

On top of that, T-Mobile, again for $10/mo gave you unlimited minutes to a landline phone to anywhere in NA through on that same router. I still to this day can't figure out why everyone in America didn't do that.  I guess they were too busy drinking the Apple iKoolAid.  My suggestion is to find an unlocked Galaxy S3 and see if it works with T_Mobile.   Perfect combo IMO.

P.S. In case you wonder why you can't get the T-Mobile landline now, they dropped it a while ago...probably due to no one having a F@#$%ing clue about this service so they dropped it for a lack of interest.  I'm not even sure you can talk over wifi anymore....I know of no other American wireless carrier to allow that.  Damn I miss T-Mobile!

Piranhanoia's picture

The phone love thing slays me.  It used to be for talking.  I remember when phone calls to anyone but your girlfriend were one minute affairs, because you needed the time with Sheila.  With a mini screen in the face, most people can't see, walk, talk, ride or drive. They talk any time, any where, are rude as hell and disturb the peace wherever they go.  And most think that is a feature not a bug.  A driver using a cell is a traffic violation in our state, and no body cares.  If the police would ticket the cellphone talkies driving impaired while blind,  our national debt could be vaporised faster than Benny blowing ink jet cartridges.

sink critically's picture

A land line without long distance works for me, under $30/mo and no responsibility to call out-of-town family and friends, ever. (no smiley does this advantage justice)

moneymutt's picture

Seriously?, do you have Internet at home? If so you're nuts to pay $30 a month for no long distance. You could do all kinds of options for next to nothing, free long distance, emails of voice mails, free texting etc

sink critically's picture

When I need to call long distance I just borrow a cell phone. To me cable is for internet only. The advantage is that I can still make local calls when the power is out.

Lokking4AnEdge's picture

excellent article

Thank you

sessinpo's picture

I Concur. Very good article that presents an idea and provides supporting thoughts on that idea.


And I must say, this article wasn't the usual Reggie article that just alluded information to try get subscribers (nothing wrong with that because I understand Reggie is running a business which we should all applaud). Personally I left the standardized phone contract system years ago with trackphone. I don't use my phone for internet, though I can. It's only for calls and texting. I also learned along time ago to limit my associates so I only converse with important people in my life (real family, friends, or co workers). Most of the people in your life are just passing by. Overall, I spend less then $100 year in cell phone service and I have all the capabilities.


Excellent all around post Reggie, Kudos.

Muppet's picture

Sarcasm?   This article is trivial dribble.   Just got an iPhone at Verizon... free of course.   They've been free for a while if you renew for two years.  

sessinpo's picture

Now that has to be sarcasm or total stupidity to be so blatant as to show how you missed one of the huge points of the article in which one does not have to sign one of those standardized contracts for 2 years.

willwork4food's picture

Free? what's your definition of 'free'? They want to charge me $35 for a "free" bi-yearly phone which I can only get online. Aside from the coverage, Im getting less and less impressed with Verizon.

Oh, and I just have a simple old fashion non-smart cell...still $35.

Yen Cross's picture

 Reggie thanks for the update on T-Mobile business restructure. I was going to purchase some Galaxy S3s . The Nexus looks sweet. Processor speeds are only 1ghz with dual core. Most top end phones are 1.4ghz+. I like the 5" screen, and the exportability.

  Eg; the freedom to use the most competitve carrier network, at the best pricing. Best wishes.

 Are these phones able to handle GSM in Australia, for our employees?

All Out Of Bubblegum's picture

I got rid of my SpyPhone and went back to a dumb phone. Fuck Apple, Google and all the other tracking services. 

Widowmaker's picture

Damn right.  Paints a target on you, everywhere you go.  All the apps monetize it and you get fingered.

jo6pac's picture

Thanks fpr the info Reggie I'm going to look into this next week and it looks like I'll buy way out an att contract and get rid of nothing but trouble iphone. In the long run it will be worth every $$$$$$.cent. Thanks the vid.

Rainman's picture

Sorry to tell ya that fixation with electronic instruments is a major contributor to the dysfunction of you humans. Y'all know that, doncha ?

WhiskeyTangoFoxtrot's picture

I don't know about this new sheriff. Something seems . . . off . . .


Praetorian Guard's picture

Sounds like the Solevei bullshit. Have an extended family member trying to pimp the Solevei shit in hopes he will become a "power seller", or whatever the fuck that means, and live the high life. Its called getting off your ass and doing something constructive other than selling a fucking useless service!! ...which is what most Americants don't comprehend. Everyone is about getting rich with little to no effort... shit, what happened to this cuntry...????

rodocostarica's picture

Hey Reggie, I see your points. Any chance you could give us some teaser actionable items here for investment so we can do well and then pay for your service?

What are we supposed to invest in? T-mobile, Google? Give us something cut and dried. Puts, calls, stock etc. Maybe I missed it but lay it out easy for a dumbshit like me.


BooMushroom's picture

Action: switch to t-mobile. How else you gonna make an extra couple grand in an hour at Worst Buy?

Panafrican Funktron Robot's picture

Particular action items are usually behind his subscription firewall.  He's relatively cheap given the quality of his research.  

Ying-Yang's picture

No.. Big Brother loves us all

monad's picture

Schmidt will do no evil, Zuckerberg is a genius, Monsanto has got your back, and Reggie has 3 sheep. So far. I remember when the federal tax on my phone bill was 1/20th what it is now. Don't worry Reggie, they are just shifting hands to get a better grip on your wallet. They'll get it all in the end. 

monad's picture

Reggie loves Big Brother.

csmith's picture

It would make sense Reg IF you were a typical wireless customer, but obviously you're not. Most people use NOWHERE NEAR their data allotments and actually NEED HELP if the phone conks out. Plus T-Mobile's network is about a 3 vs. VZ's 8 on a scale of 1 to 10.

Reggie Middleton's picture

That's because they have tiny screen iPhones without the screen real estate and horsepower to really get busy. As more people use phablets such as the note 2, its almost impossible not to consume a lot of bandwidth. In addition, if they use the wireless device as a replacement for the residential internet access and just watch a few movies, access breaks ten gigs easily.

My Note 2 automatically stores 30,000 pic thumbnails in its cache from Picasa. That's about 6 gigs right there as soon as I get the phone.

Remember, the popular hardware (iPhone) is the source of a lot of limitations because its just not that utilitarian. Look at this...

tango's picture

Reggie, I for one want to thank you for some practical news that can/will actually save us money.  I have extreme doubts about those who say they don't watch TV, go to the movies, use a car, read a paper, never travel, own a phone, hate IPADS, IPODS, MACS, PCS/all things electronic, blah blah blah.  Then I think, of course not, they're on ZH 24 hours a day!  LOL 

Common_Cents22's picture

I got a galaxy note2 a couple months ago, an incredible device.   With all the goodness, the battery will last 2 days.   My tablet is now a bedroom alarm clock.   I just laugh hysterically about iphone users bragging about their extra 1/4" and siri.   Iphones have been surpassed big time in every single way, but many just don't know it yet because they havent tried anything else.   Reminds me of Shamalyans Village movie where the Apple villagers told their kids not to venture out because their are droid boogie men!!!

Anyway, competition is good and Apple will wake up to making much larger competitive devices in the next couple years or they'll be smoked.

Carriers are another matter, again, more competition the better.   In my area in MN, verizon is hands down the best, prob followed by ATT then tmobile/sprint bringin up the rear, but sprint/att are bringing faster networks online in the next yr or so.   I do see the day when something disruptive comes along and carriers will be forced to go to month to month with no contracts.   they better do it before its too late.  I have family members on a shared plan so 3 phones with 6gigs of data a month to share come out to be about 70bucks a month per phone.   It's cheaper to team up with people you know on billing since additional gigs of data are only 10 bucks a month vs. 50-60/month for your first 2 gigs.  

Perhaps there is a good business for entrepreneur to do "co-op" billing for subscribers.

accurate voice and digital pen based input/command/search is incredible and will be a staple in the future now that the tech is good.


akak's picture

My suggestion to you would be to wean yourself off of your apparent all-consuming e-gadget obsession (shared of course by the majority of trend-sucking consumerist sheep) and try to live a real life in the real world away from the obsessive and neurotic need to constantly call or text all of your e-'friends' about all the latest and meaningless minutia of an intellectually and spiritually very empty life.

Those who live their lives around their mass-marketed gadgets are perhaps the most pathetically shallow and sad persons I can imagine.

tango's picture

Why is it obsessive to use modern technology but not to be on ZH all day?    Electronic devices extend our intelligence. It's hard to imagine a life where I can't Google for an address, phone, ball game or movie time, buy cheap things on Ebay or download books on Amazon.   I recently finished closing my father's estate and doing it on-line was so much easier than traipsing back and forth to county court houses and probate.  Sure, you can use a phone book (If you can read it) or visit a ton of store comparing prices but why go to all that extra work when you can google it?  As long as your electronic devices are tools for a better life then it's not a problem.

(We are going the Reggie way, dropping cable and land lines in favor of Netflix, Hulu and cell phones.)

akak's picture


Why is it obsessive to use modern technology but not to be on ZH all day?

Both would be equally obsessive.  And while there have been scattered days when I've been doing work on the computer where I have checked in on ZeroHedge every so often, possibly giving the appearance of hanging out here for hours on end, in fact I have virtually never done so, and in any case I have categorically never lived my life around being online in the same fashion which the modern trend-sucking, gadget-obsessed sheep actually do exactly that on a regular and daily basis with their "latest and greatest" continuous e-gadget fetishism.  It is the very embodiment of shallow, materialistic, short-term, juvenilized modern decadence.

Yen Cross's picture

 No sense in wasting my time. AKAK throtles life!  fuck DeTROIT!

Yen Cross's picture

 I concur. Some of us still use Stamps to make mortgage payments, and aren't sucked into the cloud for data storage.

 Example; I changed my windows administrative password recently, then forgot to write it down. I did do a passwork backup file/j disc on my system. Pulled the disc and put in my backup drawer, and restored easily.  Good luck doing that in the cloud!

williambanzai7's picture

BTW, Picasa sucks. Recommend you switch to Flickr.

monoloco's picture

For calls I just carry a cheap prepaid phone for the country I happen to be in, and an iPod touch for all my music, apps, and Swiss Army stuff. Works for me I can use the iPod for Facetime, Skype, and web browsing wherever there's wifi. I prefer the iPod because there are apps that I use that aren't available for Android.

williambanzai7's picture

There you go. Putting the phone guts into the iPod is what drives the design cost of the iPhone.

kaiserhoff's picture

Nice Reggie, but I'll keep my almost free piece of crap cell phone which only makes calls.

I don't need an electronic Swiss Army knife.

laomei's picture

Unlocked you say? Unfortunately carriers seem to have a policy of only activating their own phones on their networks.  So it might as well be. 

cxl9's picture

Eh? My unlocked iPhone works just fine with T-Mobile (in the United States) and Telcel (in Mexico). Insert SIM and go.

laomei's picture

I speak of course, of the national carriers.  Once you get overseas to a place I call "sanityland", everyone stops caring about the stupid petty games they play in the US.