T-Mobile has scrapped the traditional two-year cell phone contract.

T-Mobile’s shift away from subsidized smartphones and standard two-year contracts could be a game-changer for American wireless consumers, but does the scrappy carrier have a good deal for you or mostly for itself?

T-Mobile is and has been America’s fourth largest carrier — the smallest among those offering nationwide home coverage. The provider has lost contract customers for years. T-Mobile’s coverage has been less than great in many areas and it often did not offer the latest and most popular smartphones. After its merger effort with AT&T was shot down by the Department of Justice for anti-competitive reasons, T-Mobile has attempted to remake itself by changing the rules under which most of us buy mobile service.

The biggest change of all is the end of the subsidized phone. For years, cell phone companies have offered free or low-cost phones to customers, earning back that subsidy by charging higher monthly rates and locking customers to two-year contracts with early termination fees. T-Mobile will still give you an affordable phone, only now you will pay it off in small installments over a two-year financing agreement.

What difference does this make? Customers who bounce from one two-year contract to the next may not see much difference. But if you keep your phone longer than two years or buy one elsewhere, your monthly rate with T-Mobile will no longer include an artificially higher price designed to recover the phone subsidy you no longer receive.

It also means nothing traps you with T-Mobile. If after six months you find their service unbecoming, you can leave without hundreds of dollars in termination fees. But customers on financing agreements will continue to make their payments for equipment purchases, and those phones will not be unlocked for use on another carrier until the remaining balance is paid off.

A typical T-Mobile customer looking for the latest iPhone will pay a $100 down payment and then finance the remaining balance, paying $20 a month for 24 months. Your monthly rate will start at $50 a month, which includes unlimited talk and texting, and a 500MB data allowance. If that is insufficient, an extra $10 a month will buy you an extra 2GB of data. If you want unlimited data, that plan is available for an extra $20 a month.

T-Mobile says their plans will save you $1,000 over the life of a two-year contract with AT&T or Verizon. We think they are exaggerating a bit.

Like their competition, T-Mobile is moving away from budget-minded “minute plans” that bundle calling, text and data. Instead, T-Mobile charges at least $50 a month for unlimited talk/text and a small data plan whether you want those features or not.

The Associated Press found that although T-Mobile ends up being the cheapest, the savings over its rivals is closer to $700 on average. The price over two years for a 16-gigabyte iPhone 5 with unlimited calling, unlimited texting and 2.5 gigabytes of data usage per month, excluding taxes, is:

• T-Mobile: $2,020
• AT&T/Verizon: $2,635 (2-3GB data plan)
• Sprint: $2,840 (unlimited data plan included)

Some other things to consider:

• Once your phone is paid off, your ongoing T-Mobile bill will no longer show a phone subsidy payback built into prices charged by other carriers;
• You can pay your phone off early, with no penalty;
• T-Mobile’s 4G network is a mix of HSPA+ and LTE. The more commonly encountered HSPA+ network gets good marks for speed, but a number of densely populated T-Mobile coverage areas surprisingly often default to their older 2G network, which is painfully slow. LTE is only available in about seven cities at the moment, so it is still a rarity;
• T-Mobile’s unlimited service is free from tricks and traps like soft caps and speed throttles. It also performs better than Sprint’s unlimited service on its overloaded 3G and spotty Clearwire 4G WiMAX network. Sprint’s LTE network is on the way… slowly. It seems to be rolling out first in small cities you have never heard of;
• T-Mobile’s coverage in rural and exurban areas is frankly terrible. Travelers on main highways may not encounter many signal gaps, but those living in small towns or off the beaten path may get a roaming signal or poor or no reception from T-Mobile’s own towers at all. The frequencies used for its data service also do not work as well indoors as its larger rivals.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/T-Mobile Ad 4-2-13.flv[/flv]

T-Mobile channels Oprah in this new ad as the big four wireless cowboys get in touch with their feelings. But only one is ready to don a pink hat and ride off on his own. (1 minute)

Residents of some cities north of Dallas are in the unique position of being able to choose between two phone companies and at least one cable operator for television, phone, and broadband service.

AT&T U-verse competes head to head with Verizon’s advanced FiOS fiber to the home service in communities like Allen, Plano, and Frisco, Tex.,  because of franchising agreements that opened to door for both companies to compete in overlapping territories.

The aggressor was Verizon, which took advantage of Texas’ statewide video franchise law to “overbuild” its FiOS fiber operation into AT&T’s landline territory, particularly in affluent Frisco and Allen.

Verizon got interested in the area in 2008 because of the population boom and housing growth in North Texas. It was easy to lay fiber in the large housing developments under construction. When the economy crashed along with the housing market during the Great Recession, Verizon’s investment and interest in expanding FiOS declined. Today, some areas have access to both Verizon FiOS and U-verse from AT&T, as well as at least one cable operator. Other areas, especially in unfinished planned neighborhoods, only have access to only one provider, AT&T.

Verizon’s decision to overbuild and face AT&T was a decision to target investment into some of the richest areas in the Dallas-Ft. Worth Metroplex. Lower income areas often have neither service, as Verizon has focused efforts north of the city and AT&T U-verse is still not available in certain areas of downtown Dallas.

A Financial Times blog post has started a buying frenzy for Vodafone Group Plc on news AT&T and Verizon Communications are about to bid for the British mobile phone giant, despite denials from Verizon it is involved in any deal to acquire the British mobile phone company.

The Times Alphaville blog quotes unnamed sources deemed “usually reliable people” who claim Verizon and AT&T are working together on a blockbuster $245 billion takeover deal for one of the world’s largest wireless carriers. After the story appeared, Vodafone shares were up 6.1 percent.

Verizon is interested in buying out Vodafone’s part ownership in its Verizon Wireless venture and AT&T is looking to overseas markets for future wireless revenue opportunities that are harder to find in the United States.

The sources told the Times they expect the deal will initially merge Vodafone and Verizon into a single entity, but only briefly. Verizon would promptly sell Vodafone’s extensive international assets to AT&T at a premium. Verizon would end up the sole owner of Verizon Wireless, and AT&T would acquire Vodafone’s enormous wireless operations in Europe, Asia, Africa and the Middle East.

Barclays Plc is working on putting together the potential transaction, Alphaville said today.

Informal talks have reportedly been underway between AT&T, Verizon and Vodafone since December according to Bloomberg News. The biggest impediments seem to be among the company’s top executives arguing over who ends up in the leadership and where the combined companies will be located — in the UK or the USA.

Vodafone has been a tolerated partner in Verizon Wireless since 1999 when Bell Atlantic and Vodafone merged their respective mobile ventures into Verizon Wireless. Vodafone has held tightly to their part-ownership of Verizon’s wireless network, which has proven an enormous earner in an American wireless marketplace considered less competitive than in Europe. The talks indicate Verizon is willing to pay a premium price to disconnect the British wireless company from its American operations. Allowing AT&T to help finance the largest wireless takeover in years makes it more likely a deal can be done, assuming regulators on both sides of the Atlantic agree.

Virgin Media is in hot water with a UK advertising regulator after the company’s marketing department borrowed one of the tricks successfully employed in the United States: selling “unlimited broadband” service that actually is not unlimited at all.

Competitors BSkyB and BT jointly complained to the Advertising Standards Authority about misleading ad claims from Virgin Media that promise unlimited broadband, without bothering to clearly mention Virgin uses a “traffic management policy” that slashes speeds in half when a customer downloads more than 11GB during peak usage times.

Virgin defended its advertising, claiming its speed throttle is so infrequently activated that 97.7% of its customers would never encounter it.

But the ASA would have none of that, noting Virgin’s advertising campaign specifically targets customers who lust for faster speed and are engaged in bandwidth intensive activities.

The ad claim: “The faster your broadband speed, the more you’ll be able to do online. So, if there are a few of you at home gaming, downloading, streaming movies and shopping, then mega speeds of up to 100Mbps will let you all do your thing without slowing each other down.”

The tiny fine print.

“In that context we considered that the restriction of reducing users’ download speeds by 50% was not moderate and that any reference to it was likely to contradict, rather than clarify, the claims that the service was ‘unlimited’,” the ASA said. “We therefore concluded that the claim ‘unlimited’ was misleading.”

A Virgin spokesperson explained the “unlimited” in the advertising actually referred to one’s ability to use their account as often as they like without worrying about overlimit fees.

“Unlike BT or Sky, all Virgin Media customers can download as much as they like, safe in the knowledge we’ll never charge them more.”

The ASA itself is not militant adhering to the dictionary definition of “unlimited” either.

The ASA, which previously banned more than two dozen Virgin ads for stretching the truth, ruled this one misleading as well because Virgin Media crossed the line imposing restrictions “that were more than moderate:”

While the claim “no hidden charges” made clear that users would not be charged for downloading or browsing, we considered that the inclusion of the claims “unlimited” and “no caps” implied that there were no other restrictions to the service, regardless of how much data users downloaded and browsed. Virgin Media’s traffic management policy reduced users’ download speeds by 50% if they exceeded certain data thresholds and we considered that this was an immoderate restriction to the advertised “unlimited” service. We therefore concluded that the claim “Unlimited downloads Download and browse as much as you like with no caps and no hidden charges” misleadingly implied that there were no provider-imposed restrictions on a customer’s ability to download data.

“The problem is that the service claims to be unlimited but is too limited,” comments Stop the Cap! reader James, who almost thought this was an April Fools’ prank. “A little limited would be just fine. So if you claim your service is unlimited, consumers should expect it be subject to moderate limitations?”

Virgin has since slightly relaxed its speed throttle; violators now face a 40% speed cut when they are found to be downloading “too much” during peak usage periods.

For UK broadband users, the larger question is why the ASA simply didn’t reach for the dictionary when attempting to define “unlimited.”

“If a broadband provider wants to advertise unlimited service, they should simply offer it,” says Stop the Cap! reader Geoff Peale. “Calling it unlimited while interfering with your speed is nothing short of trickery, and the ASA should know better.”

[flv width=”384″ height=”236″]http://www.phillipdampier.com/video/BBC News Twenty five Virgin Media ads found to be misleading 10-11-12.flv[/flv]

The Advertising Standards Authority (ASA) has banned 25 Virgin Media adverts for being either misleading or factually incorrect in the past 18 months. The BBC’s Watchdog took a humorous look at them to find out why so many are falling afoul of the regulator. (6 minutes)

Thanks to readers James and Geoff for sharing the story.

Scored first place again this year.

Consumer Reports has released its 2013 ratings for broadband service providers, showing independently owned cable companies and fiber optic broadband services from companies large and small deliver the best bang for the buck.

WOW, a small cable operator serving limited areas of the country yet again achieved first place in the ratings, appearing in the May issue. Verizon and Frontier’s FiOS fiber networks rated #2 and #5 respectively. (Frontier acquired its fiber to the home network from Verizon in 2009.)

In general, cable broadband service scored considerably better than telephone company DSL. Wireless broadband did more poorly, with Verizon’s 4G LTE network in 23rd place. Satellite scored worst, with both ViaSat and Hughes among the bottom three.

Verizon’s ongoing speed boosts assure the company of high ratings for its FiOS fiber network.

Mediacom once again took honors as America’s worst cable company. This year, it managed to score even worse than ViaSat, formerly WildBlue. Other bottom dwellers: FairPoint DSL, AT&T DSL, Frontier DSL, Charter Cable and Comcast Cable.

Compared with last year, few companies saw dramatic improvements or declines, despite glowing press releases touting improvements and investment.

Time Warner Cable, which scored 19th last year dropped to 20th place this year.

TDS, an independent phone company, managed a surprising 5th place score last year, despite only giving most of its customers DSL service. This year it is in eighth place.

Cablevision, which faced criticism for an overburdened broadband network last year managed almost no change in ratings this year, despite a measurable improvement in service.

Consumer Reports’ ratings are largely based on customer perceptions shared with the magazine in its annual questionnaire. CenturyLink may have delivered an improved experience for its customers between 2012 and 2013. Last year the phone company was in 18th place. This year it improved to 11th place.