T-Mobile adopts Japan-style installment-based handset purchases

After much rumor on BGR and others, T-Mobile USA unveiled its Even More and Even More Plus cellular plans. Even More is essentially all you can eat voice and texting at $59.99. Having walked through the purchase process, it looks like they’re throwing in free mobile data (for a term TBD) and free shipping too.

The wrinkle with Even More Plus is that the handset subsidy is now paid back on an installment plan, as has been broadly adopted in the Japanese market. There, it had the effect of lowering ARPU, dramatically lowering churn, and improving carrier operating margins. The drop in churn is shown below. A churn rate of 1% means that 12% of customers turn over per year. Note how all operators are at or below 1%, or well below even Verizon Wireless, which has the lowest churn among the US national operators.

Japan wireless churn

Japan’s Q4-2008 ends in March 2009. Softbank instituted such plans in fall 2006 and NTT DoCoMo followed in fall 2007 following guidance from MIC, Japan’s regulatory agency. KDDI followed the following year.

Commentary from CNET, and Engadget.