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T-Mobile executive: Key to fixing industry is removing device subsidies

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As mobile devices become more powerful, prices continue to fall. And while consumers now have more computing power in the palm of their hands than ever before, T-Mobile Chief Marketing Officer Cole Brodman said that the way carriers subsidize devices is hurting the industry.

“It actually distorts what devices actually cost and it causes OEMs, carriers — everybody to compete on different playing fields,” said Brodman, speaking at the GeekWire Summit in Seattle. “And I think it is really difficult, especially from a consumer perspective, because it causes consumers to devalue completely the hardware they are using…. It is amazing hardware, but it has become kind of throw away. So, it is unfortunate, you’ve got dual-core, multiprocessor devices with amazing HD screens that get thrown away at 18 months.”

Brodman added that if he were “king for a day” he would wave his wand and wipe out those subsidies, to which fellow panelist Mike McSherry of Swype quipped: “You are one of four kings in the country to do that, right?”

Cole Brodman, CMO of T-Mobile, Jon Irwin, President of Rhapsody, Mike McSherry, CEO of Swype, and David Bluhm, CEO of Z2Live at the GeekWire Summit (© Karen Ducey 2012)

Brodman countered: “It’s hard when the other three don’t want to play along. It becomes difficult because consumers vote with their pocketbooks, and they will almost always pick a low device price oftentimes over a low rate plan price or a bundled rate plan price. We’ve experimented with that model more than anyone in the country.”

Brodman also was asked by GeekWire’s Todd Bishop whether the company — the only major carrier not carrying the iPhone — can survive without the popular device in its arsenal.

“Yes we can. We have fantastic alternate choices,” said Brodman, citing its lineup of Android, Windows Phone and BlackBerry phones. ”And I think those devices — whether it is through the app experiences, through the network experiences or through the devices themselves — do things that rival the iPhone — and in many cases — do them better than the iPhone. So, I absolutely think we can be successful.”

He added: “I don’t think it is healthy, frankly, for there to be kind of a one OS industry dominance. And that’s why I think it is going to behoove us all to watch Windows and hopefully the application ecosystem will follow, and I think that will really help the overall industry balance.”

Other GeekWire Summit coverage: Q&A: Ray Ozzie on startups, Microsoft, and what he’s dreaming up next…GeekWire Summit: How to stay innovative in a world of technological change… Mobile vets: Windows Phone is great, but it has a long way to go to catch Apple and Android

Here’s the entire discussion, which also features Rhapsody president Jon Irwin; Z2Live CEO David Bluhm; and Swype CEO Mike McSherry. The panelists start the discussion talking about the release of the new iPad.