A New Phone Every Six Months?
T-Mobile disrupted the mobile communications market earlier this year with its 'no-contract' offering. Now, T-Mobile is upping its game with 'Jump!' -- allowing customers to upgrade phones every six months. Read on to see how the no-contract, frequent-upgrade paradigm works, and how AT&T and Verizon are responding to this move...
T-Mobile's Jump: "Just Upgrade My Phone!"
Yes, that's what T-Mobile's new Jump! program promises. In 2013, T-Mobile has been changing the way that mobile phones are purchased. And the Big Boys, Verizon and AT&T, find themselves playing catch up. A few months ago, I wrote about T-Mobile's “no-contract” offering. Their latest move is the option to Jump! to a new phone twice yearly.
And apparently, this new business model is popular with customers; AT&T and Verizon have launched similar offerings in the month of July. Let's take a look at how these three carriers compare.
Traditionally, carriers have sold phones at heavily subsidized low prices, and recovered the cost of the devices through higher monthly payments on service plans that lock customers into two-year contracts. That option is still available to those who want it. Note that if you keep the same phone and carrier more than two years, you end up paying more than retail price for the phone. Also, smartphones depreciate rapidly and are worth a lot less than retail price after two years.
The new paradigm charges full retail price for the phone, but allows customers to spread most of that cost out over 20 to 24 months. There is no service contract. Customers are free to pay the remaining balance due on a phone and switch carriers at any time. Also, customers can trade in their phones for newer models after 6 or 12 months. The new monthly payment for the new phone depends on what model you choose. So you can have the latest phone and the freedom to switch carriers whenever you wish.
Frequent Upgrade Programs Compared
That’s the feel-good part. Of course, each carrier throws in its own wrinkles to ensure that it doesn’t lose any money. Here is a comparison of the three programs using a Galaxy S4 phone as an example and the best-priced service option I could find.
The T-Mobile Jump program requires a $150 down payment on a smartphone, with the rest of the hardware balance spread out over 24 months; for a Galaxy S4, the monthly hardware payment is $20. There’s also a $10 up-front charge for a SIM card. On top of that, there’s a $10 monthly charge for being in the Jump program; that includes insurance against loss, theft, or damage. But really, you’re paying $10/month to insure T-Mobile’s property, because the phone isn’t yours until it’s fully paid off. Your $10/month buys you the privilege of upgrading to a newer phone after 6 months – provided at least 50 percent of your current phone’s price is paid off. You can pay a lump sum at the time of trade-in to meet the 50 percent requirement.
The best price for T-Mobile service is $60/month for unlimited text and voice, plus a 2GB monthly data allowance. So the least you’ll pay for a Galaxy S4 and T-Mobile service for 6 months is $670. The first month will cost $220 including the down payment, Jump fee, and service. After that, you monthly bill will be $90: $60 for service, $20 towards the phone, and $10 Jump fee/insurance.
AT&T Next does not require a down payment, “insurance,” or SIM card fee. Its retail price for a Galaxy S4 is the same as T-Mobile’s but you have only 20 months to pay it off instead of 24; so you monthly hardware cost is $32. AT&T’s best service price is a Mobile Share plan for $85/month including unlimited talk and text, plus 1GB of data. Total cost every month is $117 or $702 after six months. However, you can’t trade in the phone until after twelve months. You will have paid more than 50 percent of the phone’s price by then.
Verizon’s Edge program, available starting August 25, requires no down payment, “insurance,” or SIM card fee. Like T-Mobile, Verizon spreads payment out over 24 months; its Galaxy S4 price is $650 or approximately $27/month. You can upgrade after six months if more than 50 percent of your current phone’s price is paid. Verizon’s best service price is a Share Everything plan at $70/month; it includes unlimited talk/text and 2GB of data. The six-month total cost is $582.
I love technology and gadgets, and I agree that two years is too long to wait for a new phone. But I do wonder if I'd want a new smartphone as often as twice a year. Each new device has a learning curve. It takes a while to learn the interface, customize the settings, play with the new features, and download the apps that make it uniquely yours. I've had a Samsung Galaxy S3 for five months, and I don't foresee giving it up any time soon.
So there you have it: more options, more flexibility, and more choices to make. Will you jump on T-Mobile's new offering, see what's next with AT&T or stay on the bleeding edge of mobile tech with Verizon? Feel free to post your comment or question below...
This article was posted by Bob Rankin on 19 Jul 2013
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