Sprint Price Cut or Shell Game?
Sprint says “Bring us your Verizon or AT&T bill and we’ll cut your rate in half” for the same service. Whenever a phone company makes you a simple, compelling offer, you’d better read it carefully; then have a lawyer read it too. Let’s unravel the truth in Sprint’s brand-new “half price” offer...
Will Sprint Really Cut Your Bill in Half?
At first glance, it appears that Sprint's Cut Your Bill in Half offer saves new customers 50% off their monthly mobile phone bill. But there are some rather complicated Ifs, Ands, Buts, and Maybes. And one "sort of" too. Your 50% could be 20%, depending on which Sprint executive is speaking.
First, Sprint will reduce only the service portion of your plan: the cost of calling, texting, and data. Whatever line fees you’re paying now will remain the same, as will the taxes and fees.
Additionally, you have to turn in your Verizon or AT&T phone(s) to Sprint, sacrificing their potential resale value and getting no trade-in allowance. (I predict a surge of interest on eBay for broken phones.) On the other hand, Sprint will waive the $36 activation fee, and pay up to $350 worth of your early-termination penalty or remaining installment payments for the device(s) you turn in. But you have to buy new device(s) from Sprint at unsubsidized (no contract) prices.
You can pay for your new list-price device(s) up front, in installments, or using one of Sprint’s new iPhone for Life leasing plans, if you want an iPhone 6 or 6 Plus. I spent 5 minutes trying to understand all the details and options of this plan, and failed. You might want to bring an accountant, as well as an attorney, when discussing this with your friendly local Sprint rep.
T-Mobile customers in the USA are not included in this offer. That’s probably because T-Mobile’s rates are already comparatively low; half of them would be a losing proposition for Sprint.
It's a "Sort Of" Discount
The bottom line is that your savings will be much less than fifty percent of your Verizon or AT&T bill. “They are still probably getting a 20 percent sort of net discount,” CFO Joe Euteneuer said at a Merrill Lynch conference shortly after the new promotion was announced. Publicly-traded telcos do this sort of two-faced tap dance where they woo customers with huge discounts while assuring investors that profits are not going to suffer much. It can be difficult to tell whose leg is being pulled harder.
Euteneuer went on to tell investors that Sprint's Family Share Pack plans, which for the same price double the data allowances of Verizon and ATT plans when customers switch, have been drawing new customers. “The whole idea is to attract people back into our stores,” said Euteneuer, where sales reps can assure potential customers that Sprint’s network quality and coverage really has improved over the past 18 months.
How the sales reps are supposed to do that remains unclear. I looked at some Sprint 3G/4G coverage maps and found that outside of most metro areas, there are gaping holes in coverage. That's especially true West of the Mississippi.
Other financial analysts (remember when phone service didn’t need a financial analyst?) say that the “half off” promotion will be compelling only to customers who are on legacy Verizon and AT&T contracts. Savings on those companies’ newest EIPs (equipment installment plans, e. g., Verizon’s Edge and AT&T’s Next plans) will amount to only $10 to $30 per month depending on the number of lines involved, “and comparable pricing to Sprint's existing Family Share Pack plans.”
BTIG analyst Walter Piecyk opines that Sprint’s half-off promotion “is attractive if an AT&T or Verizon customer was in the market to get new phones for all the users on the account and they were comfortable with the current state of Sprint's network.” I wonder how many people fit that description.
Pain Versus Gain
The bottom line seems to be that you'd need to visit a Sprint store, and go over your account in detail to see if there are any potential savings. You'll need to know what plan you currently have with AT&T or Verizon, how many minutes and how much data is needed monthly, and what phones are currently in use by family members.
Of course there is some pain involved in switching phones, too. You'll need to make sure your contacts, photos, text messages and apps all make the journey from one phone to another. And as I mentioned before, there's the cost of purchasing all those new Sprint phones at unsubsidized prices. The iPhone 6 and Samsung Galaxy S5 both retail for about $650. A family of four would need to cough up $2600 or spread out the cost over 24 months.
Half price, anyone? Your thoughts on this topic are welcome. Post your comment or question below...
This article was posted by Bob Rankin on 9 Dec 2014
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