T-Mobile's New Upgrade Plan Is a Great Deal—and Nobody Will Use It
T-Mobile's just-announced "JUMP"—Just Upgrade My Phone—plan that lets its customers get a new device for just $10 a month would finally get people buying iPhones on the network—if price had anything to do with T-Mobile's problems. Unlike other carriers, which don't let users upgrade their phones until the end (or very close to the end) of their two-year contracts without paying the full retail price (a lot!) for a brand new phone, T-Mobile will now charge an extra $10 a month, which yes, is a good deal. But, it turns out deals aren't the number-one thing people care about when picking their carriers.
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If you work out all the math, T-Mobile's upgrade scheme beats the competition, plus you don't feel locked in by some arbitrary carrier demand, which has its mental benefits. T-Mobile charges $99 for a new iPhone up-front and spreads the rest of the cost in $20 installments over a two-year period. Now, if you choose to swap phones at say, month 12, you ditch those $20 installments for $10 ones and then can get a brand new phone at the cheaper price. Plus, T-Mobile doesn't build the full price of a smartphone into the plan.
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It's cheaper, at least to buy the physical device. Here's the math breakdown: At 12 months on Verizon, you would pay $200 for the original iPhone plus another $650 for the new phone, all the while subsidizing that $200 iPhone. So it's at least $850 just for the phone part, with more expensive plans for the next 12 months. At 12 months on T-Mobile you pay $99 for the phone up front, plus $20 per month, which adds up to $339 for the phone for a year. The new phone then costs $99, plus $30 a month after that ($10 for the upgrade, and $20 a month for the monthly payment). In total, that's $798 for the phone. And, all along, your data, talk, and text plans should cost less, though that's up for debate. At the very least it should feel freer than being locked in for two years.
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T-Mobile, however, has been hawking a cheaper, freer image since April and so far it hasn't worked—because freedom only goes so far on a network with little to no coverage. Overwhelmingly, the commenters in our article about the possible reasons T-Mobile hasn't attracted new customers said they had to leave T-Mobile, despite liking it as a brand, because of its spotty coverage. "I liked T-Mobile but eventually I had to switch to Verizon. Way too many places with no connectivity or where the signal was so weak that the phone was rendered useless," wrote one commenter. Another said: "I like T-Mobile overall, but I can't really recommend them to friends without some major warnings. The coverage is really spotty in some areas."
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During today's announcement, T-Mobile alleviated the issue a bit, expanding its bleak 4G LTE service to 116 markets. But that's still incredibly far behind Verizon and AT&T, which blanket 500 and 300 cities, respectively. Plus, that's just the data network; the phone service is also "poor."
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Despite that remaining big issue, some will undoubtedly appreciate the deal. Most Americans upgrade their cell phones along with the two-year cycle of their plans, because it is financially stupid not to. You paid $200 for the first iPhone, which is only so cheap because two years' worth of a contract makes up for the cost over time. To get the second iPhone early costs another $650 and then you're still subsidizing it with a new contract—even though you paid full price up front.
New iPhone models, however, come out more often than every two years. For anyone who wants to upgrade the iPhone 5 right when it comes out because some tech blog says it's the best, or for people who just need or want a new phone before 24 months are up—for all the various reasons outlined in these new T-Mobile ads featuring former SNL star Bill Hader—T-Mobile's $10 a month option is way more financially doable.
