Comparing the New Frequent Device Upgrade Programs from U.S. Carriers

Discussion in ' News Discussion' started by MacRumors, Jul 18, 2013.

  1. MacRumors macrumors bot


    Apr 12, 2001

    Earlier today, Verizon became the third major U.S. iPhone carrier to announce a program designed to allow customers to upgrade their handsets more frequently. Verizon's "Edge" program, which launches August 25, will join AT&T's "Next" program introduced earlier this week and T-Mobile's "Jump" offering announced last week.

    While the new frequent upgrade plans may seem appealing to some users, The Verge earlier this week highlighted how AT&T's Next program is actually a poor deal for most customers.

    Through the program, customers end up double paying for their devices through both the new monthly handset payments and the portion of the monthly service charge that has traditionally been collected by the carrier to recoup its upfront handset subsidies. Assuming that $20 of AT&T's monthly service fees go toward recouping the carrier's handset subsidy, a customer looking to upgrade after 12 months would have paid $390 in device payments on a 16 GB iPhone 5 and $240 from monthly service fees, yielding total payments of $630 for the $650 device, although they also have to turn in the device to AT&T.

    Verizon's Edge program appears to work in a similar manner, although perhaps with a slightly better deal than at AT&T. Splitting the $650 iPhone cost over 24 months yields monthly payments of just over $27, and thus a customer looking to upgrade after 12 months would have paid $325 in device payments and $240 from monthly service fees, making for total payments of $565 plus the device trade-in.

    Device payments for a 16 GB iPhone 5 owner upgrading after 12 months
    T-Mobile has addressed this issue by completely decoupling handset purchases from service charges, creating lower monthly service fees while moving the device costs into a separate no-interest financing plan. Under T-Mobile's Jump plan, a customer purchasing a 16 GB iPhone 5 with a retail price of $650 and then looking to upgrade after a year would pay the $146 down payment plus $252 in monthly device payments plus $120 in Jump program charges, making for total payments of $518 plus the device trade-in.

    In all cases, customers would seem to be able to save some money by purchasing a contract-free phone upfront for $650 and then reselling it on their own terms whenever they wish to upgrade, almost certainly saving hundreds of dollars in the process. Customers looking to upgrade more frequently than once per year may do somewhat better, but still likely not better than simply purchasing a unsubsidized device directly.

    Article Link: Comparing the New Frequent Device Upgrade Programs from U.S. Carriers
  2. Christian 5G macrumors 6502a

    Christian 5G

    Jun 16, 2010
    Orange County, CA
  3. Alumeenium macrumors regular

    May 15, 2013
    great progress

    but I know where I'll be shopping for my next device

  4. Tknull macrumors regular

    Jun 24, 2011
    San Diego
    Yea... I also plan to move to T Mobile wheny contract is up. Much better pricing. Im just unsure of San Diego coverage
  5. geniusj macrumors regular

    Feb 27, 2004
    Sunnyvale, CA
    Jump also includes insurance, which isn't mentioned here.
  6. macrumors 68000

    May 25, 2012
    Even before this I was switching to tmob but this is good to see. As a dev I always need the latest devices and usually have to buy them outright so this is welcoming.

    Still cheaper to buy outright and sell on cragislist/ebay but good to see.
  7. Four oF NINE macrumors 68000

    Four oF NINE

    Sep 28, 2011
    Hell's Kitchen
    My concern with T-Mo is their coverage areas.
  8. milan03 macrumors 6502


    Jul 16, 2002
    New York City
    Let's not forget that T-Mobiles plans are significant cheaper even after the $20 subsidy is taken off AT&T or Verizon monthly plans.

    Definitely disruptive and game changing force, props to T-Mobile!
  9. darster Suspended

    Aug 25, 2011
    What a ripoff. So now instead of paying $199 for phone and having a contract that includes paying off your phone built into the montly bill, you now pay an additional $27 a month for the phone without your actual phone bill being cut $27. Wow, a double bonus for AT&T and Verizon.
  10. Konrad9 macrumors 6502a

    Feb 23, 2012
    Perhaps you should include the Verizon and AT&T plans without the extra fee but with the cost of the device to make this a more complete comparison?
  11. TallManNY macrumors 601


    Nov 5, 2007
    Does either AT&T or Verizon offer an "off contract" price that is $20 cheaper if you bring them an unlocked phone? I don't see them advertising cheaper rates.

    If they don't, then this chart makes no sense because there is no option to "save" the $240 cost that they are assuming in the chart.

    Also this must be analyzed based on the expected resale value of the phone. I'm confident about resale value for an iPhone 5, but much less so for a GS4 or an HTC One. The right to put either of those android phones back to the carrier at the end of the year for a new phone might be very valuable.
  12. Konrad9 macrumors 6502a

    Feb 23, 2012
    Is this not an optional plan?
  13. Val-kyrie, Jul 18, 2013
    Last edited: Jul 18, 2013

    Val-kyrie macrumors 68000

    Feb 13, 2005
    Summary paragraph says it all. NONE of these plans makes financial sense.
  14. TallManNY macrumors 601


    Nov 5, 2007
    Yes, my GF is using T-Mobile because it is much cheaper and especially once she pays off her iPhone 5. But there are too many dead zones in New York area that she has to drive through. She is going to switch to AT&T.

    But if you mainly just stick around in the city, it is a very cheap option.
  15. bytethese macrumors 68030


    Jun 20, 2007
    These programs make me want to Jump off the Next Edge I come to...
  16. Tiger8 macrumors 68020

    May 23, 2011
    If she wants to keep her current phone, she can use Net10, $45 uses AT&T network
  17. barkomatic macrumors 601

    Aug 8, 2008
    What a ripoff. If you want a new device every year, just buy it at full retail and you'll get it unlocked without extending your contract. Then, the following year you'll get a fully subsidized device.

    I have a feeling that these ripoff plans might end up being the only option someday.
  18. swarmster macrumors 6502a


    Jun 1, 2004
    Why would someone do this at AT&T or Verizon when you could just cancel your plan, pay the ETF, keep your phone, and get a new subsidized handset any time you want?

    The complexity of these hidden phone costs and payment systems are starting to exceed even bank/credit card industry levels.
  19. mgridgaway macrumors 6502


    Feb 25, 2006
    I'm confused why any of these plans are better than just getting a 2-year contract. I paid $250 for my 32GB iPhone 5 (Bestbuy sale in december), and pay $158/month unevenly split between 3 people (lots of grandfathered stuff) on AT&T. My portion is about $46.

    When my contract is up, I'll purchase the latest iPhone on contract, sell my old one on eBay to nearly cover the cost of my old one (I think I paid maybe $10 bucks after selling my iPhone 4 32GB) and soldier on.

    Personally, I don't feel the need to switch carriers on a whim, and buying a new phone every year feels a little absurd. I've had ATT going on 3 years now, and I'm ok with sticking with them until I find a much better deal or AT&T screws me over.
  20. Tubebaum, Jul 18, 2013
    Last edited: Jul 18, 2013

    Tubebaum macrumors member

    Feb 12, 2012
    Whoever wrote the Verge article is completely misinformed. I have purchased both the iPhone 3GS and the iPhone 5 from AT&T at the subsidized price after signing up for a 2-year contract. I have never had a $20 monthly device payment on my bill. The phone price is dropped because you are signing up to be stuck with AT&T for 2 years. That's what subsidized means. Otherwise it would simply be labeled as an installment payment plan. The idea that AT&T has "traditionally" charged for this is completely bogus.

    As user ladeer pointed out I was the misinformed one here, because AT&T does not explicitly list the monthly device payment on bills. They just happen to sneak it in to other services and everything ends up being more expensive for AT&T customers. I personally don't have a texting plan because Google Voice offers texting completely free. It is obvious that offering unlimited texting to 99.99% of their smartphone customers does not cost the company the $20/month they charge for the service.

    For the sake of argument let us assume that the $20 monthly device fee is being completely hidden in the base price you pay simply for your minutes. I have AT&T so I will use their pricing as an example but I'm sure the same applies to your monopolistic carrier. In that case, of the $40/month I pay for my 400 minute plan, $20 is being used to pay for the device. Quite the devilish trick by AT&T but I was completely oblivious to this because they never mentioned it.

    Now here's the funny part. Even once your contract is over (and presumably your $20/month device fee has paid off the rest of the phone), your monthly bill stays the same. You keep paying that $40/month for your 400 minutes. You're essentially forced to keep feeding money into the AT&T phone subsidization scheme even once you should be free of its clutches.

    Now here's the funniest part. If you sign up for AT&T and bring your own unlocked phone, you're paying the same monthly fees as everyone else. You still pay at least $40/month for your minutes just like other people who at least had their phones "subsidized". You're not even secretly paying off your own phone. You're simply paying for other peoples' phones. You get all the monetary headache without any of the payoff. You're getting completely hoodwinked.

    I'm calling AT&T tonight, terminating my contract early and taking my iPhone 5 to T-mobile. Goodbye and good riddance AT&T.
  21. jaykid007 macrumors newbie

    Jun 17, 2009
    Yep, $6.99 for some phones going up to $8.00 soon on verizon for insurance. Iphones are more! They did forget to include that.


    I'm in San diego on tmob lte. The phone is on 4G (HESPA+) most of the time and some areas on LTE. But I just left verizon and was getting 2.5 - 5.00 mps speeds on LTE. Even on 4G with Tmob, I'm getting 5 -8 mps and double digits on LTE. You know when Tmob's 4G are faster than Verizons LTE, something is wrong.
  22. sw1tcher macrumors 68000


    Jan 6, 2004
    This perfectly illustrates why the US govt's denial of the AT&T and TMobile merger was the right decision. If the merger had gone through, we wouldn't be seeing changes and competition like this.

    I'd expect Sprint to offer something similar to compete with these guys soon.
  23. TallManNY macrumors 601


    Nov 5, 2007
    I think folks are making assumptions about resale values of smartphones in a year from now that are unwarranted. The iPhone 5 is nine months old. If you buy one now, do you think its resale value is going to be over $400 a year from now? When the phone will basically be two generations old since iPhone 6 will easily be rummored at that point.

    And with the veritable flood of android phones on the market and coming, I really am skeptical about the resale value of those next year. An excellent condition GS3 is being advertised on ebay right now for $300. I'm also seeing a Verizon 4S 32 GB on ebay that just sold for $297. I'm guessing the trend in smartphone prices is generally downward over the next twelve months.

    I'm not saying this is a good deal. But article is wrong to say that these deals are off by a value of hundreds of dollars.
  24. techwhiz macrumors 6502a

    Feb 22, 2010
    Northern Ca.
    A GS3 is now going for $300 or so on Swappa. So that is 50% of the off contract price, give or take a few bucks.

    But the plans are still a rip. Upgrade every year and get every other phone like this.

    I'm off contract and won't be going back into a contract.
    A subsidized phone ruins my unlimited.
    I save more just by keeping my unlimited.

    It's just a way to sell more devices and not give a break for those who don't get a subsidized device.
  25. TallManNY macrumors 601


    Nov 5, 2007
    Hmm, thanks I will check it out.

    The good thing is that the reason she needs coverage all over is a new job that makes her travel sometimes. And that job will reimburse part of her cell bill.

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