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

[KdParker]

When you put the numbers out like that, just seems simpler to buy unlocked and then sell when you want to upgrade.

you could easily get back 200 and reduce cost of phone to around 400 per year.

 

[chrmjenkins]

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.

To fairly compare, I think you should look at the resale value when the new phone is launched. A 16GB 5 in great condition with all included accessories and a good description and pictures will still go for 400 on ebay when the 5S hits. You get hit by about 12% in ebay and paypal fees, though.

 

[PatriotInvasion]

This post fails to recognize that even if you pay full retail of $650 for a new iPhone, you STILL are paying the inflated $20/month in service charges for a subsidy that never happened. So you must tack on the $240 "Device portion of monthly fees" which makes buying outright more like $890.

While you can then sell your phone after 12 months, you still take a hit on the depreciated value of the old phone. Say you sell it for $350 on Craigslist, your net cost is $540 for the year. So when you look at it this way, the Next program isn't as bad as it seems. Remember, you are paying a bit for the convenience to finance the phone interest free and the ability to upgrade at $0/down without having to worry about selling your old phone. Convenience has a price people. It's up to you.

 

[autrefois]

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.

Edge, Next, Jump.

When I have to spend a lot of money for an upgrade, those aren't the four-letter words that come to mind...

 

[Zoboomafoo]

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.

i agree these things are getting super complex.

But, canceling my plan would mean i wouldn't get unlimited data, lose all my discounts and have to buy more minutes than i need.

----------

This post fails to recognize that even if you pay full retail of $650 for a new iPhone, you STILL are paying the inflated $20/month in service charges for a subsidy that never happened. So you must tack on the $240 "Device portion of monthly fees" which makes buying outright more like $890.

While you can then sell your phone after 12 months, you still take a hit on the depreciated value of the old phone. Say you sell it for $350 on Craigslist, your net cost is $540 for the year. So when you look at it this way, the Next program isn't as bad as it seems. Remember, you are paying a bit for the convenience to finance the phone interest free and the ability to upgrade at $0/down without having to worry about selling your old phone. Convenience has a price people. It's up to you.

Can you point this out somewhere? That can't be right. It'd be like Comcast deciding that I should pay them 300 bucks if i buy a new TV. (Please don't read this comcast and get any ideas...)

 

[Lancetx]

This post fails to recognize that even if you pay full retail of $650 for a new iPhone, you STILL are paying the inflated $20/month in service charges for a subsidy that never happened. So you must tack on the $240 "Device portion of monthly fees" which makes buying outright more like $890.

You're correct if you go with either AT&T or Verizon. However with T-Mobile that is not the case, so that's precisely why I'm going to buy the unlocked 5S direct from Apple and switch to T-Mobile this fall.

 

[jclardy]

This doesn't factor in Verizon/AT&T's ~$20 higher base price to cover subsidizing phones (Even if you don't buy a phone on contract.)

With that T-Mobile wins by a landslide.

I have a prepaid t-mobile sim that I have been trying out. Service seems adequate along the east coast, but it will be difficult giving up LTE.

 

[boccabella]

The carriers do not charge a monthly fee to recoup the cost of your discounted phone, you're getting the discount in exchange for signing a two-year contract. That's why you'll pay the same monthly rate even if you bring your own phone.

 

[geniusj]

Love T-Mobile but there's no coverage! I'm not talking LTE, I'm talking basic coverage. Within the suburbs there's literally nothing, even within 50 miles of New York City.

I feel for you in NY. Whenever I take my phone to Westchester, the service is abysmal for T-Mobile. I'm not sure why it's so awful there, I assume there must be difficulty building new towers because AT&T doesn't seem to be that great either (Verizon is king there it seems.)

Here in the SF bay area though, the coverage is definitely comparable to everyone else. YMMV

 

[Tiger8]

When you put the numbers out like that, just seems simpler to buy unlocked and then sell when you want to upgrade.

you could easily get back 200 and reduce cost of phone to around 400 per year.

Correct. Common sense my friend. Sometimes the best options are the simplest!

 

[geniusj]

The carriers do not charge a monthly fee to recoup the cost of your discounted phone, you're getting the discount in exchange for signing a two-year contract. That's why you'll pay the same monthly rate even if you bring your own phone.

They do, it's just built-in; it's not itemized on the bill. The two year contract is required in order to recoup the subsidy they gave you up front. $20x24 months = $480, which is roughly the max subsidy you'll get on a two year plan.

When T-Mobile launched a contract-free subsidy-free post-paid plan ("Even More Plus") a few years ago, it exposed the details of this common practice because that plan was $20 cheaper than the equivalent plan that included a subsidy+contract.

It's actually even worse than an installment plan, because they'll continue to charge that extra $$ on your plan even after they've recouped your device cost. They'll also charge you that extra $$ if you bring your own device.

 

[AngryChim]

As a consumer who make $9/hour, I'm glad these carriers have the guts to pull such strategic to rip off more rich fools so they can create more and better pay jobs.

Regards,

 

[Tiger8]

The carriers do not charge a monthly fee to recoup the cost of your discounted phone, you're getting the discount in exchange for signing a two-year contract. That's why you'll pay the same monthly rate even if you bring your own phone.

That's what they want you to believe, but the subsidy is BUILT IN your phone plan, especially the data portion

 

[TallManNY]

To fairly compare, I think you should look at the resale value when the new phone is launched. A 16GB 5 in great condition with all included accessories and a good description and pictures will still go for 400 on ebay when the 5S hits. You get hit by about 12% in ebay and paypal fees, though.

I think we can only look at the current plan as it applies to current phones. We don't know what the terms will be for the 5S when it comes out. And this plan was not available when the 5 was launched. So we can only compare this plan to current off contract options. The 16 GB iPhone 5 is $650 now from Apple. I doubt you will be able to sell it for $300 12 months from now unless you kept it in an otterbox and kept all the packaging and material in good condition.

These aren't great plans, but they aren't the total rip offs that folks are saying they are.

----------

That's what they want you to believe, but the subsidy is BUILT IN your phone plan, especially the data portion

But you don't have any option to avoid the subsidy, right? If you want pure AT&T or Verizon service you must pay their plans, which "includes" the subsidy price regardless of if you are being subsidized or not.

 

[T-Will]

Jump also includes insurance, which isn't mentioned here.

What many people don't realize is a lot of homeowner's insurance policies already cover mobile devices and computers for a very small premium and deductible.

 

[KdParker]

As a consumer who make $9/hour, I'm glad these carriers have the guts to pull such strategic to rip off more rich fools so they can create more and better pay jobs.

Regards,

Not srue what you mean? They are still ripping you off too if you use a cell phone.

 

[chrmjenkins]

I think we can only look at the current plan as it applies to current phones. We don't know what the terms will be for the 5S when it comes out. And this plan was not available when the 5 was launched. So we can only compare this plan to current off contract options. The 16 GB iPhone 5 is $650 now from Apple. I doubt you will be able to sell it for $300 12 months from now unless you kept it in an otterbox and kept all the packaging and material in good condition.

These aren't great plans, but they aren't the total rip offs that folks are saying they are.

You can compare it to what it looks like now, but it wouldn't be in the best interest of the consumer to use it now. So, I think it's only fair to compare optimal to optimal.

I sold a 32GB 4S for $416 on October 26th, 2012, over a month after the 5 released. I'm confident in my estimates.

 

[freediverdude]

These programs make me want to Jump off the Next Edge I come to...

I see what you did there.

 

[chalmers4three]

That's what they want you to believe, but the subsidy is BUILT IN your phone plan, especially the data portion

Again, this is flat out wrong! Show me somewhere where this is stated by the carrier. It's easy to make wild statements without supported evidence.....watch: the $20 subsidy actually went up to $25 when AT&T launched the mobile share plans!!!!!

The $130 you pay per month on the 4gb data share plan is for the SERVICE and has nothing to do with the phone. Just because you and others think there is a hidden subsidy does not make it true and should not factor into the discussion. You pay extra for AT&T and Verizon because they have a superior network and that costs money!!!

Even if I gave you the benefit of the doubt and said the big two did take possible phone subsidies into consideration when they priced out their plans then you would be kidding yourself if you didn't think t-mobile did that as well!

You t-mobile folks get so upset when other carriers come out with other options why don't you just stick with your crappy coverage and quit crying. It almost seems like you are looking for a reason to jump but because the big two won't stoop to t-mobiles level youre always disappointed!

 

[AngryChim]

Not srue what you mean? They are still ripping you off too if you use a cell phone.

Only rich fools would JUMP NEXT to such sharp EDGE. They can't rip me off since I use Craigslist as my upgrade program.

 

[ladeer]

anyone who has taken an introductory economic course can tell you that there is no such thing as "Free Lunch." apple charges $650 for the cheapest iPhone 5, so that must come from you the consumer somehow, may it be paying it up front unsubsidized and factory unlocked, OR paying MORE over longer period of time. All these programs are all different appearances of the same thing: charging you MORE money because you are unwilling to fork over $650 up front.
In behavior finance, this is a common exploitation of consumer weakness. Consumers tend to think short-term and pay overall more Net Prevent Value of $.

For example, instead of paying $1000 one time, they rather pay $110 over 10 monthly payments. With a risk-free market interest rate of 5%, the company basically "lends out $500 for 10 months and made $100 in interest!" ($500 because there is a linear repayment for the principal balance so essentially half of the $1000 was paid back by 5th month, etc.)

 

[3rdiguy]

I'm on Verizon and wonder will this kill my unlimited data? If so, I'll stick with paying full price.

 

[ladeer]

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.

no, ATT definitely charges you more every month to subsidize your device. It is not explicitly listed, because they built it into their entire pricing model. They as a company buy devices in bulk from Apple, and they MUST pay Apple back. They didn't buy those devices at $199. They paid at least $500. They must somehow pay the difference and the difference must come from you. Therefore, they make the rate plan expensive as it is, charges you $20 for unlimited text, etc. While you don't know exactly where, they certainly built that into their price. Sure, if you bring your own phone, you still have to be stuck w/ their expensive plans because all plans have built in subsidy for cheaper phone. Why do you think in countries where phones are not subsidized, monthly plans are usually $6/month or less? (e.g. Taiwan.)

 

[trife]

I'm so glad I live in an area that has excellent TMO reception. LTE is super quick and the only time I drop a call is when I'm going over some of the mountains here.

If I didn't already have Applecare+, I'd definitely take advantage of the JUMP program. If you're already paying for monthly insurance, enrolling is a no-brainer.

 

[The Robot Cow]

So we get to pay about $30/month to get a new phone if we can not officially upgrade. It does not extend our contract. This makes is easier to buy a phone at full retail. I think people are just making this a much bigger deal than what it is.

If price is such a big deal then go over to a budget carrier and save money.