The 'UNcarrier' makes an interesting proposition that puts other carriers to shame and helps its bottom line at the same time
At an event in New York City this week, T-Mobile made its self-described “Boldest moves yet”. Along with new device announcements and touting its LTE network expansion, the biggest change the carrier announced Wednesday was a new device insurance and upgrade system it calls “JUMP!”. With this new system, T-Mobile is again taking straight aim at the other major carriers in the U.S. -- this time focusing on lengthy upgrade periods.
As we described when the service was announced, JUMP! (yes, all caps and with an exclamation point) builds on T-Mobile's existing PHP (Premium Handset Protection) insurance to also offer customers device upgrades twice per year. With JUMP!, customers can buy a handset on an installment plan and twice a year return the working device to T-Mobile, have all remaining payments on the device wiped out and buy a new device on an installment plan as if they were a new customer. The new JUMP! service is just $10 per month, only a couple dollars more than what it previously charged for PHP alone.
Together with its new Equipment Installment Program (EIP) and no-contract plans, JUMP! just let T-Mobile leapfrog the other major carriers in a big way. The magenta carrier is changing the way it takes on equipment upgrades, and it's another push in the right direction that this industry needs.
Verizon, AT&T and Sprint have one-by-one cut down every single early upgrade scheme previously in place that gave users the privilege of re-signing a 2-year contract and getting a new subsidized device -- meaning that no matter which you choose, you're now waiting a full 24 months for a new subsidy. With T-Mobile's new service, they're going in the completely opposite direction to nearly not caring at all when you upgrade. Not only does T-Mobile's new JUMP! service beat the other carriers' upgrade systems, it beats them into a pulp.
With the new service, customers not only have the security of full handset protection, but also the freedom to bump up to a new device twice a year. For users who previously were paying for PHP alone at the rate of about $8 per month, moving up to JUMP! is practically a no-brainer. For an additional $2 per month (for a total of $10), you now have the ability to pay just the down payment on a brand new device, and see no additional changes to your monthly bill.
If you're a phone junkie that wants to upgrade as often as possible, the new plans will save you a considerable amount of money over buying them outright on other carriers. Take the example of buying a high-end phone at an MSRP of $650 every 6 months (buying at start of service, 6 months, 1 year and 18 months) on both T-Mobile and Verizon.
With T-Mobile's new plan, you'll be paying $10 per month for JUMP!, along with $20 installments (typical for that price phone) every month. You'll only be paying $100 each time you "upgrade" though, meaning your total cost of ownership for 4 phones in a 24-month period will be roughly $1,120. On Verizon, for example, you'll only get a subsidized handset every 24 months. You'll pay $650 for the other 3 times you buy a phone, assuming you also buy Verizon's $7 per month handset insurance (to get things apples-to-apples as possible) you'll spend roughly $2,318 in total for the 4 phones over 2 years.
These are rough calculations that will naturally vary based on the price of the devices you're buying, but it's clear that for someone who plans on upgrading frequently, T-Mobile drastically reduces your cost of ownership both up-front and long-term. The carrier is about to make it trivially easy to upgrade a device and not spend half a paycheck doing it.
From T-Mobile's point of view, it is simply making it easier for people to keep spending money on handsets and continue to pay a monthly equipment installment. The carrier is hoping to entice customers away from other "traditional" carriers with a very consumer-friendly upgrade system, but make no mistake that JUMP! is a potentially profitable proposition for T-Mobile as well. Not only does T-Mobile now have the opportunity to get more customers onto a new $10 payment plan potentially for the life of their account, they will also be extending the EIP back out to 24 months with every single upgrade. The carrier also indicates that it plans to create a robust market for the refurbished phones that are returned as part of JUMP!.
But as I've demonstrated above, there are clear advantages to this service for a wide range of customers, not just fringe cases. Just because it's a smart move monetarily from T-Mobile doesn't mean that it isn't also a great value for consumers. The service rewards loyalty to T-Mobile without forcing "loyalty" through a 2-year contract with an early termination fee. And best of all, if the numbers don't work out in your favor given the pricing structure and number of upgrades you plan to make, the $10 payment and JUMP! service -- and EIP overall -- is completely optional.
JUMP! doesn't lock anyone into T-Mobile, but simply gives them fewer reasons to leave. And that's a good thing all around. Other carriers take notice.
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