The U.S. mobile industry has seen an interesting change in the last few weeks. Three of the big four carriers now offer plans that let you upgrade your phone more often than the standard two years. They sure do sound exciting, with names like Edge, Next, and especially JUMP! (with caps and punctuation included in the name, it must be interesting). T-Mobile’s JUMP! sparked quite a bit of buzz, initially, but AT&T’s Next and Verizon’s Edge have both been decried as a bad deal. After all, both plans have you paying based on the full cost of the phone, even though you’re paying the same monthly fee as an on-contract customer. That means you lose $20 in phone subsidy payments every month.
What many tech journalists are forgetting is that these plans aren’t supposed to be cheap compared to taking your upgrade every two years. They’re supposed to make getting additional phones cheaper. T-Mobile’s plan is clearly the cheapest after you include the cost of your service plan, but all three plans save you at least some money if you buy another phone mid-contract on your carrier of choice anyway.
Below are the numbers for an iPhone 5 on all three carriers (a Galaxy S4 carries similar costs). This includes the cost of insurance ($7 per month on all three carriers, but included at no extra cost as part of T-Mobile’s JUMP! plan), but doesn’t include the cost of your service plan, which will be the same on your carrier whether you take one of the new plans or not. Assume you keep your service for two years and return your final phone under the new plans, rather than paying them off and keeping them. The numbers in the table represent a two-year contract or equivalent time frame using 16 GB iPhone 5 pricing and assuming that on the off-contract plans, you turn in your final phone, rather than buy it for the remaining cost. Samsung Galaxy S4 pricing is similar.
If you buy a 16 GB iPhone 5 on contract under the old plans and replace it in a year with a similarly-priced device (say, an iPhone 5S), you pay a total of $1,467.98 on T-Mobile, $1,017.98 on Verizon, and $1,017.98 on AT&T in combined insurance and equipment costs. Compare that with JUMP!, Edge, and Next where you pay $1,035.98, $817.99, and $947.99, respectively. Saving between $70 (AT&T) and $432 (T-Mobile) is nothing to sneer at, especially if you’re going to buy that extra phone anyway. The savings are even bigger if you get a new phone every six months. Only Verizon and T-Mobile offer an option here, but you save $1,012.48 on the former and $1,440.00 on the latter if you’re a frequent upgrader. That means you can effectively upgrade to four new phones for the price of two under the old plans.
Now, there is a cost here. Without JUMP!, Edge, and Next, you would end up owning all of those phones at the end of the process. These new plans have you turning them into the carrier, who can resell them as refurbished devices. That means no holding onto them as a backup or reselling them on eBay. If your goal is to always have the latest device, this is all exciting news.
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