Frequent Wireless Upgrade Plans Require Customers to Choose Carefully

By Wayne Rash  |  Posted 2013-07-25

Frequent Wireless Upgrade Plans Require Customers to Choose Carefully

Perhaps you remember how things were with wireless carriers back in the mists of time when every company had a two-year contract and cell phones were paid for by subsidies to your plan? You know—back in January 2013. Since then there's been an upheaval in the way wireless companies sell their plans and their phones.

This happened because many users didn't want to wait for two years before they could buy another phone and they didn't want to pay the early termination fees that the phone companies demanded if they got new phone before the two years were up. First, T-Mobile announced that it was doing away with contracts that subsidized phones and instead started selling unlocked phones at a discount. You could buy those phones on an installment plan.

Then T-Mobile introduced Jump, which allowed customers to trade in their phones and upgrade any time they wanted. But, of course, nothing is ever that easy. There are rules with T-Mobile's plan, and we'll talk about those in a minute.

A few days after T-Mobile announced its Jump program, AT&T announced Next. The idea was similar to the plan T-Mobile has, but you can't upgrade your phones as often. A few days after AT&T rolled out Next, Verizon Wireless announced Edge, which is similar to Jump and Next. We haven't heard from Sprint yet, likely because that company has been involved with other things, including fending off a hostile takeover and selling itself to SoftBank.

Since then all three companies have been conducting an advertising war, each one claiming that the other two aren't offering as good a deal as their own. No surprise here. The reality is that each plan has its good points and weak points, and no one plan is right for everyone. The confusion was compounded when T-Mobile took some heat for insisting that it be paid for the phones that customers bought, even if they terminated their T-Mobile contract.

But in fact all three of these frequent-upgrade plans require that you pay for your phones. Again, this is no surprise. These wireless carriers are in the business of selling phones and providing network connectivity for profit, so of course you have to pay for what you agreed to buy.

T-Mobile's plan was the first to be announced and went live on July 14. With T-Mobile's Jump plan you are required to pay $10 per month for the device protection plan, which includes the right to upgrade, but also includes handset protection insurance.

Frequent Wireless Upgrade Plans Require Customers to Choose Carefully

There's also a down payment on most devices, which varies according to the device. You pay T-Mobile's standard monthly plan prices. The T-Mobile plan lets you upgrade as often as twice a year.

AT&T's plan lets you get an upgrade once a year. There's no monthly charge, and the handset protection coverage isn't required although it's encouraged. As is the case with T-Mobile, you're not required to stay with AT&T. But if you leave, you have to pay whatever cost is remaining on your phone. You pay AT&T's standard monthly rates for your service. AT&T's Next plan will be available on July 26.

The Verizon Wireless Edge plan lets you upgrade as often as every six months. Like AT&T, there's no extra monthly charge, and there's no down payment. Unlike AT&T and T-Mobile, you don't have to pay for the remainder of the retail cost of your phone if you leave Verizon, but you do still have to pay off the monthly hardware cost until that's paid off. Verizon initially said there would be a $1.50 per month finance charge. However, on July 29 the company disclosed that it decided not to levy the finance charge. The Verizon program starts on Aug. 25, according to Verizon Wireless spokesperson Melanie Ortel.

With all of these frequent upgrade plans, you have to return your existing phone to the company when you upgrade, and half the cost of the phone has to have been paid, which may mean that you'll have to come up with some extra cash if you do, indeed, choose to upgrade before you hit that halfway point.

"This is a plan that's intended for the person who wants to get a new device every year, said Mark Siegel, AT&T's executive director for media relations. There's no deposit, no finance charges, no activation, no upgrade fee. There's no fee to be in the program and no early termination fee."

Siegel said that with the AT&T plan the phones are paid off in 20 months. But Siegel also noted that the Next plan isn't for everyone. "Look at the kind of user you are," Siegel said, noting that there are a lot of users that don't want to trade phones frequently and would prefer the traditional two-year contract. Or they may prefer to bring an unlocked phone to AT&T and buy a Subscriber Identity Module (SIM) card for a month-to-month plan.

It's worth noting that each company has a wide range of plans, and that no one company has a lock on having the cheapest or best deal. What matters most is to match your wireless plan to how you actually use a phone.

Editor's Note: This article has been updated to reflect Verizon's decision not to charge a $1.50 finance charge on the balance that customers owe on their mobile phones if they leave Verizon's service before the end of their service plans.

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