So, T-Mobile launches Jump! on July 14th, and then a few days later AT&T unveils its Next upgrade plan (to launch July 26th). AT&T’s tag line for Next is: “Technology doesn't wait. Neither should you.” (Funny, AT&T thought in June we should all have to wait an additional 4 months.)
However, as many of the industry pundits have pointed out, these new installment programs offer different options for consumers. Here is a comparison:
So, yes, AT&T has been criticized for basically giving the customers the option to pay full price for the device (upwards of $650) over time but then also charging them the higher service plan rates that other customers get when the carrier subsidizes the device. While it can be said that AT&T will offer better coverage and more services for the higher monthly rates, this new plan may appeal to those users who want a phone for under a 12-month period. AT&T also has no MRC for Next or a down payment requirement on the phone; Next is offered for tablets as well.
(Note: Compass Intelligence primary research shows about 12% of mobile users upgrade every 12 months or less. Specifically, about 10% of users upgrade at around 12 months and 2% said at 6 months or less.)
T-Mobile’s plan is slightly different in that you must pay $10 per month and an upfront down payment; however, the carrier includes its Total Equipment Protection plan with Jump! and offers lower monthly rates with no contract. Finally, T-Mobile customers who choose Jump! only have to wait 6 months to be able to upgrade, albeit they also have to turn in the old smartphone in working order.
(Note: Customers most prefer lower monthly rates over discounted phones and the flexibility of no contract over discounted phones, according to Compass Intelligence primary research.)
Not to be out done, Verizon is rumored to be coming out with its Edge program. Verizon’s program will supposedly allow customers to trade in their phones once they've paid off 50% of the purchase price. Perhaps a new upgrade plan will boost what are rumored to be weak iPhone sales for Verizon as well.
Something else to think about is the naivety of the consumer today. They want the newest, brightest toy out there even when their wallets might say “no.” Also, customers will have to pay for that device whether they are paying high MRC fees for the service or finishing out paying the installments for that upgrade equipment plan. Will this be a situation where consumers will face another huge credit problem? The Register offered this biting account of the new plans: “Should you choose to play along, that two-year wait for a new device will be consigned to the dustbin of history, and carriers will have a lot of trade-ins to recondition and offer to smartphone and tablet newbies at more affordable prices, subsidized in part by fanbois and fandroids who want the latest shiny-shiny in their pocket or purse.”
Finally, these plans -- while they do require a used phone trade-in and may increase the device recycling rates -- are really not eco-focused or provide any type of incentive to lengthen a device’s life-cycle. What they do set out to accomplish is to ease the subsidy burden on the carrier—the proverbial thorn in their side for many years. And, these programs are great for the fast movers i.e., those customers who need the newest devices at launch; they can acquire them now at a lower penalty. Finally, we’ll have to wait and see if Sprint (newly-acquired by Softbank and who just launched an unlimited plan for life) joins in or does something unique that not only helps the company’s bottom line, but offers consumers a simple, fair value and promotes (what it has long valued) responsible device reuse and recycling.
For more information about the wireless industry, device reuse and recycling and services offered by Bamboo Mobile (and Compass Intelligence, please contact Kate at email@example.com