Is now the time for iPhone users to "JUMP" onto T-Mobile?
iPhone users, T-Mobile wants your business and they don't want to make you wait to buy a new iPhone. At a press conference earlier this week, they introduced a new program called JUMP that frees you from the tyranny of waiting to upgrade your phone every two years. Is it worth the money? Let's take a look.
It wasn't that long ago that iPhone users in the United States had only one option for a cell service provider: AT&T. That changed in 2011 when Verizon began selling the iPhone, and since then the iPhone has made its way to Sprint, and, starting earlier this year, T-Mobile. You can even get unsubsidized iPhones through a host of pay-as-you virtual network operators like Sprint-owned Virgin Mobile and Tracfone-owned Straight Talk Wireless.
T-Mobile CEO John Legere is openly hostile to his competitors. "We are going to redefine a stupid, broken and arrogant industry," he told reporters gathered at a press conference in New York City earlier this week. He says that two years, or 730 days, is too long for customers to wait, "watching new phones come out that you cannot have."
T-Mobile's latest effort to address that problem is JUMP, which enables customers to upgrade their phones up to twice per year, if they so wish. There are no upgrade fees, and you don't have to renew an annual service contract when you get a new phone. Sound too good to be true? Well, there are some catches, but it may work out in your favor.
Ever since the feds rejected T-Mobile's planned merger with AT&T Wireless, the company has strived to reinvent itself (and keep itself alive in an incredibly competitive market). The company seems to be hitting its stride by positioning itself as the sane alternative to an increasingly insane U.S. mobile marketplace that seems bound and determined to drain every last cent out of American consumers. The company calls its plan the "UnCarrier."
T-Mobile's already done away with two-year contracts that lock customers into forced loyalty unless they want to pay out big early termination fees; the company has simultaneously done away with phone subsidization programs that bury the cost of an iPhone or other high-end smartphone in monthly fees that end up costing you significant multiples of the phone's full retail value.
And, depending on your needs, you may end up paying significantly less for T-Mobile service than for AT&T and Verizon. The family plan my wife and I shared on AT&T cost us north of $200 per month for two lines. A comparable plan through T-Mobile is $120. That's a huge savings for families on a budget.
The new JUMP program, which Legere said stands for "Just Upgrade My Phone," charges customers a $10 fee each month. After six months, customers are able to upgrade to a new phone without incurring additional fees. To that end, Legere said JUMP compares favorably to T-Mobile competitors' insurance plans, which charge as much or more.
Does the math work in your favor?
If you're interested in the JUMP program, there are a few things you should be aware of. For example, if there's a problem with your existing phone, you are going to have to pay a deductible. On the iPhone 5, that deductible is a hefty $175.
In fairness, even Apple's AppleCare+ program for iPhones incurs a (significantly lower) deductible, so this shouldn't be entirely unexpected. But still, it's a fee that may not be obvious to some people eying the new JUMP program.
Upgrading every six months may sound like a great plan, but if you're forsworn to one phone or phone operating system - let's say iPhone and iOS - you may find your choices for upgrading every six months are a bit lacking. Apple, for example, tracks (typically) an annual upgrade cycle for its phones - so you'll be out $120 instead of $60 before you will have a reason to upgrade.
To buy a 16 GB iPhone 5 through T-Mobile, you have to pay about $150 up front. Let's assume you keep it in good shape so you don't end up getting dinged with a deductible after six months. Let's also assume that Apple will produce a new iPhone model this year that will be compelling enough to make you want to upgrade. If you buy an iPhone through T-Mobile today, you'll be eligible to upgrade by the end of January, 2014. That means $150 down, plus about $20 a month in installment payments (unless you buy the phone up front for $650), plus $10 a month for the JUMP program.
That's a total of $330 - more than half of the full retail price of an unlocked iPhone 5 purchased directly from Apple - with nothing to show for it at the end. Just like leasing a car, you've been making payments, but you're essentially turning the keys back over the dealer and driving off the lot with a new car.
This makes the JUMP program a little less appealing for me. Like a lot of you, I expect, my household has in place a "trickle down" program. I have a wife and three kids, and it's pretty routine for us to hand down well-maintained electronics to each other as we upgrade. That's how my kids have ended up with Macs and iPads, and how my wife upgraded from an iPhone 3GS to an iPhone 4 when I got my iPhone 5. Obviously, your mileage may vary.
Then what happens in 2014? Will Apple wait until October to produce another new phone? You may end up paying considerably more than $60 in JUMP fees to find out. If you have to wait a year to upgrade, you've paid out more than $500 - much closer to the full retail value of the phone. The difference is you've done it in a down payment and easier-to-handle $30 monthly payments ($20 in phone installment charges, $10 for JUMP) than paying for the phone upfront. If your cashflow is an issue, this may be a palatable alternative.
Of course, this assumes that you're brand-loyal to Apple products. Maybe in six months a new Android or Windows phone will catch your eye, and you'll want to give that a try. But if you're locked to Apple's upgrade cycle (and I presume many of you reading iMore.com are), I think I've made my point - $10 a month doesn't sound like much, but it adds up when you factor in the down payment on the phone and the installation payments.
You only have two weeks from the date of activating your phone with one of T-Mobile's "Equipment Installment Plans" to enroll in the JUMP program. Otherwise, you're ineligible.
Also, if you're currently a T-Mobile customer and you want to get on board with the JUMP plan, there's a limited window. So give T-Mobile a call or stop in to a T-Mobile store to get the ball rolling as soon as you can.
The phone is only as good as the network it's on
There's also the question of T-Mobile's coverage. Legere pointed out during the press conference that T-Mobile is aggressively increasing its LTE footprint - it's now providing LTE service to 116 cities around the U.S. That's way behind Verizon, and behind AT&T as well.
I've previously written about my experience getting a plain-vanilla unlocked GSM iPhone 5 to work on T-Mobile's network. There are some caveats there which I'd encourage you to read about, especially if you have a recently-unlocked iPhone 5 and you're considering switching.
But if you're in an urban area serviced by T-Mobile's LTE network, you're probably pretty happy with it. When I've gone into Boston, New York or San Francisco, I've been consistently impressed with the speed and quality of service. But if you're in an outlying area, you're going to run into trouble.
Not only is T-Mobile lagging behind AT&T and Verizon in its LTE deployment, but the company is still in the process of "refarming" its older, slower 2G PCS network to much faster 4G HSPA+ service. That effort involves installing new equipment on T-Mobile towers, running new fiber optic networking cable, and upgrading software. And T-Mobile is only reallocating part of its wireless spectrum - specifically, some of its 1900 MHz frequency.
What does that mean in practical terms for iPhone 5 users? If you're not in an area that's densely serviced by T-Mobile towers, you're going to see your iPhone drop into EDGE (2G) service frequently. When your iPhone 5 is on 2G, it makes almost any sort of data use (e-mail, Web, or any sort of social media connection) on the phone all but useless. Phone calls still work, though, for those of you dinosaurs who still use your phone to actually talk to people.
What's more, that 1900 MHz frequency used for that 4G communication is notoriously unreliable inside of buildings and other structures. I've been increasingly infuriated with my iPhone 5's inability to make and receive calls when I walk inside. If I didn't have such a chip on my shoulder about dealing with AT&T, I'd switch. Only my utter contempt and loathing of AT&T is keeping me loyal to T-Mobile at the moment, not T-Mobile's coverage.
T-Mobile has been on a spending spree of late - most recently the company acquired pay-as-you-go carrier MetroPCS. That acquisition and others will help T-Mobile expand its LTE and HSPA+ footprints and dramatically increase bandwidth in areas already serviced by LTE - T-Mobile customers in Las Vegas have seen LTE speeds double following the MetroPCS acquisition, for example. But T-Mobile's buildout and modernization can't possibly come fast enough for some customers like me who are stuck with really mediocre, spotty service.
So is it worth it?
You should sit down with the numbers yourself and figure out if the JUMP program is right for you. But before you switch to T-Mobile, take a long, hard look at the interactive service map on the company's Web site, and understand that if you're not in one of the darker green areas on their map, you're likely going to be frustrated while their service. At least until T-Mobile's buildout and refarming effort is further along than it is now.
Ultimately, T-Mobile is trying to address a few different challenges with JUMP. First of all, JUMP helps the company to continue to differentiate itself from Verizon, AT&T and Sprint, which are creating resentment by trying whatever they can to reduce "churn," the term they use to describe customers who switch to other service providers.
Secondly, many American consumers are spoiled and sadly innumerate. They think that the cost of a feature-rich smartphone should be around $200, because that's what they pay when they agree to a long-term contract with a cell service provider. But smartphones cost a lot more than that, and just some basic arithmetic tells a very different story than $200.
T-Mobile is trying to toe that line with JUMP by offering consumers a better deal than what they have otherwise without it dramatically affecting T-Mobile's bottom line. And in the end, T-Mobile is still a business with a responsibility to its shareholders. JUMP only works if T-Mobile ends up making money on the deal.
If you're heavily invested in a family or shared plan through one of the other big three service providers in the United States, or if you're working for a company that gives you a break on service through one of the T-Mobile's competitors, chances are you're not going to pull up stakes and leave for more magenta pastures. But if you're near the end of your contract or if you're actively shopping around for a new cell company, T-Mobile is definitely making it worth your while to consider - as long as you're in an area with good enough coverage.
I want to know what you think. Is T-Mobile's JUMP plan what you've been waiting for? Have you already made the move? What do you think of T-Mobile's service? Tell me in the comments.