Today Rogers announced a new program called Next which aims to win over early adopters that want a new phone every year. You’re essentially leasing your phone for $25 or $30/month, depending on if you want to have device insurance. You don’t pay any initial cost on your upgrade including activation or remaining device balance, you hand over your old device, and you get a new phone for $0-down that normally costs up to $250 on a two-year plan. Sounds like a good deal, right? Let’s run through the details to see if it’s all it’s cracked up to be.
First, some background. This structure isn't entirely new in the grand scheme of mobile. TELUS has something similar called T-Up specifically for iPhone which only charges $9/month, but doesn't pay for your next device and just forgives your current device balance when you're ready to upgrade after a year. You also have to have Apple Care+. In the U.S., AT&T also has something called Next, T-Mobile has Jump, and Verizon has Edge. They're all a little different, but from the looks of things, T-Mobile screws people the least. Oh, and the Americans can do it every six months rather than once a year.
By Rogers’ own math, you’re saving $275 on upgrading a $700 Galaxy Note 3 (roughly the same outright cost as a 16 GB iPhone 5s at $720) after a year using Rogers Next rather than upgrading under the normal two-year contract. This is also assuming you get the device protection option on the normal plan. Those relative savings dip if protection isn’t something you need or want. In addition to your usual service plan, Rogers Next costs $300 after a year to upgrade without device protection. The standard two year plan costs $515 to upgrade after a year under those circumstances, which leaves a difference of $215 between them. Keep in mind that this puts the cost of device protection at $5/month under Rogers Next, versus the usual $10 on a two-year plan.
The other thing is that you don’t gain anything from staying on Rogers Next for more than a year. Your new device still can’t be any more than $250 on-contract without paying the difference. This means the savings you're getting with Next diminishes the longer after a year you wait, since you'd be spending that time on a two-year contract paying off your device balance. Also, if your new phone is worth any less than $250, then again you’re losing out on the money you saved compared to the two-year plan. Conversely, if you want a high-capacity iPhone, you’ll have to end up paying the difference between the $250 allotted by Next and the standard two-year cost.
The real catch here is that you have to give Rogers back your iPhone in order get your next one. Meanwhile, Rogers gets to refurbish the device they take back and sell it all over again. This is in many ways a dealbreaker. Rogers is essentially betting that you can’t (or won't) sell your year-old device elsewhere for $275. To be fair, this gets trickier on a two-year contract, since the two-year-old iPhone 4S sells for around $180.
The other catch is that this is only really worth it for more expensive devices, and even then, not by much. All of the numbers we've been going with are for phones that retail for $700 or so outright, and are assuming we're upgrading to something that is $250 on-contract exactly. Let's say this plan was set up for someone upgrading from the 8 GB iPhone 4S to the 16 GB iPhone 5c, and they're skipping the device insurance.
- Cost of iPhone 4S: $450
- Cost up-front: $0
- FLEXtab balance: $450 ($225/year)
- Next and Device protection costs: $300/year with Next vs $0/year on two-year contract
- Remaining FLEXtab to pay: $0 with Next vs. $225 on two-year contract
- Device upgrade cost (assuming same price as on-contract iPhone 4S): $0 with Next vs. $95 with two-year contract
Savings with Next: $20, but you lose your iPhone 4S after a year.
Let’s try the other side of the coin with the top of the line, a 64 GB iPhone 5s, and they decide to go all-out with the premium $12/month insurance.
- Cost of iPhone 5s: $920
- Cost up-front: $440
- FLEXtab balance: $480 ($240/year)
- Next and Device protection costs: $360/year with Next vs. $144/year on two-year contract
- Remaining FLEXtab to pay: $0 with Next vs. $240 on two-year contract
- Device upgrade cost (assuming same price as on-contract iPhone 5s): $190 with Next vs. $455 with two-year contract
Savings with Next: $289, but you lose your iPhone 5s after a year.
Considering a 64 GB iPhone 5s currently sells for $790 on average, and the iPhone 5 is going for $340, I’d feel good about being able to get $289 for the 5s after a year and sucking up the termination fees on a standard two-year contract. Basically, the cheaper the phones you're dealing with, the worse this deal gets. Even with the top-of-the-line devices, you’re rarely going to be taking advantage of the full $250 of device credit that you’re earning throughout your month-to-month Next payments.
Another big catch here is that once you're ready to upgrade, you're signing up for another two-year term. So when you first start with Next, you've got a year to run through. You finish that, and to take advantage of the money you've already put in, you need to dedicate yourself to another two. Sure, you can optionally sign up for Next again, but you'll always have at least two years of service to wade through at the end. This is a pretty insidious way of bringing back three-year contracts after the government mandated carriers go down to two.
So, is Rogers Next worth it?
Rogers Next is worth it if you line up with all of these criteria:
- You can’t be bothered to save up money for your next phone and early upgrade cost but can spend another $30 on top of your existing $80+ monthly plan.
- You need the extra protection provided by device insurance anyway. You’re getting it for half-off with Rogers Next, which equates to saving $60/year.
- You don’t want to be bothered with selling your old device.
- You really want to have a new phone every year.
- You're comfortable committing to be with Rogers in a year for another two years.
Rogers Next becomes a bad deal if you can get your finances in order to buy the device outright, can handle waiting a second year for a new phone, can live without device protection, or you're able to sell your second-hand device. My guess is that will include most of you, but I don’t doubt that there is a segment of big-spending customers that want to be top-of-the-line with none of the hassle.