New Cell Phone Plans of 2013, You Are Getting Screwed!
This year it is no secret T-Mobile is pushing the boundaries of cell phone carriers. Their CEO is beginning to roll phase two of his "Un-Carrier" plan that looks to tear down the confusing wall between customers and carriers. Phase two deals with two new plans, "Jump" and all family plans. The new family plans are less radical they offer family plans to any family, without all of the rules that AT&T have. The second plan is much more radical. "Jump" is a very simple way to upgrade your phone twice a year. To combat this radical change AT&T has released "Next" and Verizon has released "Edge." "Jump" is not only cheaper, it is definitely easier to understand.
(T-Mobile) Jump Explained
In order to use Jump you will basically do the following: Buy a phone and put it on any T-Mobile plan. A normal T-Mobile plan for an iPhone 5 (16GB)(Unlocked price $650) would be $145 down payment and then monthly installments of $21 for 24 months. This adds up to $650 (The Price of an unlocked iPhone). Then add on the amount of Data you want (Including unlimited talk+Text). Then just add on $10 a month payments until you replace the phone. When you decide to replace the iPhone 5 with the iPhone 5s or some other phone you stop paying the installments, trade in your old phone, and pay the downpayment on the 5s and begin paying those installments. This process continues. The pricing on this is if you payed for the iPhone 5 for 6 months you will have paid off $331 of the $650 that phone is worth. The next upgrade will be even cheaper since you could technically only have the phone for 1 month or less.
The Fine Print
You can only update your phone twice a year after an initial 6 months of owning the first phone. You have to wait 6 months every year. When you replace the device you must trade it in. Jump also acts as insurance incase you damage your phone; the downside is if you break a phone and down't to replace it with the same phone, you want to upgrade to a new one you will have to pay $20-$170 for the damage. Over all the advantage is T-Mobile tells you exactly what you are paying and what that money is paying off whether it is for the device, the upgrade, or the data. One of the cool things about Jump is it can be added to any cell phone plan, Next and Edge will have separate subsidies and data costs!
(AT&T) Next Explained
I will now attempt to explain "Next" to you, the problem is AT&T is being very sneaky on the information they are releasing If you want an iPhone 5 (Unlocked Price $650) with "Next" you do not need to pay a downpayment but you will pay installments of $32 and a subsidy that is unofficial right now but estimated by experts to be $20 (The Same price as an iPhone on a regular plan). In addition to these payments you must add the price of Data+Talk+Text. You can only upgrade after 12 months, and at that point you will pay $384 in "Next" payments and $240 in subsidies for a total of $624 just for a phone. This does not seem to be too bad except for the fact that now you need to turn in your old phone (the one you just completely paid for) before getting the new one. This gets worse if you decide to keep the phone for 20 months instead of 12months. You will have paid for $640 in "Next" Payments and $400 in subsidies. That is a grand total of 1,040 for a phone that only costed $650. The only good thing about it is now you can keep the device. In the end you might as well buy the phone full price at the beginning and pay a normal plan and upgrade at anytime.
(Verizon) Edge Explained
If you thought that was confusing get some caffeine and your thinking cap because this is even worse. So the way edge works is the cost of the phone is divided into 24 monthly payments and you can upgrade at 6 months if you pay the difference between half the price of the device and what you have paid already in monthly installments. So what is the catch? In addition to the cost of data there is a $20 subsidy every month. So lets do some math.
An iPhone 5 for 6 Months
If you get the iPhone 5 (Unlocked price $650) you will pay monthly payments of $27 and that $20 subsidy. To keep it simple we will not include the cost of data since it is justifiable to pay for the service and it has nothing to do with the device. So After 6 months you will have paid $162 in "Edge" payments and $120 in subsidies, a total of $282. The problem is, Verizon does not count the subsidy as paying off the device. So to upgrade you will have to pay an additional $163 for a grand total of $445. At this point you will turn in your old iPhone and start the process for a new one. Not to bad, however it gets much worse at 12 months.
An iPhone 5 for 12 months
So the monthly payment of $27 and $20 subsidy is the same but now we are doubling all of the costs from before. So after 12 months you will have paid $324 in "Edge" payments and $240 in subsidies, a total of $564. Now you want to upgrade but even though you have paid off almost all of the phone those subsidies still don't count. The good news is there is no additional upgrade cost but you still have to give them the phone.
An iPhone 5 for 24 Months
At this point there is no reason to have gotten this plan in the first place since 24 months is how long you are required to have the average cheaper plan (And you would keep the phone) but just for the sake of argument the monthly prices are the same so after 24 months you would be paying $648 in "Edge" payments (The full price of the iPhone 5) and $480 in subsidies which means a grand total of $1,128. So not only did you pay for the entire phone (Not including subsidies) and you payed the additional subsidy fee but YOU STILL CAN NOT KEEP THE PHONE!!!!! so obviously this is the biggest rip off in history.
Comparison of Prices:
Cost of Upgrading a Single Phone at a Given Time
(T-Mobile allows 2 upgrades a year after 6 Months, AT&T allows 1 upgrade every 12 months, and Verizon allows an upgrade every 6 months)
Over all the choice is simple T-Mobile is both cheaper and easier to understand. I have gone through all of the painful math for you and the evidence is simple. Not only is T-Mobile an upgrade plan it is insurance and Non-Contract. I could see you wanting to keep Verizon as a Carrier if you enjoy a better network in your area and will upgrade every 6 months since the difference is not very large and good networks are very important. But if you plan on going with AT&T Next for 12 months or Next/Edge for 24 months I hope I have educated you enough to change your mind!