The status quo in phone contracts has remained the same for some time. Phones are subsidized by carriers, which allows consumers to get the latest and greatest phone at an affordable price.
However, this subsidy comes at a cost. In most cases, the customer is locked into a two-year contract – at a higher rate than if they had purchased the phone outright – and can’t upgrade to a newer phone or change carriers without paying an early termination fee. That’s just the way it is. Or at least, that’s how it was, until now.
T-Mobile is looking to change the wireless industry entirely. And if early indications are anything to go by, it already has.
Competitors such as AT&T, Sprint and Verizon have already adopted plans similar to that offered by T-Mobile – a sure sign that those carriers see the merits of T-Mobile’s approach.
So what is this new approach to wireless service? Well, it’s not so much a new approach as it is a multi-pronged attack on the old way of doing things.
T-Mobile: The Uncarrier
T-Mobile has branded itself as the uncarrier, and for good reason.
Whereas traditional wireless service providers bundle the cost of hardware and service into one package, T-Mobile has taken a different approach. The company allows individuals to pay for their phone and their service separately. What this means for the consumer is flexibility and freedom.
If you currently have a phone, you can take advantage of T-Mobile’s uncarrier program and sign on for a month-to-month, wireless-only data and phone plan. No two-year contracts. No hardware fees.
If you would like to buy a phone and sign up for service at the same time, T-Mobile will separate the cost of your phone from your data, so that you know exactly what you’re paying for your services.
Even when buying a phone and service together, the total cost of the transaction over the duration of your payment plan tends to be less than with rival carriers.
But is this strategy working?
The numbers seem to indicate that the answer to that question is an emphatic “yes.”
So yes, it appears to be working.
Switching Has Never Been Easier
As part of the company’s uncarrier program, users are being encouraged to switch to T-Mobile to take advantage of their month-to-month wireless contracts.
But what about those early termination fees? Won’t consumers get dinged by their current carriers if they opt out of their contracts early to make the switch to T-Mobile?
In most cases, yes, which is why T-Mobile will reimburse new customers up to $350 for termination fees imposed by their previous carrier.
New T-Mobile customers can submit their final service bill, along with any early termination fees, directly to the company. T-Mobile will then pay these fees. It’s as simple as that.
Whether this strategy catches on with other carriers is anyone’s guess, but there is no denying the audacity (or conviction) on T-Mobile’s part.
Don’t Walk, JUMP!
The one thing about two-year contracts is that you can’t upgrade your phone until the contract is over (in most cases; obviously, the nuances of contracts are different for each carrier).
Your iPhone or Samsung Galaxy may be the cat’s meow today, but what about six months from now?
That is exactly the question that is addressed by T-Mobile’s JUMP! program.
Individuals can add the JUMP! program to their service contract for just $10 per month, and by doing so, upgrade their phone not once every two years but twice every 12 months.
They are also upgrading JUMP to allow upgrades phones and tablets any number of times as long as customers have paid 50% of the device cost.
For the techie who must have the latest and greatest phone, there is no easier way to do so.
Will T-Mobile Define the Future of Wireless?
Ultimately, T-Mobile still has a way to go if it wants to compete head-to-head with giants like AT&T and Verizon, at least in terms of pure volume.
That being said, in regards to whether or not the company is changing the wireless industry – from its approach to contracts and service plans to phone upgrades – there can be little doubt: it is.