Is two years too long to wait for a new smartphone? Wouldn’t you like to upgrade sooner? Well, T-Mobile heard you and so it introduced a new plan called Jump. And thanks to capitalism, AT&T heard T-Mobile and so it introduced a new plan called Next; Verizon heard both of them and so it introduced a new plan called Edge. The basic idea with all of these plans is that they don’t have two-year contracts and you can upgrade to a new phone sooner than once every two years by trading in your old phone.
We already took a close look at T-Mobile’s Jump! plan, which allows you to upgrade your phone every six months by paying an extra monthly fee ($10) and trading in your old phone (in perfect condition) when you splash out the full subsidized price for a new one.
AT&T’s Next plan is a little different. It allows you to buy a new smartphone or tablet with no down payment and pay it off in 20 monthly installments. After 12 installments (or one year), you can trade in your device and pick a new one, which kicks off a new 20 month installment plan. The price varies greatly based on the phone you choose.
Verizon’s Edge plan is closest to AT&T’s Next. It also allows you to buy a new device and divide the cost into 24 monthly payments. The first installment is due immediately. Verizon will allow you to switch phones after six months, but you must have paid off 50 percent of the cost. After six months you have the option of paying off another six months of the payments, and trading in your device – assuming you want to upgrade – which will start a new contract.
Buying a Galaxy S4
In all three cases, you still have to pay for a monthly service plan that covers calls, texts, and data. Carriers love to complicate these things, so we’re going to put together a straight comparison on cost. We’re going to use a Galaxy S4 as a comparison, but every phone comes with different costs. Verizon hasn’t yet confirmed pricing, but we know the 24 monthly installments are set to cover the full retail price. For this experiment, we’re going to assume you want to switch phones after 12 months.
If you were to buy a Galaxy S4 on T-Mobile Jump, you would pay $150 down payment followed by 24 monthly installments of $20. Once you pay those 24 installments, you own the phone. It’s yours. You are also going to have to pay $10 per month for the Jump! plan which allows you to switch to a new phone after six months. When you do switch, you’ll trade in your old phone (expect penalties for any damage). Expect to shell out a new down payment of $100-$200 and start on a new batch of 24 monthly installments to pay the new device off. Remember that your talk/text/data service plan is going to cost $50 to $70 per month on top of all that.
One benefit of T-Mobile’s plan is that it also acts as phone insurance. If your phone is damaged, you can get a new one.
- Down payment on GS4: $150
- Jump! payments: $120
- Monthly phone payments: $240
- Down payment on phone you upgrade to: $150
- Total phone payments for one year: $660
- Service plan: $600
- Total one-year cost: $1260
- One-year cost if you aren’t on Jump: $990 ($840 during second year of phone payments)
So, you’ve paid $510 for a Galaxy S4 for a year before we take T-Mobile’s service plan into account. It will be a minimum of $600 for a year (unlimited talk, text, and 500MB data).
If you buy a Galaxy S4 on AT&T Next, you would pay no down payment and no activation fee (AT&T charges a fee just to start a new phone) followed by 20 monthly installments of $32. After 12 months you have the option to trade in your old phone (expect penalties for any damage) and start a new 20 month installment plan. You also have the option to pay the device off early (with no additional charge, just the remaining monthly costs combined) or keep paying monthly until the 20 month point where you actually own the phone.
- Down payment on GS4: $0
- Next payments: $0
- Monthly phone payments: $384
- Service plan: $1,020
- Total one-year cost: $1404
- One-year cost if you aren’t on Next: $1255 ($1020 during second year of contract)
So, you’ve paid $384 for a Galaxy S4 for a year before we take the service plan into account. If you went for the basic Mobile Share plan then you’d pay $1,020 for a year (unlimited talk, text, and 1GB data).
If you buy a Galaxy S4 on Verizon Edge then you’ll pay your first month up front. That’s the full retail price ($650) divided into 24 months, so we’re looking at $27 per month. After six months, you could pay off another six months of the contract for $162, trade-in your S4 (there will be penalties if it’s not in perfect condition), and get a new device on a new 24 month contract. Alternatively, you could wait until 12 months and trade in the S4 for a new phone, starting a new 24 month contract.
- Down payment on GS4: $0
- Edge payments: $0
- Monthly phone payments: $324
- Service plan: $1080
- Total one-year cost of Edge: $1404
- One-year cost if you aren’t on Edge: $1315 ($1080 during second year of contract)
So, you’ve paid $324 for a Galaxy S4 for a year before we take your service plan into account. If you went for the basic Share Everything plan then you’d pay $1080 for a year (unlimited talk, text, and 1GB data for $90 a month).
How do they compare?
All these plans offer freedom from two-year contracts, but add significant cost to your bill.
Time between upgrades: The difference is that you could upgrade your phone on T-Mobile Jump! every six months, but remember that you have to trade in the old phone and pay a new down payment. On AT&T Next you have to wait 12 months before you can upgrade, but there’s no down payment. Verizon’s Edge falls somewhere in between, because you could upgrade after six months by paying off another six months in a lump sum, or you could wait until 12 months is up and upgrade without having to pay anything extra. You do have to turn in your old phone to AT&T and Verizon as well, meaning you don’t have a backup phone and you can’t resell your old phone for $300-$400 on eBay.
Service plan price: AT&T and Verizon charge a lot more for service plans, so you can see that the potential savings on the device are wiped out when you add the two together (especially considering that current service plans already have a two-year subsidized phone price built into them). We’re talking $1,404 combined on AT&T versus $1,524 combined on Verizon versus $1,110 combined on T-Mobile. To complicate it further, the Mobile Share and Share Everything plans are really designed for sharing, they don’t make much financial sense for individuals. For families with multiple devices the Mobile Share and Share Everything plan pricing will start to compete with the T-Mobile plans, which are more straight forward.
Contract: However, all three carriers are offering service without a two-year contract. You’re paying month to month. AT&T requires that you maintain service with it until you pay off your phone.
Phone insurance: T-Mobile’s Jump plan also acts as phone insurance, allowing you to turn in your old device and get a replacement if it’s damaged. AT&T’s plan does not. A representative told us that phone insurance is optional and an additional cost (AT&T Mobile Insurance $7/month or AT&T Mobile Protection Pack $10/month). We do not know if Verizon’s plan will include insurance.
Lines per account: Up to two phone lines (or devices) per account can use AT&T Next and we assume Verizon will be similar. On T-Mobile, plans cover up to to 5 people. We presume that as long as you pay $10 per device per month, you can have as many lines on Jump as you’d like; it would get expensive fast.
How much do the upgrades cost?
There’s another way to look at it. On AT&T you could pay $200 upfront for a Galaxy S4 and be locked in to a two year contract. Next asks you to pay $384 to reduce that contract to one year, but it’s split into monthly installments so there’s no upfront cost. The proposition with Verizon is much the same – you could pay $200 upfront and take a two year contract. Edge effectively asks you to pay $324 to reduce that contract to six months or a year.
On T-Mobile, you are paying $150 upfront regardless, followed by your monthly installments. Jump! asks you to pay an extra $60 for the privilege of upgrading every six months. Your new device is going necessitate another upfront payment. All carriers force you to pay the rest of the phone price off over a period of 20-24 months.
Which is for you?
With T-Mobile’s Jump! you’re paying a premium to upgrade frequently, but at least you really can upgrade frequently – every six months. AT&T’s Next only allows an upgrade every year, but the attraction of no down payments will tempt some people into accepting the higher monthly fees for service. Verizon’s Edge falls somewhere in between, although it’s worth noting that you’ll effectively pay the same price whether you want to upgrade after six months or you wait for a full year. Since Verizon and AT&T have not reduced the price of their service plans, which are supposed to subsidize a handset, you are effectively paying twice with Next or Edge and you’re giving them your phone, which is worth $400 after one year.
Updated on 7/19/2013 by Jeffrey Van Camp: Added further detail about the costs of plans and how much you’d save if you did not switch to them.
Updated on 7/19/2013 by Simon Hill: Added Verizon’s Edge plan details and updated comparisons.
Article originally posted on 7/16/2013.