T-Mobile's new 'Jump' plan: Great deal for impatient

Jeff Gelles, Inquirer Business Columnist Posted: Thursday, June 25, 2015, 6:03 PM

When T-Mobile launched its "Uncarrier" campaign more than two years ago, CEO John Legere's main target was "pain points" in the wireless industry - which was known for them. Large carriers like Verizon and AT&T set the pattern, with contract terms that heedlessly caused pain to customers via overage charges, international roaming fees, early-termination fees, and data-roaming charges. Some were so outrageous - hundreds, thousands, or even tens of thousands of dollars in extra charges on a monthly statement - that they prompted an FCC campaign focused on "wireless bill shock."

T-Mobile and the famously profane Legere made those tricks and traps vanish for the Uncarrier's subscribers, and sometimes pushed the competition. But its series of "Uncarrier" announcements (such as here and here) was a tough act to follow, which is probably why today's announcement - a new "Jump on Demand" feature that lowers the cost of continually wanting the latest and greatest smartphone - seems to pale by comparison.

"What we're doing is giving people more freedom and flexibility than they've ever had," area vice president Terry Hayes told me. The average American upgrades a cellphone every 20 months, and customers subscribed to T-Mobile's previous Jump plan swapped phones every 14 months, Hayes says. With Jump on Demand, cellphone ownership turns into something more like "an amped-up lease," he says. Sign up, and you can repeatedly replace your phone - up to three swaps a year - at no added cost.

T-Mobile describes the details this way:

Both new and existing T-Mobile postpaid customers can get a new smartphone with JUMP! On Demand.

Customers with qualifying credit can get a new phone with JUMP! On Demand for zero upfront cost, zero at upgrade, zero fees and zero wait whenever they want to upgrade to a new smartphone.

Customers without qualifying credit can get a new phone with JUMP! On Demand with an upfront payment similar to our EIP [Equipment Installment Plan] regular financing, zero program fees and zero wait when they want to upgrade.

How JUMP! On Demand Works

Get a new smartphone with JUMP! On Demand for zero upfront out-of-pocket cost. (Starting June 28, 2015)

Whenever you want to upgrade, simply bring in the last phone you got with JUMP! On Demand for a quick three-point check-up to ensure it's in working order and swap it out for a different superphone.

Rinse and repeat anytime − tomorrow, next week or next month − up to three times a year.

Is this "revolutionary," as T-Mobile hypes it, or "evolutionary," as Hayes told me? I'd vote for the latter.  Sure, there are people who want the latest and greatest phones, and don't want to wait a few extra months. And it will particularly please a niche in the market: people who want to try different platforms, or think they want to, without the risk of being stuck with a new phone they don't much like.

"Say you use this to get an iPhone 6. Now you can come back and say, 'You know, I''m really not an iPhone guy. Android's more for me,' and we'll give you a Galaxy 6," Hayes says, describing the plan as "like a lease without a buyout."

What makes T-Mobile's new plan most interesting right now are the numbers in its Jump on Demand promotional offering for an iPhone 6: With a smartphone trade-in, you can get that iPhone with 16 gigabytes of memory for $15 a month, well below the $27 a month the company has been charging under its previous zero-down, no-interest payment plan.

Things get a little tricky under T-Mobile's promotion - shame on you John Legere, but tricky pricing seems to be an occupational hazard in this industry even for those who forswear it. The $15-a-month deal ends at 18 months.  If you haven't upgraded by then and just want to keep the iPhone 6, you'll have to pay a "residual value" that T-Mobile sets at about $163 - or $27 times six months - to keep the phone outright. But you'd own a $650 phone for about $433.

Hayes says T-Mobile is subsdizing the purchase at about $216 per customer - covering the $12 monthly difference toward the pay-down of your phone, as if you were paying the $27 a month for those 18 months. (Note that the Jump on Demand price is phone-specific, and that other phones don't appear to be similarly discounted.  For example, you'll pay $31.24 a month for an iPhone 6 Plus with 16 gigs - about $750, based on a 24-month payback - or $28.33 for a 32-gig Galaxy S6.)

Of course, T-Mobile is betting you'll want to keep paying whatever your Jump on Demand phone costs, just for the privilege of ditching it, and then ditching its replacement, and on and on.  We Americans are an impatient people, so the company is probably right.

One thing that makes the promotion work for T-Mobile is the impressive resale value of all those secondhand phones - about $125 recently for a used iPhone 5s, Hayes says. He makes no promises on how long the iPhone 6 promotional offer will last. See T-Mobile's video press release here. 

And make no mistake: Whatever this offer's limitations, and whatever else T-Mobile announces in the next few days, T-Mobile deserves credit for what Legere claims: seriously disrupting America's cellphone market. 

Source: T-Mobile's new 'Jump' plan: Great deal for impatient