Comparing Verizon, AT&T, and T-Mobile’s New Upgrade Plans

The newest fad in the wireless industry has quickly become upgrade plans. After Verizon and AT&T both extended upgrade periods out to 24 months, we have since seen T-Mobile and AT&T officially announce new options to upgrade, but all signs point to Big Red joining them in August. T-Mobile’s is called JUMP!, AT&T’s is called “Next,” and Verizon’s will be called “VZ Edge.”

It’s pretty obvious that carriers have realized that upgrades are simply another way for them to rake in cash, by implementing fees or locking customers into payment plans that will keep them on their network. So to try to help explain all three of these new plans, I’ve attempted to break down some basic examples below. It’s a long one, so strap in. 

VZ Edge from Verizon

Since the only details we know about VZ Edge are through a report of ours, we still do not know everything, however, since it appears to be an extension of Verizon’s device payment plan, we can make pretty good guesses here. Once this plan is announced, we will try to get back and update this post to make it 100% accurate.

Update:  Verizon has announced VZ Edge, so we’ve made edits to the original post to make sure it is accurate.

The Basics:

• Full retail priced smartphone or tablet price must be a minimum of $349.99.
• Pay for the full retail priced smartphone or tablet in 24 payments.
• Finance charge of $24, which is just $2 per installment.
• Once 50% of the device is paid off and you have participated for 6 months, you can upgrade to a new phone.
• To upgrade, you trade in your current phone.
• There are no upgrade fees, no contract agreements, or finance charges.
• Device Payment Plan customers can take advantage of Share Everything pricing and data sharing.
• First payment due at time of purchase. Your next payment will appear on your next Verizon Wireless bill.1
• Feel free to pay off the full balance of your new full retail priced smartphone or tablet anytime you want.

Example 1:

I’ll use my current Verizon situation as an example, since it includes unlimited data and is likely a scenario that many of you are looking at. I have an older $80 per month 700-minute share plan, along with two lines that each have $29.99 unlimited data plans. I’m also a current customer, so there was no upfront cost for a new phone. So my bill, sans taxes and fees, runs about $140 per month. If I were to buy into the device payment plan in order to pick up a new phone and still keep my unlimited data (can’t keep unlimited data, have to switch to a Verizon Max plan), we’re looking at the full retail price of a phone broken down into 24 monthly payments plus a $24 finance charge (also broken into 12 payments). So say I choose the Samsung Galaxy S4 which costs $650 – I would then be looking at an additional monthly charge of around $27 for 24 months; my bill would jump to $167.

But with VZ Edge, I can upgrade to a new phone once that Galaxy S4 I just bought is 50% paid off and have participated for 6 months. Assuming I pay the regular $27 per month payment, I could upgrade again in 12 months time. I’d have paid $324 already on that phone.

Now this is where it becomes a bit of a mystery, as the full details are not yet available. Verizon has followed T-Mobile or AT&T’s lead, in that they allow you to trade in your current phone that is 50% paid off and pick up a new one. You wouldn’t have to pay an upfront cost other than the first month’s payment to get your new phone.

So essentially, depending on the full retail price of the phone you buy, you are looking at anywhere from an extra $15 to close to $30 added on to your bill per phone. At the end of the 24-month payment plan, should you not upgrade after paying 50% off, you will pay an additional $325 (top tier phone price) in a year period for something like the Galaxy S4, which is on top of the $1680 your service plan already ran you during that same year.

Example 2:

To use one of Verizon’s current plans, let’s just tackle a single line on Share Everything with a standard 2GB of data. You are looking at $40 per month for the smartphone line itself (unlimited talk and text), plus $60 per month for the 2GB of data ($15 extra for every GB over). Your bill would be $100 per month.

If you decide you want to participate in the device payment plan with VZ Edge and start with a Galaxy S4, you will also pay an extra $27 per month installment. If you pay the phone off after 24 months, you will have paid $325 extra in a 2-year period on top of the $1200 your service plan ran you. You could also upgrade a year in (or once you paid off 50% of your phone), but that shouldn’t change your payment if you bought another phone that was $650 at full retail. Again, that’s assuming Verizon will let you swap out phones at the 50% mark and not make you continue to carry a payment for the old phone until it’s paid off.

At the end of a 2-year period, you are looking at $2400 for the service, plus $1300 (assuming you picked up two $650 phones), totaling $3700 (sans taxes and fees). Keep in mind that you may also be able to tack on an additional $200 or so, should you have bought a subsidized phone at the beginning of the contract or as a new customer.

Conclusion:

Where this all gets really dirty, is in the idea of a subsidy. You see, with most wireless plans, customers buy a phone at a subsidized price of say $200 for the latest and greatest at the beginning of a contract. Carriers give you such a good deal on a phone that would normally cost $650 because they build a subsidy type of charge into your monthly service plan to help pay off that phone. While they may not ever admit that, it’s widely understood in the industry that this is the way it works. So say my bill is $140 for my two lines, a portion of that is likely there to cover a subsidy, should I have received a deal on a phone when I signed my contract.

With something like VZ Edge (and also AT&T Next, which we’ll get to), Verizon is asking you to pay a monthly fee for a device (plus a finance charge) and also that subsidy that is built into your service plan. Yes, you are essentially getting double pimp-slapped. Feel insulted? You should.

Note:  Verizon has announced that there are no finance charges with VZ Edge, so that’s why you are seeing the finance charge sections crossed out.

AT&T Next from AT&T

AT&T announced AT&T Next on July 16 as their attempt to offer an early upgrade option for those who love to stay on the cutting edge of technology. Of course, this move came shortly after they raised their upgrade dates on contracts from 20 to 24 months.

The Basics:

• Customers can get a new device with no down payment.
• Upgrade and activation fees are waived with AT&T Next.
• The monthly device installments do not have a financing fee.
• There’s no penalty if the customer pays off the balance of their installment plan early.
• Customers can trade in their device after 12 months, or they can keep using their device, and have no more installment payments after 20 months.
• There’s no additional monthly fee required to participate in AT&T Next upgrades.
• Devices operate on the nation’s fastest 4G LTE network.

Example 1:

AT&T’s plans work much like Verizon’s, so I’ll just grab one of their Mobile Share plans that includes unlimited talk and text. If we choose the 4GB data option (there isn’t a 2GB option), then we’re looking at $45 per month for a single smartphone plus $70 per month for 4GB of data. Your bill, as a single line, would run about $115 per month or $2760 for the life of a contract (sans taxes and fees).

But let’s say you decide you want to participate in AT&T Next, so you buy a new phone. You choose the Galaxy S4 which costs $650 at full retail. AT&T breaks that down in 20 monthly payments, making it $32 per month extra on top of your $115. There is no finance charge per month, unlike Verizon who charges $2 per month. In 12 months, you can decide to trade your phone in and pick up a new one. AT&T will wipe the other phone and payment away and let you take on a new monthly payment for the new phone. If you don’t want a new phone at the 12-month mark, you can continue to pay your current phone off until you hit 20 months. When upgrading at the 12-month mark, there is no downpayment.

If we look 24 months down the road, you could be on your second phone and have paid $768 ($32 per month), assuming both were $650 phones, plus the $2760 for your wireless service for a total of $3528. This scenario does not include the $200 you likely spent when you signed your contract and purchased a subsidized phone.

Conclusion:

So the difference here when compared to Verizon’s plan is minimal. There are different monthly installment periods and percentages, but in the end it’s the same deal. AT&T Next asks that you pay for normal wireless service with the subsidy built in to the cost, plus add on an additional monthly payment for a phone. Again, they are double charging you for a phone – you are paying for it twice.

JUMP! from T-Mobile

T-Mobile introduced JUMP! as their upgrade plan, giving customers the opportunity to upgrade phones two times every 12 months, while paying a $10 per month charge (this also includes insurance for the phone).

The Basics:

• Buy a new smartphone on a Simple Choice Plan using our Equipment Installment Program.
• Enroll in JUMP! for $10 a month when you add Services to your order.
• Upgrade as soon as six months after enrollment.
• Trade in your phone each time you upgrade so you can get the same great price as new customers for new phones.

Example 1:

Let’s say you pick up T-Mobile’s Simple Choice plan which runs $60, gives you unlimited talk and text, plus unlimited data with up to 2.5GB at full 4G speeds. Since T-Mobile makes phones separate from their plans now, you really do only pay $60 a month for service. Unlike Verizon and AT&T, T-Mobile doesn’t include a subsidy phone charge in their plans.

But this is where it gets different. Should you choose the Galaxy S4 at the time you sign up for service, you will pay a down payment of $150 for the phone. You will then have a $20 per month installment plan to pay the rest of it off over 24 months. If you sign-up for JUMP!, so that you can upgrade often, you will pay an additional $10 per month which is the fee associated with the program. Your monthly bill is now $90.

So you participate in JUMP! for 6 months and decide to upgrade to a new top tier phone that  costs $150. You trade in your Galaxy S4, pay the $150 for the new phone, and continue on about your way. T-Mobile doesn’t ask you to pay off the previous phone, they just give you a new installment plan that matches your old at $20 per month. You have now paid $300 upfront for two phones, and $180 (equal to 6 months worth of payments for phones, plus $10 JUMP! fee). If we take the upfront costs of the phones out for a second, you are essentially paying $30 per month ($20 installment for phone, $10 for JUMP!) for early upgrades and to be a part of JUMP!.

If you were to upgrade the one time during your first 12 months (you can do it twice if you want), you would have paid $720 for service, plus $240 in device installments, plus $120 to be a part of JUMP!. Tack on the $150 you paid as a downpayment on the first phone, plus another $150 as a downpayment on the second phone and your total for one year’s worth of service on T-Mobile sits around $1380.

If you don’t upgrade to another phone at any time then for another 12 months and just pay for service, your total cost would sit somewhere around $2460. Now, T-Mobile wants you to upgrade more, so they have given you the opportunity to upgrade twice every 12 months, so should you have upgrade again, you could tack on another $150 which would be a downpayment on a top tier phone.

Conclusion:

In the end, T-Mobile’s JUMP! upgrade option is just that, an option, but it’s not necessarily cheaper as a stand-alone product than either Verizon or AT&T’s new upgrade plans.  You are paying around $30 per month (depending on the phone) to participate in their JUMP! program ($20 installments and $10 JUMP! fee), plus you have to throw down a downpayment of around $150 for a top tier phone each time you upgrade whereas VZW and AT&T don’t require downpayments. So in terms of how much you are paying per month, it seems like you would be paying more for T-Mobile’s upgrade plan, right?

Technically yes, but just for the upgrade plan. Since T-Mobile pulls out the subsidy fee from their service, they aren’t hitting you up twice for the same phone, something that both Verizon and AT&T are doing by adding in subsidy costs into their wireless plans. In reality, you have lower service expenses, with slightly higher priced upgrade options on T-Mobile. Also, T-Mo’s plan includes equipment coverage in the $10 fee, while Verizon and AT&T still charge you extra.

Final Thoughts

I probably don’t need to say this, but none of these companies would be doing this if they weren’t making money in the end. The big deal to me with these plans, is the fact that Verizon and AT&T are essentially charging you twice for your phone. They include a subsidy fee in their wireless service, but are now also asking that you pay a monthly fee for a phone just because you want to upgrade more than once every two years.

With T-Mobile, the entire package looks cheaper, but that’s because T-Mo doesn’t include a subsidy fee in their wireless plans, leaving it substantially lower from the get-go. For example, you can get unlimited talk, text, and data (with 2.5GB at full 4G speeds) on T-Mobile for $60 per month, while AT&T is charging you $115 for something comparable because of the subsidy fee. Verizon is much the same way.

T-Mobile is clearly the more affordable overall option, but you already knew that. Your problem for sticking with one of the big two carriers probably has to do with coverage and network more than anything. Hopefully this will at least help you realize where that few extra hundred dollars is going when you decide to join their upgrade program in order to keep your current plan. If anything, know that you aren’t getting a deal.

*Note – In the examples, I didn’t go into the idea that you could re-sell your phones after you pay them off, as that can completely change the entire situation.