New Plans Allow Phone Upgrades Sooner

July 16, 2013

You might not have to make a long-term commitment to your smartphone anymore. Several major phone carriers are tweaking their cell-phone contracts—which usually require a two-year commitment—to make them shorter and allow customers to upgrade their phones sooner. 

AT&T reportedly will announce Tuesday a plan to give customers a chance to upgrade phones after just one year. T-Mobile USA announced a similar plan last week. 

“AT&T’s new plan, called AT&T Next, will offer customers a way to essentially rent a phone for a year,” explains The New York Times. “The customer will pay no cost upfront but will then pay monthly installments for a year. After that period, the customer can upgrade to a new smartphone or tablet, again with no down payment.”

For example, under AT&T’s new plan, customers would be able to buy Apple’s iPhone 5 with zero upfront cost and pay $32.50 every month for one year. After one year, customers would have the option to trade in the device for a new one. Previously, customers would pay $200 for an iPhone 5 upfront and then wait another two years to be able to upgrade to a new iPhone, for another $200. If a customer chose to upgrade in less than two years, he or she would have to pay the full cost for the phone: about $650. However, under the AT&T Next option, customers would pay $390 over a year to be able to upgrade to the next iPhone at the end of that year, saving about $260. 

T-Mobile’s new plan is called T-Mobile Jump. Customers would be able to pay for the smartphone upfront and also make monthly payments. The plan allows customers to upgrade to a new smartphone for another down payment twice a year, The New York Times reports.

John Legere, chief executive of T-Mobile, says that customers shouldn’t be required to wait so long to be able to purchase a new phone. “Seven-hundred-thirty days of watching new phones come out that you can’t have. Or having to live with a cracked screen or an outdated camera,” Legere says. “We say two years is just too long to wait.”

Source: “2 New Plans to Upgrade Smartphones After a Year,” The New York Times (July 16, 2013)