T-Mobile's "Jump on Demand" counts on subscribers' craving for novelty
When T-Mobile launched its "Uncarrier" campaign two years ago, CEO John Legere's main target was "pain points" in the wireless industry, which caused lots of them. Large carriers such as Verizon and AT&T set the pattern, with contracts that left subscribers vulnerable to overages, international roaming fees, early-termination charges, and more.
When T-Mobile launched its "Uncarrier" campaign two years ago, CEO John Legere's main target was "pain points" in the wireless industry, which caused lots of them. Large carriers such as Verizon and AT&T set the pattern, with contracts that left subscribers vulnerable to overages, international roaming fees, early-termination charges, and more.
Overseas data fees were like a snake hiding in the grass. Some were so outrageous - adding hundreds, thousands, or even tens of thousands of dollars to a bill - that they prompted a Federal Communications Commission campaign focused on "wireless bill shock." But one by one, T-Mobile and its raucous and sometimes profane CEO obliterated those traps for T-Mobile's subscribers and put pressure on the competition to change, too.
Still, its series of "Uncarrier" announcements was a tough act to follow, which is probably why Thursday's announcement - a new "Jump on Demand" feature that cuts the cost of continually switching to 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 said.
When Jump on Demand starts on Sunday, T-Mobile will turn cellphone ownership into something more like "an amped-up lease," Hayes says. Sign up, and you can repeatedly replace your phone - up to three swaps a year - with no switching costs.
Is this "revolutionary," as T-Mobile touts 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. Jump on Demand 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. He calls the plan "like a lease without a buyout."
What makes T-Mobile's new plan most interesting right now are the numbers in its promotional offering for an iPhone 6: With a smartphone trade-in, you can get one 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.
This is where things get a little tricky under T-Mobile's promotion - and shame on Legere for falling prey to a cellphone-industry hazard that he generally forswears.
The $15-a-month iPhone 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 its "residual value," which T-Mobile calculates at about $163 - roughly $27 times six months - to keep the phone outright. All told, you'd own a $650 phone for about $433.
Hayes says T-Mobile is subsidizing 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 first 18 months.
And don't be surprised to learn that Jump on Demand pricing is phone-specific, and that other phones don't come with a similarly deep discount. For example, you'll pay $31.24 a month for an iPhone 6 Plus with 16 gigs, or $28.33 for a 32-gig Galaxy S6 - prices the carrier says include interest-free financing, and a similar option to buy after 18 months.
Of course, T-Mobile is betting you'll want to keep paying your Jump on Demand price each month, just for the privilege of ditching your current phone, and then ditching its replacement, and on and on. As T-Mobile knows, we tech-loving Americans are an impatient lot.
Hayes says that the average cellphone subscriber upgrades after 20 months, and that T-Mobile's initial Jump plan cut that to 14 months. He says he expects the cycle to speed up, not slow down, and he may be right.
How big an "Uncarrier" announcement was this?
Major, minor, or somewhere in between, this much is obvious: Whatever else it announces in the coming days or weeks - and Hayes says more changes are coming - T-Mobile has already seriously disrupted America's cellphone market.
215-854-2776@jeffgelles