T-Mobile this morning announced a new promotion for the back-to-school shopping season, offering most of the smartphones in its lineup for no upfront payment.
The announcement comes as AT&T launches its new “AT&T Next” device upgrade and payment plan with zero down payment, responding to T-Mobile’s previous pricing and upgrade changes. T-Mobile CEO John Legere has lambasted AT&T for not simultaneously reducing its wireless rates, calling its rival’s actions “calculated” and “sneaky.”
T-Mobile’s back-to-school promotion starts tomorrow with no specified end date, although the company says it will run for a “limited time.”
The promotion includes popular Android devices such as the Samsung Galaxy S4. It also includes the iPhone 5, although the company says in a footnote that the offer only applies to the 16GB version of the Apple device. Customers buying the 32GB and 64GB versions of the iPhone 5 will still need to make the initial down payment.
People who take advantage of the offer will still need to pay the full price of the phone over time, so in the end the biggest benefit is the deferral of the payment.
For example, the 16GB iPhone 5 on T-Mobile normally requires a $146 down payment, plus monthly device payments of $21 for 24 months, adding up to about $650 over the two-year period. Under the zero-down promotion, which starts tomorrow, the initial payment will be waived but the monthly device payment will go up to $27, making the overall price over two years essentially the same.
Those costs are in addition to the price of wireless service. T-Mobile earlier this year rolled out a new pricing structure that separates the cost of wireless service from the purchase of a phone — no longer subsidizing the cost of the device as part of the wireless plan. That means that consumers can pay off the phone over time, and T-Mobile says the overall cost of the phone and wireless bill will be lower for its customers.
Earlier this month, the company announced a new plan called JUMP that lets customers pay a $10/month subscription fee for the right to upgrade to new phones as many as two times in a calendar year, under the same terms as new customers, without having to pay the remaining balance on their existing phone.