T-Mobile's plan: $10 monthly for phone upgrades twice a year. Worth it or not?

A T-Mobile store at 7th Avenue and 49th Street in New York City.

T-Mobile fired a shot at the wireless industry's binding two-year contracts yesterday. That's the agreement carriers like Verizon and AT&T make you sign in exchange for subsidizing the cost of your iPhone -- or Galaxy. If you're timing is off, and the latest, greatest smartphone comes out right after you sign? Tough luck, unless, you’re with T-Mobile of course.

Starting Sunday, the wireless carrier says it'll let you upgrade your smartphone up to twice a year for a monthly fee of $10. The new plan is called “Jump,” and it taps into the modern desire to “upgrade.”

We met with Javon Johnson in downtown L.A. He says he’d love to trade-up his iPhone. But, he says, “While I’m a tech guy, the desire to get a new phone every year will be trumped by how much it costs me to do that."

So what does it cost? John Butler, an analyst at Bloomberg Industries,  says it’s a little complicated. “Let’s take a step back and look at the current T-Mobile plan,” Butler says. Then he explains that right now if you want to buy an iPhone from T-Mobile, you have to pay $150 upfront. Then over two years, you pay $20 a month to pay off the phone. That’s a grand total of $630 or about the price of an iPhone. But, you don’t have to lock into a two-year plan.

“Under the new Jump plan, T-Mobile is allowing customers to pay instead of $20-a-month, $30-a-month for the option of upgrading their phone every six months,” Butler says. If you decide to upgrade, you have to turn in your old iPhone and plunk down another $150 for the new one,  and the two-year payment plan starts all over. “It’s not cheap really for your average guy,” Butler says. The point, he adds, is that Jump only works if the customer actually upgrades twice a year.

Ross Rubin, a consumer tech analyst at Reticle Research,  says there’s another way of looking at it. “It’s really how the charges are presented to consumers,” Rubin says. The $10 also includes insurance for your phone in case it breaks. That’s in line with what other major carriers charge for insurance. T-Mobile is throwing in the ability to upgrade.

About the author

Queena Kim covers technology for Marketplace. She lives in the Bay Area.

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