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Will T-Mobile Trade-In Program Drive Defections?
Will T-Mobile Trade-In Program Drive Defections?
By Jennifer LeClaire / NewsFactor Network Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
APRIL
10
2013

T-Mobile is gearing up for its long-awaited iPhone debut with some trade-in offers it hopes will cause Apple fans to defect from AT&T, Verizon and Sprint. As part of its so-called "un-carrier" promise to change the face of wireless in America, the company is supplementing iPhone 5 pricing with a trade-in offer that might just turn some heads.

Here's how it works: Through June 16, qualified customers can trade in their iPhone 4S or iPhone 4 to get an iPhone 5 for zero down and monthly payments. T-Mobile has done away with annual service contracts and subsidies, so this could make the iPhone 5 more affordable under its banner.

Customers can sign up for a Simple Choice Plan and receive a trade-in credit of up to $120 that can be used toward monthly payments, an existing T-Mobile bill, or the purchase of accessories or another device. Mike Sievert, chief marketing officer for T-Mobile, trumpeted the deal as an "unbeatable upfront price" coupled with the "most hassle-free and affordable rate plan in wireless."

Must Be 'Well-Qualified'

T-Mobile's Simple Choice Plan offers unlimited talk, text and web on the company's 4G network. The plan starts with a base rate of $50 per month with 500MB of up to 4G speed data. Consumers can add 2GB of up to 4G speed data for $10 per month per line, or, get unlimited 4G data for an additional $20 per month per line. Customers can also add a second phone line for $30 per month. Each additional line is just $10 per month. And T-Mobile promises no caps and no overages.

T-Mobile is also working to beef up its speed to better compete with larger carriers. The company recently announced 4G LTE service in seven major metropolitan areas, including Baltimore, Houston, Kansas City, Las Vegas, Phoenix, San Jose, Calif., and Washington, D.C.

T-Mobile's 4G LTE network is expected to reach 100 million people by midyear and 200 million nationwide by the end of 2013. The company's 4G HSPA+ network currently reaches 225 million people in 229 metropolitan areas.

The iPhone 5 will be available nationwide from T-Mobile starting Friday, April 12. The company said "well-qualified customers" are eligible for T-Mobile's Simple Choice Plan for $99.99 down and $20 per month for 24 months. Well-qualified is a key word. Financing is available on approval of credit. And if you cancel your service, you have to pay the balance you owe on the phone.

The Untold Story

We caught up with Weston Henderek, a principal analyst at Current Analysis, to get his take on the trade-in program. He told us there is an aspect of the deal that T-Mobile didn't mention in its marketing materials.

"If you bring an iPhone to T-Mobile right now -- an iPhone that worked with AT&T, for example -- it's going to be missing the AWS frequency and you are not going to be able to take advantage of the full network coverage," Henderek said. "So it's better for someone who wants to run on T-Mobile to actually get the new T-Mobile version of the iPhone."

As for the actual trade-in deal, Henderek said consumers may be able to get more money selling their phone on Craiglist -- but T-Mobile is making it easier than jumping through those hoops. Consumers can walk into a store, do the trade, and walk out with a new iPhone 5 immediately.

"From an ease of use point of view, it's a customer-friendly trade in program," Henderek said. "Consumers are still going to have to pay that off over two years. So it's not anything like a straight swap, but, it's still nice to have that zero down. U.S. customers are obviously very conditioned to paying low up front prices for their smartphones and they love the free device type deals. This trade-in program flows into that."

Read more on: T-Mobile, iPhone, Wireless, 4G LTE
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