T-Mobile launches summer promotion with $0 upfront costs for smartphones

T-Mobile US (NYSE:TMUS) launched a new promotion for the summer in which it is dropping the upfront price on its entire lineup of devices in stores nationwide to zero dollars down. That doesn't mean that customers get free devices--they still must pay monthly device payment costs as part of the carrier's Simple Choice plans (and must eventually pay off the full cost of the device). However, the promotion, which starts Saturday and is expected to run for at least a few weeks, will make it easier for customers to walk out of T-Mobile's stores with brand-new devices for no money down. Under the normal scheme, customers can make a down payment on T-Mobile devices and spreads out the rest of the cost of the device in monthly payments which are added on top of a customer's service bill; the new promotion just removes the need for a down payment and spreads out the payments over 24 months.

T-Mobile CMO Mike Sievert told FierceWireless that the promotion is a "direct response" to AT&T Mobility's (NYSE:T) "Next" device upgrade program, which he once again slammed as a program that makes customers pay for the cost of their device twice. A key distinction between Verizon Wireless' (NYSE:VZ) and AT&T's upgrade programs and T-Mobile's Jump plan is that Verizon and AT&T are not taking the cost of a device subsidy out of their rate plans; their rate plans remain the same under the upgrade programs, but customers who want to upgrade sooner are asked to pay the cost of the device as well. Although T-Mobile's Jump program has a $10 monthly fee, T-Mobile, through its Simple Choice plans, has effectively decoupled the cost of its service (which is cheaper than service from AT&T and Verizon) from the cost of devices.

Jump lets customers upgrade their phone twice every year after the initial six-month enrollment period has expired. Sievert said the promotion would make Jump even better because customers can now switch phones after six months having paid less in equipment fees than under the normal scheme. Sievert also said the promotion is about sustaining the momentum T-Mobile has seen from its Simple Choice plans. Release


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