In 2000, I walked into a Pacific Bell Wireless store on Market St. in San Francisco and signed up for service. For the next twelve years, I stayed with them through six different names:
- Pacific Bell Wireless
- Nevada Bell Wireless (technically different service when I moved from California to Nevada, but they were both owned by the same company)
- SBC Wireless
- AT&T Wireless
- Cingular Wireless
- AT&T Mobility
In 2012, with the release of the iPhone 5, I upgraded from my iPhone 3G. At the same time, I switched from AT&T to Verizon, to save a little money (from $100/mo down to $90/mo), and because at the time, Verizon had LTE service in Reno, but AT&T did not yet. (AT&T did launch LTE in the area a few months later.)
On Wednesday, I heard the announcement that T-Mobile would be paying off the Early Termination Fees of up to $350 if you switched to them, traded in your smartphone for up to $300, and bought a new smartphone with them. Their plans are decent, offering unlimited talk/text/data (though the data is throttled after a certain point depending on what you pay, but they tell you this up-front) for as low as $50/mo. They've also got the system where you essentially finance the unsubsidized cost of the phone over the course of 24 months, rather than the telco subsidizing the cost of the phone into higher monthly plan costs. For most people, assuming a new phone every 2 years, the savings would be modest, but there would be savings.
After I looked at this offer, I didn't think it was worth it in my specific case. ETF on Verizon would be $200 ($350 minus 15 months at $10/mo), and they offered $215 for my iPhone 5 32GB. I'd have to get a new phone, so say the equivalent iPhone 5S 32GB for $100 down and $25/mo for 24 months. Net savings after 9 months (when my Verizon contract would have come up): $250, except I'd still have 15 months of a "contract" left in the form of $25/mo payments on the new phone.
Instead, I decided to switch to T-Mobile anyway, eating the $200 Verizon ETF and keeping my existing phone. I'm now paying $50/mo with T-Mobile, instead of $90/mo with Verizon for effectively the same service. Net savings in 9 months will be $200, $50 less than the scenario above, but I will have no obligation at any point from now going forward, unless I decide to buy a new phone sometime soon.
And therein lies the mental benefit. If I would have stayed with Verizon, in 9 months when my 24 month contract would have been up, I would have still been paying $90/mo. It mentally encourages you to get the latest and greatest when your contract is up, to justify the price, but that locks you back into a contract. With this new T-Mobile service, I can continue to use my existing phone as long as I want. Or hey, maybe the iPhone 6-X With Blast Processing is released in 9 months and I decide to get that. I've got choices.
"But Ryan," you ask, "your current phone was bought through Verizon and was still under contract. And isn't it CDMA anyway? How does it work with T-Mobile?" In short, it works, and well, but not to its full potential. The iPhone 5 A1429 (CDMA) model includes CDMA, a handful of GSM bands, and a handful of LTE bands. The LTE band T-Mobile uses just isn't available on my phone, so no LTE. A year ago, I would have been limited to EDGE/GSM (2G), as 1900MHz was the only common frequency, and T-Mobile had UTMS/HSPA+ (3G/"4G") on 1700MHz, which isn't available through my phone. However, in the last 6 months, T-Mobile has been moving UTMS/HSPA+ over to 1900MHz on a city-by-city basis, and Reno has already been done. HSPA+ is not LTE, but it's plenty fast. The only real downside is if I'm in a non-major metro area, it's likely I'll be limited to EDGE, but I can live with that.
As for the contract issue, here's a fun fact: All Verizon LTE-capable phones, including the iPhone 5/5S, are completely unlocked. They're actually required to as an FCC condition of their allocation of LTE band 13. So my "CDMA" phone is actually a fully capable GSM phone out of the box. This was useful for me as I've been to London twice in the 15 months since I got the iPhone. I can literally walk up to a vending machine in Heathrow and buy a short-term SIM card. (Though crazily, T-Mobile offers unlimited free roaming data in many countries, including the UK, and the majority of why I'd get a SIM card in the UK was for mobile data. Woot.)
As a side note, when I switched cellular service in 2012, I got a new phone at the same time. My mind had linked the process of switching cellular providers with the reward of new tech. As a result, after switching providers again this week, for about 24 hours I would occasionally think, "I switched providers! I should go play with my new... oh, it just means I get my bill from another company."
(I think I have lost the ability to write small posts anymore. I may have a problem.)