The lines may not be as long as they typically are for the launch of a new iPhone, but T-Mobile customers and those looking to jump ship to the maverick wireless carrier are excited that the iPhone is finally coming to T-Mobile.
The company began selling the iPhone 5 in retail stores and online today. The carrier is selling the device at a discount compared to Apple and its other carrier rivals. The full price of the device from T-Mobile is $580, compared to the full price of $650 from Apple and other carriers. T-Mobile is also letting people finance their new iPhone 5s over two years with no interest. The down payment, which doesn't require a contract, is $99 with 24 payments of $20. AT&T, Verizon Wireless, and Sprint sell the new iPhone 5 for $199 with a two-year contract.
To entice loyal iPhone fans from other carriers, T-Mobile is offering a trade-in program. In exchange for relinquishing an older iPhone 4 or iPhone 4S, customers can get credit for the new iPhone 5 from T-Mobile. But how does this plan stack up against the many trade-in sites on the Web?
That's one of the questions answered in this Ask Maggie. I also explain whether iPhones from other carriers can be used on T-Mobile and why I think T-Mobile's plan is better than AT&T's offer.
Where can I get the most bang for my buck when trading in my iPhone?
I am currently a Verizon Wireless customer. But I am thinking about switching to T-Mobile's new plans. I have an iPhone 4S from Verizon. Will I be able to take it with me to T-Mobile? If not, I have heard that T-Mobile has a trade-in program for the iPhone. Do you think this would be a good deal for me, since I was thinking about upgrading to the iPhone 5 anyway? The only thing I am concerned about is that Apple will come out with a new phone in the next few months. Also, I'd like to get the best trade-in value for my old iPhone.
Let me know what you think.
As I've written in the past, I'm a big fan of the new T-Mobile plan for people who are looking to save money. But keep in mind that T-Mobile's coverage is much more limited than Verizon's. So before you make the switch make sure that you are able to get service where you live and work. If the coverage is there, go for it.
Now onto your question. Unfortunately, you will not be able to take your existing iPhone 4S from Verizon to T-Mobile, because the networks are incompatible. Verizon has built its network using a technology called CDMA and T-Mobile uses a technology called GSM. The two technologies will not work together so a device designed for one network won't work on the other, even if the devices are carrier "unlocked."
That said, unlocked iPhones from AT&T should be able to work on T-Mobile. And AT&T devices should be able to get similar speeds on T-Mobile as they'd get on AT&T's network. AT&T is also a GSM carrier, which is why the devices are compatible.
Should you trade in your old iPhone 4S for a new iPhone 5? Given that you must get a new phone if you want the T-Mobile service, I would say that this is a good idea. There are rumors that Apple may come out with a new iPhone 5S as early as this summer. But right now that's still speculation, and I can't tell you for certain when it will launch.
More from Ask Maggie
This leaves you with two choices. You can continue on Verizon's service until the new iPhone is released and then buy that new device on T-Mobile's network, or you can move over to T-Mobile and buy a new iPhone 5. If you feel you need the newer iPhone when it hits the market, you can sell your iPhone 5. Apple iPhones tend to hold their value very well so it's likely that you would be able to get a very good price on the iPhone 5 just after a new iPhone is released.
This would then allow you to offset the cost of buying the new iPhone from T-Mobile.
Let's say you choose this route. Where are you going to get the best value for your old iPhone? T-Mobile is offering a trade-in program to help offset the cost of a new iPhone. Remember under T-Mobile's model, you can buy the device up front or finance it over 24 months.
Under T-Mobile's trade-in program, the company is waiving the $99 down payment, and you could get a $120 credit for a 16GB iPhone 4S, according to the company's press release. T-Mobile sells the iPhone 5 for $580. T-Mobile says that that the credit for the trade-in can be used toward monthly payments on the new device, an existing T-Mobile bill, or the purchase of accessories or another device. So this would mean you'd pay $360 for your new phone. If you apply the remaining $120 credit toward lowering your monthly payment for the device, you reduce your monthly bill by $5. which brings it to an additional $15 per month for 24 months.
This is a pretty good deal. If you go to a reseller site such as Nextworth.com, you could sell your 16GB iPhone 4S for $210. An 16GB iPhone 4 would net you $148. These prices could be less, since the Verizon iPhone typically resells for less than a GSM version of the same phone. Of course, the difference between using the T-Mobile trade-in offer and a trade-in site, is that with a site such as Nextworth, you actually get cash in your pocket. T-Mobile's offer is for credit with T-Mobile, which can be applied in several ways.
Also, keep in mind that T-Mobile's trade-in program is a special promotion. It's only offering the program through Father's Day on June 16. Another thing to remember, if you want to finance the device, you must be considered "well-qualified," which essentially means, you had better have good credit.
One thing to keep in mind when comparing any trade-in sites is that the prices quoted depend on the condition of your phone. Devices that are in better condition have a better chance of qualifying for the top resale values than those with scratches or cracks.
Bottom line: My advice is go ahead and switch to T-Mobile now. The sooner you make the switch, the more money you will save in terms of your contract. At this point, it looks like T-Mobile is offering the most bang for the buck when it comes to trade-ins. But I'd also recommend checking out reseller sites, such as Nextworth.com and Gazelle.com. Prices change regularly. And T-Mobile's plan is for a limited-time only.
My guess is the new smartphone Apple introduces, whether it comes in the summer or the fall, will not be a major change from the iPhone 5. I imagine many of the new bells and whistles will come as part of the next iOS software upgrade. And it's very likely that many of the new features will also be available on the iPhone 5. Still, you always have the option to sell your iPhone 5 if a new one comes out. And that surely will pay for a big chunk of your next device.
I hope this advice was helpful and good luck!
What's the big deal about T-Mobile's new no-contract plans?
Dear Maggie, Thanks for your article about T-Mobile's no-contract price options. I have been with AT&T for over 10 years. Usually my phone always breaks down right around two years when my current contract is up. I am confused because if you go to AT&T's Web site, the company lists options for purchasing the phone at full retail price on a month-to-month service. Or you can get a two-year contract. I just don't see what's different about this than what T-Mobile is doing. Can you please explain?
You are correct that you are able to buy a phone from AT&T at full price and not sign a contract for your service. This is also true of T-Mobile. But the fundamental difference is that if you buy a device at full price from AT&T, the monthly service contract is exactly the same as if you had taken the subsidy for a new phone and signed a two-year contract.
In other words, there is no incentive to buy the device from AT&T or any other major carrier at full retail price, because your monthly service, which supposedly helps offset the cost of the phone subsidy, will remain the same regardless of whether AT&T is paying off the subsidy. When you don't take the subsidy, you are essentially providing more profit for AT&T. It's like making a car payment to the bank for a car you already own. It's free cash.
Of course, if you buy the device at full price from AT&T, you won't have contract. But what are the real benefits of not having a contract? The biggest benefit is that you can switch to another carrier anytime you want. But you've already been with AT&T for a decade. Do you really anticipate you will change carriers in the next couple of years?
Unless you plan to change service providers within two years, it doesn't make sense to buy the device at full price simply to avoid a contract. The only reason why I would consider buying a device at full price from AT&T is so that I could get it unlocked. AT&T recently changed its policy, and it no longer unlocks smartphones that are still under contract.
But again, if you plan to use AT&T's service, I don't see this making financial sense unless you travel overseas regularly. In that case, you would probably want an unlocked phone so that you could use a local SIM card in your phone when you're traveling. Using AT&T's international roaming plans can get expensive.
By contrast, T-Mobile's plan is different. There is a set price for the service, which by the way is less expensive than a comparable service from AT&T. And if you want to finance your phone over two years, you can make a down payment and then add payments to your monthly bill. The finance charge depends entirely on the cost of your device. A more expensive device will cost you about $20 more a month.
This plan looks very similar to the subsidy model that the other carriers use. The big difference is that once the T-Mobile device is paid off, you stop paying the extra finance fee. What's more, if you buy a used phone or you find a cheaper device to use with your service, your overall cost of ownership will be less.
This is not true of subscribers on AT&T, Verizon, or Sprint. There is only one price for the service. If you bring a used device to the network or buy a cheaper device, you will pay the same amount each month as if you bought the most expensive device in the carrier lineup.
Of course if you plan on upgrading your device every two years and you plan on getting the most expensive phone on the market every time, then AT&T's model may still work for you. But in most cases, T-Mobile is still less expensive than either AT&T or Verizon. That said, price isn't everything. If AT&T's coverage is better where you live and work, then T-Mobile's no-contract, no-device subsidy plans aren't worth much. Having a phone that works when and where you need it is still the most important thing to look for when deciding on a carrier.
I hope this clarifies things for you. Thanks for your question!
Ask Maggie is an advice column that answers readers' wireless and broadband questions. The column now appears twice a week on CNET offering readers a double dosage of Ask Maggie's advice. If you have a question, I'd love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header. You can also follow me on Facebook on my Ask Maggie page.
Correction 10:50 a.m. PT An earlier version of this story did not account for the fact that T-Mobile is waiving the $99 down payment on iPhones when people trade in their old devices. With this factored into the overall savings of the trade-in, T-Mobile's trade-in program actually offers consumers a better value than other trade-in sites such as Nextworth.