NEW YORK -- T-Mobile announced a new device upgrade program for its no-contract customers Wednesday. The program allows these customers to get their hands on the latest and greatest phones at subsidized prices.
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The upgrade program, called Jump, makes it easier for people to upgrade to new devices and pay a lower price instead of replacing their current devices at full price. To participate in the early upgrade program, customers will pay $10 a month. Customers can get their first upgrade after being enrolled in the program for six months. The company will then credit the remaining cost of the device. Enrollment will start this Sunday.
"Two years is too long to be locked into a phone," said T-Mobile's CEO John Legere."You should decide when you upgrade, not your wireless company."
The program also works as device insurance and includes protection against malfunction, damage, or theft. Legere said device insurance already costs between $8 and $12 a month, so the upgrade program is virtually free if you think of it that way.
Legere went on to say that the Jump program will finally allow people to upgrade their device when the screen cracks or they drop their phone in the toilet.
"If your phone malfunctions or it becomes possessed," he said. "If it's stolen or you drop it in the toilet or run it over with the car. Or if you just don't like it anymore, you are covered."
Legere pointed out that competitors AT&T and Verizon Wireless are actually lengthening their upgrade cycles to 24 months.
"That's not what customers want," he said. "What will they do next? Extend it to 36 months?"
Earlier this year, T-Mobile announced new no-contract plans that require customers to buy devices at full price. Customers also can pay for devices in monthly installments. But if they leave the T-Mobile service, they must pay the full price of the device.
Some consumers complained that buying devices at full price made it more difficult to get newer devices. CNET first learned of this concept in March, when CEO John Legere said it was still an idea that the carrier was tossing around.
Family share plans with no-contract
T-Mobile also announced Wednesday a less expensive family plan for no-contract customers. Now a family of four can get a plan for $100 per month with unlimited talk and text messaging. Each member of the family on the plan can also get 500MB worth of wireless data at full speed. The big bonus for families is that there are not contracts or credit checks, said Mike Seivert, T-Mobile's chief marketing officer. That said, people will have to put down a deposit instead of the credit check to get the family plan. The deposit is the cost of one month of service, which is $100 for four people.
T-Mobile lights up more LTE markets
In addition to the new Jump early upgrade program and an expansion of the family plan, T-Mobile also announced it now has deployed 4G LTE service in 116 cities covering a total of 157 million people in the U.S. with the new faster speed service.
Neville Ray, T-Mobile's chief technology officer, said that company beat its midyear goal of reaching 100 million people with the service. By the end of the year, the company expects to have LTE available to 200 million people in the U.S. in 200 cities
Cities where 4G LTE is now available include New York, Los Angeles, San Francisco, Chicago, Boston, Philadelphia, Dallas, Seattle, Atlanta, and Miami. Ray also talked up the company's expansion using spectrum it got from its acquisition of MetroPCS. The deal closed in May and T-Mobile is already using spectrum in areas where MetroPCS had begun deploying its own LTE service. Specifically, he pointed to Las Vegas as an example of where the companies have combined spectrum for LTE service. And he claims the customer experience has greatly improved with faster speed service due to the added capacity.
"T-Mobile's network will get stronger and stronger, as we add more spectrum from MetroPCS," he said.
In an effort to give these new LTE markets better handset selection, T-Mobile also announced new LTE devices to its line up. It is adding the Windows Phone 8 Nokia Lumia 925 and it will be the exclusive carrier in the U.S. for the Xperia Z. The Xperia X debuted at the Consumer Electronics Show in January. T-Mobile also said it will offer the Samsung Galaxy Tab 2 10.1 users an LTE software update.
A key part of T-Mobile's strategy has been getting more of popular handsets on its network. After years of waiting, the company finally starting offering the iPhone.
Success not just about the iPhone
While there is no question that T-Mobile had to get the iPhone in order to stay competitive against the other three major wireless operators -- AT&T, Verizon Wireless, and Sprint--Legere said the company's recent success in reducing customer churn and attracting new customers is not only due to the iPhone.
He noted that iPhones have been 29 percent of sales -- or 39 percent in April, the month the device launched at the carrier -- but the device never became 50 percent of T-Mobile's base.
"The iPhone isn't everything," he said.
Legere noted that many people are leaving other carriers for T-Mobile. He took the opportunity to take a few shots at competitor AT&T and said that customers "fed up with AT&T" are leaving the company's service in droves and heading for T-Mobile. Another indication that customers are considering T-Mobile more than they have in the past is the fact that T-Mobile's store traffic has virtually doubled in the past couple of months.
"We're changing this business," Legere said. "We're going to redefine a stupid, broken, and arrogant industry."
Update, 2:13 p.m. PT: This story was updated with additional information and executive quotes from the press conference.