T-Mobile to let US customers swap phones twice a year

In its latest challenge to the two-year contracts of its competitors, US wireless carrier T-Mobile has announced a new plan that allows customers to upgrade their handsets to new models as often as twice a year.

"At some point, big wireless companies made a decision for you that you should have to wait two years to get a new phone for a fair price," T-Mobile president and CEO John Legere said in a canned statement. "That's 730 days of waiting. 730 days of watching new phones come out that you can't have. Or having to live with a cracked screen or an outdated camera."

Unveiled at a press event on Wednesday, T-Mobile's new Jump! plan allows customers who buy their phones under the carrier's Equipment Installment Program (EIP) to trade in their handsets twice a year, once they have been enrolled in the program for at least six months.

EIP, you may recall, is T-Mobile's answer to handset subsidies, which the carrier did away with in March amid much fanfare. Under the EIP program, customers pay a down-payment on their phones and then pay off the balance of the device's full list price over the next 24 months.

Previously, customers were only eligible to replace their phones once they finished out the 24 months (or paid off the balance on their old phone in a lump sum). With Jump!, customers can now switch to new phones up to twice a year, provided they turn in their old ones.

Customers who turn in their phones under Jump! have all of their remaining EIP payments negated and they can purchase their new phones under the same pricing and terms as new customers. The only requirement is that their phones must be in good working order – no broken screens, no liquid damage, and the devices must power on.

The catch is that Jump! isn't free. It costs $10 per month, so while T-Mobile says there are no charges or fees to swap your phone, by the time you're eligible to upgrade you will have paid a minimum of $60 on top of your regular EIP payments.

On the plus side, T-Mobile is treating the program as an extension of its existing handset protection insurance plans. When you sign up for Jump!, you also get protection from damage, loss, or theft thrown in for the same fee.

Jump! is only the latest attempt by fourth-ranked T-Mobile to regain market share from its larger rivals, Verizon, AT&T, and Sprint. Despite restructuring its rate plans and debuting the iPhone on its network in April, the carrier continues to struggle to retain customers.

According to the latest figures from Kantar Worldpanel ComTech, T-Mobile accounted for just 10.1 per cent of US smartphone sales during the three months ending in May, down from 13.5 per cent during the same period a year ago.

But those same figures showed that 53 per cent of customers who bought an iPhone through T-Mobile had previously owned a feature phone, rather than a smartphone, which was significantly above than the 45 per cent industry average.

By making it easier for customers to upgrade their phones more often, T-Mobile may be betting that more of their customers will move from feature phones to smartphones, which are generally more lucrative for carriers.

T-Mobile's Jump! program officially launches in most US regions on Sunday, July 14. ®