The iPhone Upgrade Program Would Pay for Itself, If Customers Could Switch to Pre-Paid Mobile

The most significant part of the recent announcement of the iPhone 6s and 6s Plus was the introduction of the iPhone Upgrade Program. This is because it allows iPhone customers, for the first time, to lease unlocked iPhones directly from Apple, finance them through Apple1, and get away from the two-year subsidized purchase contracts with mobile carriers that have kept iPhone customers paying inflated rates for mobile data and cellular service.

A lot of customers who looked for ways to finance their new iPhones in this purchase cycle were disappointed that they were being asked to pay monthly as a separate line item for their new handset. But this separation of phone financing from mobile service is already putting pressure on AT&T and Verizon, who charge the highest rates for post-paid mobile service in the United States.

This means that the 16 Gigabyte iPhone 6s can be financed for $32.41 per month for two years, regardless of which of the big four U.S. mobile carriers you choose to use (AT&T, Verizon, Sprint, or T-Mobile). iPhone customers who choose the iPhone Upgrade Program can seek the lowest service rates available from these four carriers.

If you upgrade to an iPhone 6s or 6s Plus, you should seriously look at financing using the iPhone Upgrade Plan or paying for the phone outright, if you can afford it. This gives you the greatest negotiating power with carriers, and gives you the option of paying for service on a month-to-month basis.

That's Fantastic, So Why Haven't I Upgraded?

The problem with the iPhone Upgrade Program right now is that customers must choose between AT&T, Verizon, T-Mobile, and Sprint, which are the four largest post-paid mobile carriers. If customers were allowed to choose from the non-branded, pre-paid carriers, the monthly savings on mobile service would be even greater.

My wife and I decided not to upgrade our iPhones (a 5s and a 5), let our two year agreement with AT&T expire, and we were able to get our monthly bill down from about $145.00 on an AT&T Mobile Share Value plan to $80.00 on Cricket Wireless' Bring Your Own Phone plan.

This means that my wife and I should be able to stay as customers of Cricket and be able to afford to finance two 16 Gigabyte iPhone 6s phones through the iPhone Upgrade Program at nearly the same cost we were paying for service alone with AT&T two months ago.

The drawback is that right now Apple doesn't let us choose Cricket. We have to choose one of the big four branded carriers, all of which are more expensive.

Who is Cricket Wireless Anyway?

A lot of middle-class U.S. smartphone users probably aren't even aware of Cricket Wireless' existence, but they are the pre-paid mobile service subsidiary of AT&T. This means that I keep almost all of the features of AT&T, including the exact same coverage areas, and pay about $65.00 per month less than I did by being a post-paid AT&T customer.

If you really want to know what we don't get with Cricket that we had with AT&T, the biggest things we don't get with Cricket are:

  • tethering
  • pooled data (we went from a 10 GB Mobile Share Plan to 5 GB of LTE data for me and 2.5 GB of LTE data for my wife, which we can change if we need to on a monthly basis)
  • capped network throughput (supposedly 6 to 7 Mbps on LTE, but I have not yet noticed any performance difference between Cricket and AT&T's branded service in the areas where I travel)

But for $65 less per month, I can deal with these features being missing.

Best of all, if I ever decide I need tethering, pooled data or somewhat higher throughput, I can switch to a carrier or a plan that provides it at the end of my current monthly billing cycle. I don't have to stay with Cricket more than 30 days because we pay as we go.

Who Are the Other Pre-Paid Mobile Carriers, and What's the Deal with Them?

If you are interested, the biggest pre-paid mobile carriers in the United States that are not branded with the big four mobile carriers names are Cricket Wireless, Straight Talk, Virgin Mobile, Boost Mobile, MetroPCS, and GoSmart. Some of them don't provide LTE data plans comparable to the post-paid carriers. Some of them don't support the iPhone. YMMV.

Conclusion

We should thank Apple for providing the iPhone Upgrade Program, and for breaking the hold that the mobile carriers have on us if we can find the right month-to-month plan that meets our needs as an individual or a family.

But, for me and my family, I want the option to choose a U.S.-based pay-as-you-go carrier as my mobile carrier and still be able to participate in the iPhone Upgrade Program. So right now, I am on the sidelines, still using my iPhone 5s. (...which is still an awesome phone, and runs iOS 9.1 like a champ. It's just not as awesome as the newer phones.)

1iPhone's leased through the iPhone upgrade program are technically financed through Citizen One Personal Loans, but this is Apple's choice of customer financing options.