What is it?
- T-Mobile announced an equipment upgrade program known as JUMP!™, which enables people to upgrade their phones when they want, up to twice a year as soon as six months from enrollment. The monthly outlay is $10/month with equipment warranty (theft, lost, broken, or when one wants another phone).
- The Simple Choice for Family plan (4 lines of unlimited talk, text and web(500MB) for $100/month) was also announced allowing access to discounted plans without a credit check. The caveat is that payment must be in advance (prepaid).
- JUMP Details:
- Enroll in JUMP for $10/month. Have to wait for 6 months until the first 'JUMP' to get a new device.
- If in 'Good Working Order' (powers on, no screen cracks, no visible water damage), customer can get the next latest and greatest. If customer is financing it (Equipment Installment Plan (EIP)), remainder of payments are waived. Customer can enter a new EIP plan.
- If not in 'Good Working Order,' a deductible will be paid ranging from $20-$170, depending on device,
- Customer can upgrade twice a year. It could be as early as the next day.
What it means for consumers:
- For T-Mobile consumers who are early adopters and want the latest and greatest, Jump should be very compelling.
- For T-Mobile customers who don't care for upgrading and are price-sensitive, they're not likely to enroll in JUMP as the enrollment tallies to $120 a year.
- For credit challenged family customers who want access to discounted postpaid rates, this should spur them on.
- The JUMP plan should appeal for early adopters in other competitors. Since T-Mobile is targeting AT&T, it would be logical for T-Mobile to step up some anti-AT&T marketing as it has done so already.
What it means for T-Mobile:
- JUMP is an interesting anti-churn tool that appeals to a segment of customer who is willing to switch to get the latest and greatest. For this reason, it comports with T-Mobile's public comments stating that 2013 is going to be a year to stabilize.
- JUMP may be an effective switching tool. If T-Mobile can convince potential switchers that the T-Mobile network is just as good as everyone else's that would help customer acquisition.
- The long term impact of JUMP 'trade-in' devices will help its MetroPCS unit. These turned in devices will be refurbished and pushed into the MetroPCS portfolio as refurbished. For the MetroPCS customer who normally pays full priced for a phone, access to nearly the latest and greatest smartphone at a lower cost increases service stickiness. As T-Mobile wants to transition MetroPCS customers from their CDMA phones anyway, this move can potentially help accelerate the migration to the LTE/HSPA network and refarming of MetroPCS PCS spectrum.
- Depending upon the JUMP subscriber size, the $10 monthly fee may be a factor in lifting postpaid ARPU.
- Simple Choice for Family should also help T-Mobile acquire subscribers. The price point is compelling. This plan could draw price sensitive postpaid family subscribers from competitors as well as transition families dealing with individual prepaid plans. How much this will hit Tracfone brands like StraightTalk and Simple Mobile remains to be seen. Of note, Simple Choice is LTE accessible whereas MVNO plans are still 3G/HSPA (okay 4G-ish).
Which companies will feel the most impact?
- AT&T as the very public target should see the most marketing against its subscribers. Other competitors may experience some leakage from their early adopter community as well, especially those whose ending contracts.
- T-Mobile warranty companies should be busy depending upon how well JUMP is embraced.
- Handset makers (likely with halo devices) will likely see more volume coming out of T-Mobile. With increased volume, T-Mobile may leverage this to attain more favorable pricing.