NEW YORK (AP) - Sprint is launching a new program that gives customers the chance to upgrade their phones every 12 months, becoming the last of the four national wireless carriers to target customers who want the latest devices.
Sprint Corp.'s new One Up plan is most similar to Jump from T-Mobile US Inc. T-Mobile allows for more frequent upgrades, but requires a $10 monthly fee to participate. Sprint's is free, but doesn't include insurance, as Jump does.
Like T-Mobile, Sprint is reducing the monthly cost of voice, text and data services while charging for the phone in installments. But unlike T-Mobile, Sprint's discount ends after the phone is paid off over two years. T-Mobile customers can keep the lower service rates indefinitely.
AT&T and Verizon Wireless also allow customers to upgrade their phones before the typical two years are up. But neither Verizon's Edge nor AT&T's Next program reduces the monthly service fees, so customers pay more overall. With the iPhone 5S, for instance, a phone company typically charges about $200, or $450 less than the full retail price of the phone. With Edge, customers pay the entire $650, with no credit for not needing the subsidy. Next discounts the price to $540, but that's still $340 more than what customers normally pay.
Sprint said the program is available to new and existing customers on Unlimited, My Way and My All-in plans beginning on Friday. It is not yet available at Sprint stores in Florida or Washington, D.C.
Customers who want to sign up for the Sprint One Up program must buy an eligible smartphone or tablet and agree to two years of installment payments. Sprint said that once a customer makes 12 straight payments, or pays for half of the phone's cost, they can upgrade to a new smartphone or tablet. That applies retroactively to customers who have had their current phone for at least 12 months. The customer must turn in the old phone in good working condition, which means no cracked screens or other damage.
The fee for unlimited voice, text and data will be $65 a month, which is $15 less a month than its standard rate plan. That's a savings of $360 over two years, but less than the $450 iPhone subsidy.
Sprint isn't charging a down payment for new phones, but says that's a limited-time offer. That means that when customers are ready to upgrade in 12 months, they may have to make an extra payment up front to get the new device.
In July, T-Mobile was the first of the four carriers to announce an upgrade plan. Under Jump, customers are eligible for two upgrades every 12 months as long as they pay the $10 monthly fee. There's a deductible for insurance claims and a down payment for new phones, so upgrading frequently will be more expensive than keeping the phone the full two years.
AT&T Inc. followed a few weeks later with Next. There's no down payment or upgrade fee, but there's no insurance or reduction in monthly service fees either. The customer pays for the phone over 20 months and can upgrade 12 months into it.
With Verizon's Edge, which began in August, there's also no down payment or upgrade fee, nor is there insurance or any change in service fees. The cost of the phone is spread over 24 months instead of 20, and a customer can upgrade in just six months. However, before a year is up, the customer needs to pay off several months of installments to hit 50 percent of the phone's full cost. So at six months, that's six extra monthly payments at once.
Sprint One Up: http://www.sprint.com/landings/oneup
T-Mobile Jump: http://explore.t-mobile.com/phone-upgrade
AT&T Next: http://att.com/next
Verizon Edge: http://www.verizonwireless.com/edge
AP Business Writer Michelle Chapman contributed to this story.