When Cell Phone Companies Fight, You Win… Sometimes

By Ian Bush

PHILADELPHIA (CBS) – The big wireless companies are doing very public battle these days for your cell phone business, but the price war doesn’t always end in your favor.

The spat between T-Mobile and AT&T has reached the radio, billboards, and other ads.

“T-Mobile has really amped up the level of competition since they got their new CEO less than a year ago,” Sascha Segan, lead analyst for mobile at PCMag.com says T-Mobile — with its Jump plan — is trying to appeal to those who want that new iPhone or Galaxy right when it comes out.

“If you’re a very frequent upgrader, then this can save you some money.”

AT&T calls its version “Next”: unlike with T-Mobille, there’s no upfront fee for the device; instead, you pay up to $50/month on top of regular service charges.

But the fine print uncovers some New Math.

“It’s actually cheaper to pay the early termination fee on a two-year plan and sell your own phone on eBay than to turn it back to AT&T who can then resell it for a profit,” Sagan says. “For instance, with an iPhone, after about six months, that becomes more than you would have paid for a discounted iPhone. After about 12 months, you end up paying more that you’d pay for a discounted iPhone plus the termination fee. They’ve done the math to make it pretty hard to get a financial advantage here.”

This summer, Verizon is expected to announce its own appeal to the early-and-often upgrader.

“These carriers all have very smart accountants, and they’re not going to set up these plans so they make less money than they do now.”

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