Must Have An iPhone 5 Right Now? Maybe Your Carrier Will Effectively Pay You To Leave

Good news, Apple fans: if you absolutely must have the iPhone 5 right now, take the time to do some math and talk to your current carrier. It might be cheaper to just break up with your carrier, pay the early termination fees, sell your existing phone (or phones, on a family plan) and get a subsidized phone from a new carrier. One customer discovered that this was the case: that AT&T would effectively be paying him to leave, since the price of upgrading was so high.

He wrote on Apple stock blog Bullish Cross:

During the process of figuring out whether everyone on my family plan is eligible for an iPhone 5 upgrade, I came to discover that only my line was eligible. That my other two lines would have to pay a $250 early upgrade fee in order to be eligible to purchase the iPhone 5 tonight.

But get this. Upon discovering that I had to pay $250 for both my wife and sister to get them iPhone 5′s, I inquired as to how much it would cost me to essentially cancel my account at AT&T and go to Verizon instead. I wasn’t seriously considering leaving, but just sort of wanted to know out of curiosity what it would cost to not be under contract.

And this is precisely where AT&T completely and totally fails. This is why Apple is Apple and why AT&T is AT&T. For me to cancel the entire family plan and move to another carrier, it would only cost me $320.00.

So essentially, what AT&T told me today was that I can stay at AT&T and pay $500.00 to upgrade two of our iPhone 4S’s to iPhone 5′s, OR I can leave AT&T pay $320 and then get the iPhone 5′s for the normal $199 price elsewhere. AT&T more or less told me that they would pay me $180.00 to go to Verizon. And no one would budge to fix this. I must have talked to at least six or so people at AT&T today until finally someone realize how idiotic this sounded and decided to pay me $173.82 (via account credits) not realizing that doing so put me under no obligation to hang around. I can leave anyways.

All I wanted AT&T to do was to give us 1 early upgrade for free. Since I could leave AT&T and save $180, it makes sense that they give me one $249.99 upgrade for free as an incentive to hang around. Instead, some idiot decided to just credit my account for $173.82.

But what did that do exactly? Pretty much nothing. They just paid me $173.82 as a parting gift. Now instead of having to pay $320.00 to cancel my contract with AT&T, I only have to pay $146.18. And do you know what? I have zero moral qualms leaving because they should do their own due diligence and realize that I’m not under any obligation whatsoever to hang around. That they just essentially paid me $173.82 for the hell of it. What they should do is figure out a much better system than saying, “you can pay $500 to stay with us or $320 to go to Verizon.”

What they should have done is what I asked for. And that is to upgrade one of our lines for free. That way I can’t screw them over. Now they’re just inviting me to do so. Because I’ve generally been made whole, I’m inclined to want to stick around. But the fact that their system is so freaking broken, the only way to get them to fix it is to expose the problem.

No customer should ever be put in a situation where by canceling their contract, they get to save $180.00. What the hell is that? What kind of business is that? One of two things should have happened today. I should have either been able to upgrade two out of my three lines without any further investigation OR upon further investigation I should have come to find out that it would be far worse for me to leave AT&T. Why in the hell would they ever employ a system where I would have a $180.00 incentive bonus to leave AT&T? That doesn’t make any sense at all.

So the moral of the story is this. When checking to find out whether you are eligible for an upgrade, you should always ask how much it would cost to just rip-up your contract and move on to another carrier. I can’t imagine that I’m the only person in the U.S. where it would have been cheaper for me to cancel my service at AT&T than to upgrade to the iPhone 5 at Verizon.

How AT&T paid me $173.82 to go to Verizon [Bullish Cross] (Thanks, David!)

Comments

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  1. Daggertrout says:

    Whoever said math was the strong suit of any cell phone carrier?

  2. AustinTXProgrammer says:

    I’m not sure I would have taken the credits AND left. They may not have committed you to staying with a contract extension but it was certainly implied.

  3. eturowski says:

    Something about the OP’s math doesn’t add up.

    Price to stay with AT&T and get two iPhones: $500

    Price to leave AT&T and buy two iPhones from Verizon: $320 + $199 + $199 = $718.

    Or did I miss something?

    • eturowski says:

      Hmmm… looks like I missed a phone, but that just reinforces the math, as salamanderjuice states below. 1 free phone + 2 upgrades < ETF + 3 phones.

    • Chmeeee says:

      I think the iPhones would have cost $250+$199 each at AT&T, but that wasn’t clear.

      • Chmeeee says:

        To clarify that:

        AT&T – $199+($250+$199)x2 = $1,100
        Verizon – $320+$199×3 = $920

        • eturowski says:

          Ah, that makes sense. Thanks for clearing it up.

          The blogger’s overpowering air of entitlement was obscuring any traces of logic in his story.

    • MightyHorse says:

      I assumed that the $250 upgrade fee from AT&T was in addition to the purchase price of the iPhone 5. So it would be $199 (free upgrade) + $199 ( +$250 upgrade fee) + $199 ( +$250 upgrade fee) = $1097

    • pdj79 says:

      You missed the price of the new phones AFTER the $500 in early upgrade costs as well as there being 3 lines, not just 2.

      AT&T – $500 (early upgrade) + $199 + $199 + $199 = $1097
      Verizon – $320 (ETF) + $199 + $199 + $199 = $917

      • jessiburkham says:

        Don’t forget Verizon charges $35.00 per line to activate. And ATT charges an upgrade fee of $18.00 per line

        ATT=500+3(199)+(3*18)=$1151
        Verizon= 320etf +3(199)+(35*3) =$1022
        Then from what I understand the customer service rep gave him A CREDIT of $173.82 makes Att cheaper plus you need to figure in the price difference of the rate plans for the duration of the 2 year contract. I used to work in the loyalty department for a cell phone company it just take explaining the long term savings to people no credit needed. This customer obviously wants short term benefits, and can not look past next Tuesday for his want it right now attitude.

    • Ceric Neesh says:

      He has to pay $250 per line PLUS the $199 per iPhone, is how I understood it.

    • diddy0071 says:

      Price to stay: $500 early upgrade (I’m guessing, he’s paying 250+199 per phone)

      so that is: $449+$449=$898

      OR

      $320+$199+$199=$718

      898-718=$180!

  4. NeverLetMeDown2 says:

    This is always going to be true, because the ETF is less than the subsidy on the handset, plus it declines over time. If you had just signed up for a 4S at AT&T three months ago, you wouldn’t be entitled to a discount on an iPhone 5, so it would cost you ~$680 to upgrade. The ETF would be $325-10*3 (325, declines by $10 for every month you’re in contract), so $295. Getting an iPhone 5 at Verizon would be $200, so $495 to switch, $680 to stay.

    The only way this wouldn’t be true is if the ETF were the full subsidy ($450), AND it didn’t decline until very late in the contract period. Hardly consumer friendly.

    • Geekybiker says:

      Apple is the most heavily subsidized phone maker. I wish they would change to something like you described where your ETF was directly related to your phone cost. Or better yet, have a service cost and allow people to finance a phone over the two year contract. That way the guy with the iphone 5 and the flip phone are paying drastically different monthly rates.

  5. lyontaymer30 says:

    “This is why Apple is Apple and why AT&T is AT&T.”

    I don’t understand this comment, why is he comparing a phone manfacturer and a phone service provider like they’re the same thing and the same situation?

    “What they should have done is what I asked for. And that is to upgrade one of our lines for free.”

    Entitled much? I wonder if he told the CSR that and that’s why they told him that lol.

    • RogerX says:

      This. That $199 for a phone includes $400 in subsidy that the carrier is paying Apple out of the money you pay them over contract. Not getting into the completely bogus subsidy system versus actually offering lower rates while you pick your own device…”Give me free phones to keep me around, company!” is entitlement BS.

      How about this: You sell the 4Ses on eBay (they’re at most 11 months old, why do you think you should get a replacement free again?) for about 400 each, and pay 600 out of pocket for a 5 that you own free and clear.

      • nodaybuttoday says:

        Agreed, what a sense of entitlement the OP has. Gimme gimme gimme. For MOST people it’s cheaper to stay with your carrier and wait for the upgrade. Most people don’t need 2 or 3 iPhones for their family. Boo hoo, my family can’t get their iPhone5s.

        AT&T is providing a service, they can’t just hand out iPhones to everyone just because they cry about it.

        Also, what are the activation fees related to Verizon? Aren’t they forcing everyone on that new plan where all devices go on the same plan too?

    • ovalseven says:

      His point is that it’s to AT&T’s advantage to do what he asked for. It’s not about entitlement.

      Tell me you wouldn’t try to negogiate a deal that benefits both you and the other party, as opposed to a deal that benefits only the other guy.

      • lyontaymer30 says:

        Not always, because they recoup the money the discounted from the phone from your contract. If they give you freebies like this, especially two free iphone 5s, that’s $800 right there they’re giving up. And unless they can “profit” (notice I said “profit” and not just make) that $800 back over the term of the contract, it would not be in their benefit to do that. I never said he shouldn’t ask, what I was saying is for some reason he thinks he’s entitled to that. When I negotiated, I didn’t think or feel I was entitled, I just wanted to ask to see if they would do it.

        Some consumers are just a burden to the service providers, I know most consumers like to think they’re special, but some of you are a burden.

        • Sarah of Get Cooking says:

          Not two free phones – he would still have to pay 199 per phone. The post is about the existence of early upgrade fees, which was $250 each for 2 of the lines.

  6. salamanderjuice says:

    I don’t get it. You need 3 iPhone 5s right? You have one free upgrade on AT&T. It would cost $500 to get the other two right? But you can cancel for $320 and then get new phones on Verizon for $200 a pop, so that right there is $200×3+$320=$920. $920 > $500. Even if you have to pay $200 on top of the $250 at AT&T it’s still cheaper to stick with AT&T especially since you have that credit there…

    • The hand that feeds, now with more bacon says:

      I think by “free upgrade” the poster means receiving the subsidized price. Basically he could upgrade the eligible line for $200 and the ineligible lines for $450 each (200+250), or $1100 for 3 lines versus paying $320 to quit and $600 for 3 new lines on another carrier (totaling $920). The difference there is the same $180 mentioned in the post.

      Personally I don’t understand the obsession with having the latest and greatest iThing before everyone else. Does it cause that much anguish to wait until the contract is over to upgrade?

  7. The Brad says:

    Did everyone in your family really need to upgrade to the latest iPhone? There’s nothing significant compared to the 4S (besides the taller screen) that makes it worthwhile to upgrade early.

    • macdude22 says:

      I’m still debating on if I will upgrade my 4 or just stick with it. There’s nothing I inherently need on the 5. I might just wait for the next revision. I enjoy apple’s ecosystem of content and connectivity with my Mac, and it just works fine on my 4 still. Turn by Turn Nav in maps would be nice but I drive once a month maybe and telenav free works fine on my 4. I do have that new phone itch though. I also have that I want beer itch. I could buy a lot of beer for the same price.

      • roshambo says:

        Download the free Waze App. It does turn by turn voiced directions and navigates you by traffic paterns. It’s free and works great. I believe it is also who is partnering with the mapping in the new iOS which you can still download on your iphone 4 when the iOS is released.

    • fantomesq says:

      You’re kidding me, right? A6 processor? Substantially higher processing power…

      • The Brad says:

        And nothing to take advantage of it yet. It’s like having a Formula 1 racer but there aren’t any roads you can take it on to drive over 30 mph.

        • Geekybiker says:

          Not true. It is going to run all existing software substantially smoother. Its closer to you’re trying to drive a moped on a highway, and you replace it with a corvette. Sure you won’t be able to use the full power of the car, but it’ll do the highway a heck of a lot better.

        • lanman04 says:

          Not true. The faster the processor, the faster it can get done with tasks, leaving you with more battery life (as the processor is idle more of the time).

          That’s assuming, of course, that the A6 uses less power-per-clock (or whatever speed metric we’re talking about) than the previous processor.

    • who? says:

      That’s what I’m thinking. I got lost when he insisted that he wanted to upgrade multiple iPhone 4S’s. Yes, the iPhone 5 is better, but is it really so much better that you can’t wait a year?

    • rdm says:

      Agreed. What’s the harm in waiting 6 months? Do you really need a new phone every 10 months (or whatever it’s been since you got the 4S)?

    • elangomatt says:

      +1 It is families like this why Apple is making so much money. There are way too many people that don’t even consider using their phone for more than a year anymore since they just want the new shiny when it comes out. I think the iPhone 5 is a decent enough upgrade really, but good enough to make me want to go through the frustration of trying to figure out ETFs and how I can screw over my current carrier to try to get them to pay for my addiction to needing the latest and greatest.

  8. The Fake Fake Steve Jobs says:

    Sometimes it’s better to walk away from a contract than it is to stay. It’s that simple. It will probably be cheaper when the iPhone 6 comes out to do the same with Verizon and go to AT&T or another carrier.

  9. jeepguy57 says:

    I am considering swtiching to Verizon from AT&T, if for no other reason than AT&T coverage is pretty bad by me and my wife has Verizon account that I can combine into.

    AT&T wants $225 ETF. But I can sell my iPhone 4S to Gazelle for $285.

    Sure, I still have to buy a new phone from VZW, but I will have about $60 to put towards it.

    • Damage Incorporated says:

      Versus having $285 dollars to put towards it if you stay on AT&T?

      • jeepguy57 says:

        It’s a 4S – I am obviously not eligible for an upgrade for at least another 9 or 10 months. So I would need to pay at least $250 in an upgrade fee.

        And combining plans will save us $40/month. But we will give up our unlimited data in the process, which is why we have been hesistant to do this. But using less than a gig combined, each month, for the past year, we are confident we do not need our unlimited data plans anymore.

        • selianth says:

          That sounds like a no-brainer. Better coverage + cheaper overall plan + not really using your unlimited plan anyway = No reason not to switch.

    • nodaybuttoday says:

      Thanks for the tip about Gazelle!

  10. MightyHorse says:

    it is stupid, but i would imagine there aren’t a lot of people who take the time to do the math like this. most probably just pay they extra $$$ and upgrade with their current provider. likewise, AT&T probably gets a lot of defections from VZW and Sprint users who figure out the same thing and decide to pay their ETFs and jump ship.

    • Geekybiker says:

      Well the big issue for ATT is that AFAIK they are letting people keep their grandfathered unlimited plans. Verizon isn’t. So if you’re a long time ATT customer you’re going to lose unlimited data.

  11. Chmeeee says:

    I had a similar problem with AT&T, but I didn’t argue with them, I just went to Verizon. When the 4S came out, I was out of contract with AT&T on my 3GS. When I went to upgrade, I found out that they had bumped my upgrade eligibility back by 3 months because I had had a late payment a few months before (cc expiration had changed, didn’t notice autopay didn’t go through for a few weeks). AT&T wanted ~$600 for a new 4S, Verizon wanted $200. Apparently they don’t want a customer who was late on a payment once in SIX YEARS.

    • frank64 says:

      In your case not arguing and leaving was the best thing to do. They tried to screw you, why give them a chance to see the effect and make it right. That would be like a thief getting caught and letting him put the stuff back and walk. Must have been a good feeling.

      Adding to the contract for this reason, and the many more arbitrary reasons should not be allowed, and at the very least we as consumers should fight them every step of the way on this. The reason for the contract should be to pay the subsidy. I think we would all be better off if we paid for the phone outright and the plan was cheaper. What we have now distorts the real cost of everything, and makes it seem we are getting a cheaper phone. It also makes for issues like the OP has.

  12. Pete the Geek says:

    On Saturday I was looking to buy a 2 kg box of generic baking soda. It was $4.95. Then I noticed that the 500 g boxes were $0.98 so bought four of them. Businesses set dumb pricing all the time and I think it sometimes only makes sense from the “big picture” view. You would think that customer-service employees would be empowered to fix issues like the phone upgrade pricing, but I think that business leaders are reluctant to give up control, even when it costs them customers.

    • eturowski says:

      That’s a lot of baking soda. Are you going to do something cool with it, like mix it with vinegar to make a volcano? :)

      • Not Given says:

        I put it in my laundry and in the bath water. Before I switched to scoopable, I used to put it in the cat litter. You can also stir dish soap into it to make a paste that works as a soft scrub, maybe add a little peroxide just before using. Put baking soda in a pan of water with a little vinegar and use it to wash produce.

      • Pete the Geek says:

        One spooky Halloween science demonstration, a spouse that uses it for 101 household things and the fact that it is a 100 km drive to the nearest big box store, so I buy in bulk when I go.

  13. cactus jack says:

    While he went about this like a douchebag, I applaud him on beating the system. On top of everything else, he gets to keep the 3 handsets. That’s another ~$1000-1200 in his pocket.

  14. Not Given says:

    I don’t get it, why not just wait until they are eligible for upgrade. Did the phones go bad? If they did, why do you want the same brand phone?
    I may be the wrong person to ask about this with my RAZR v3c that someone gave to me when they got a new phone and my contract that ran out 5 years ago.

    • rdm says:

      I totally agree with this. I don’t know how Apple convinced everyone they have to buy every new iPhone, but I applaud them for it.

  15. failfailfail says:

    “But what did that do exactly? Pretty much nothing. They just paid me $173.82 as a parting gift. Now instead of having to pay $320.00 to cancel my contract with AT&T, I only have to pay $146.18. And do you know what? I have zero moral qualms leaving because they should do their own due diligence and realize that I’m not under any obligation whatsoever to hang around. That they just essentially paid me $173.82 for the hell of it.”

    Could you be any more of an asshole? Why doesn’t his have a Bad Consumer tag?

    • frank64 says:

      In general you are right, but when these companies treat you like they do, I think it is OK to play the game back. They set the rules, if we are forced to play by them, we should play by them.

      • Geekybiker says:

        Still a jerk move if he does leave. ATT was nice for once and he’s thinking about how he can screw them.

  16. wackydan says:

    Dumb dumb dumb. Idiot is still spending stupid money just for the sake of getting iPhone 5′s. He IS NOT saving anything in reality.

  17. Crackpot says:

    Short version: The OP is an ass.

    Does the fact that AT&T’s policy makes it cheaper to leave mean that AT&T is being stupid? Yes. Is AT&T’s credit stupid? Perhaps in implementation, but not in intent. This is where the OP’s color shows.

    You see, the OP’s original complaint was that it was cheaper to leave. AT&T agreed, and gave the OP a credit to offset that policy, so that the OP would stay. This is the point where the OP should have shut up. But he didn’t. Instead, the OP began to rant and rave about how the customer service rep should have made it harder to leave.

    OP, AT&T JUST DID YOU A FAVOR. Now you’re going to complain because they did so in a way that was BENEFICIAL to you? That’s just ridiculous. Yes, customer service reps make mistakes. Yes, they’re often undertrained. That isn’t really something that’s specific to AT&T. Essentially, the OP is complaining that AT&T made a mistake in his favor.

    AT&T’s policy making it cheaper to leave is a valid story, in a negative way. AT&T offering to credit the difference is a valid story in a positive way. An AT&T customer complaining because they made a good faith effort for the customer in such a way as to possibly being taken advantage of by the customer? That’s just ridiculous.

  18. notserpmh says:

    “they would pay me $180.00 to go to Verizon”

    No, they aren’t paying you $180, they are charging you $180 less. It is a major difference (at least in my mind). Also, realize that they can’t just give you 3 phones at the subsidized price (even if you are the bestest customer ever). Those phones cost $600-$800 dollars (I haven’t checked the price on the current model) and they make up the $400 or so off they give you by 2 years of service. Since you already have a 4S, they already have given you this discount and need to make it back up through your monthly service. If they gave you the discount on the 5 early, they would have lost money on the 4S they already sold you.

    That said, the craziness of Apple fans (willing to throw out all that money and switch providers just to get 1 newer generation of the phone) makes me glad I’ve held on to my apple stock.

  19. samonela says:

    Orrrrrr….you can just be happy with the slightly smaller and heavier, but not all that much different 4S?

  20. Nathan says:

    Others have chimed in on this, but as an AT&T employee, I feel compelled to add some context. This is the result of two attempts by AT&T to be more consumer friendly.

    Previously, AT&T used flat ETFs that did not change at all during the course of the contract. They changed them to decline over the course of the contract in 2008, and changed to a two-tiered ETF system based on device type in 2010 as a result of higher subsidization costs. Smartphone ETFs begin at $325 and decline by $10/month over the course of a contract (as someone pointed out, the ETF is less than the discount to start with).

    After the launch of the iPhone 3GS (I think; I’m less sure of the exact timing of this), some customers were upset that they were unable to get a discount on the price of the new phone because of the length of time remaining on their contract, so AT&T introduced “Early iPhone Upgrade Pricing.” This was a partially subsidized price: instead of $450 off the MSRP, it was only $200. This isn’t hidden – upgrade check results online and via *NEW# will let you know if this is available.

    When you put these two things together, you get incidents like these, where AT&T attempts to be consumer-friendly instead earn the ire of customers and get it branded as “not making sense.” Were they to not offer the Early Pricing, those other two iPhones would be not $500 more total, but $900 more total. Would AT&T then be paying you $580 to leave? If the ETFs did not decline, would they be draconian?

    I should also point out that I am not aware of any such pricing level at Verizon, though I could be wrong.

  21. roshambo says:

    It’s almost always going to be cheaper to cancel and go to a diffent carrier to game the system and get phones for less. The reality is, if this is what you plan on doing every time a shiny new phone is released, you aren’t the kind of customer most of the phone companies likely want. The OP fights threw many operators to get what he feels is owed to him. He gets someone to agree and then continues to complain and essentially say he is just going to leave anyway? I’m thinking ATT isn’t going to miss him.

  22. darklighter says:

    This happened to me in December when I broke my iPhone 4 and wanted to replace it with a 4S. The cost to upgrade at that point in my contract was higher than the cost to buy a new phone from Verizon and pay the ETF to AT&T. It seems to me that the ETF and the early upgrade premium should be the same, since the point of both is to recoup their subsidy.

  23. Xboxer says:

    Another a-hole that wants something for free. Look, I love the iPhone. I’m a huge fan. I can’t upgrade until November and I have 2 other people on my plan but we’re not all rushing out to get the iPhone 5. I can be a little patient and save hundreds of dollars. Then I can sell my iPhone 4 and pretty much get back what it will cost me to upgrade. So in the end I lose nothing. Go ahead and switch carriers. There’s a lot of things I cannot stand about AT&T, the fact I barely get a signal in downtown Boston is one of them. But after being with all four major carriers over the years I have found out they all suck.

  24. NorthAlabama says:

    don’t fault at&t for being honest with you. if you don’t stay the length of the contract like you agreed, then yes, go ahead, leave if you want.

    sure, the cost involved in replacing you with another customer will hurt, but they might keep their word when they sign a contract.

  25. Demilio says:

    Sounds like you are dishonest. Why does consumerist post this crap?