Why T-Mobile's free iPhone upgrade isn't actually free

T-Mobile announced that customers will be able to get the next iPhone for free – if they buy an iPhone 6 or iPhone 6 Plus with the Jump on Demand program.

Mary Altaffer/AP/File
T-Mobile CEO John Legere talks about the company's Jump plan during news conference in New York on July 10, 2013. T-Mobile announced that customers will be able to get the next iPhone for free – if they buy an iPhone 6 or iPhone 6 Plus with the Jump on Demand program.

T-Mobile knows you're on the prowl for iPhone deals, and it just made getting one a bit easier — if you're OK with the idea of leasing your smartphone.

The Uncarrier network, which is hell-bent on changing the mobile industry, just announced that customers who buy an iPhone 6 or iPhone 6 Plus with Jump on Demand will be able to get the next iPhone (expected to be announced in September) for "free" as an upgrade.

What that really means is customers will get to swap their old iPhone for one of Apple's forthcoming models, without the customary down payment that is typical for buying subsidized phones on contract. But, as we'll explain below, that's already built into the Jump on Demand program. The more definitive "deal" aspect to this announcement is that it will lock in the older iPhone's $15 per month leasing plan ($19 per month for the iPhone 6 Plus).

So, is this a good deal? And what exactly does the Jump plan entail?

Lease Your Phone, Trade It In

Jump on Demand customers don't actually own their phones. Instead, they lease them and pay them off over the course of 18 months. Under the plan, customers with qualifying credit pay zero money down for a new phone (as opposed to the typical $199 that a user pays for a subsidized phone on contract), and they're allowed to upgrade three times per year at any point in their lease.

No Increase in Monthly Payments for the Next iPhone

So what T-Mobile is really announcing is that customers can lock in the current iPhone's $15 per month leasing price, upgrade to the new iPhone in the fall (as is possible for all Jump on Demand users), and avoid a presumed increase in monthly payments. In theory, if you upgrade to the new iPhone from a non-iPhone 6 model, you can still do so "for free" with the Jump plan, but you might end up paying more per month to lease it.

Naturally, there are a few conditions. First, you must purchase your iPhone 6 with Jump on Demand from T-Mobile before Labor Day, and you will need to trade-in that phone — which must be in good working condition — when upgrading to the new model. The offer is valid for existing and new Jump on Demand subscribers with an iPhone 6 or iPhone 6 Plus.

So is this a deal? It is, if you don't mind leasing your phone, but it presumes that T-Mobile is going to increase the monthly cost for the next iPhone. If T-Mobile doesn't increase rates, then it's really just a restating of what's already doable with the Jump on Demand plan. That said, $15 per month already undercuts Sprint's leasing plan of $20 per month.

Unlimited Apple Music Streaming

The bigger perk in today's announcement is that T-Mobile now includes Apple Music as part of its Music Freedom plan. Music Freedom lets you stream from services like Spotify, Rdio, and Google Play Music without having it count against your monthly data cap. Fans of Apple Music will now be able to stream without worrying about overage fees.

This article first appeared on DealNews.

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