Now Official, Sprint's "One Up" Puts Pressure on the Competition... for Now
Between Apple's latest record-setting iPhone launch and BlackBerrytentatively agreeing to be acquired for just $9 per share, it seems an understatement to say the last few days have been ridiculously busy for everyone in the mobile industry.
Amid all the craziness, then, I suppose you'd be forgiven if you hadn't realized Sprint Nextel on Friday became the last of the four most significant mobile providers to offer its own early upgrade program, appropriately calling it One Up.
Of course, this isn't a complete surprise; recent reports had speculated Sprint's yet-to-be-announced program would debut the same day as Apple's iPhone launch.
But now that Sprint has made it official, let's dig in to see what, if anything, the company is doing to ensure its early upgrade program lives up to its name.
The devil's in the details
As expected, Sprint is allowing customers to grab any phone with no money down, instead giving them the option of paying in 24 equal installments with no finance fees and no long-term service agreement. After 12 consecutive payments, customers can then give back their current device to upgrade to a new smartphone or tablet.
In turn, and because Sprint can avoid paying a pesky subsidy on devices this way, smartphone customers will receive a $15 monthly service discount off of Sprint's Unlimited, My Way, and My All-in plans.
By contrast, while T-Mobile's JUMP program allows customers to upgrade every six months, it still requires an upfront payment for the device. What's more, T-Mobile only allows upgrades after the first six months of enrollment, and JUMP requires a $10 per month service fee to subscribe. To T-Mobile's credit, the JUMP monthly fee also includes a comprehensive handset protection program, but the comparatively confusing terms and down payment requirements are likely to turn some consumers off.
Meanwhile, though Verizon Edge and AT&T Next took a similar path as Sprint chose in opting for monthly payments in lieu of upfront phone costs, neither program from the country's two largest mobile carriers offers a monthly discount to offset the lack of a subsidy. And though Verizon requires the same 50% paid status prior to upgrade as Sprint, AT&T is asking its users to have paid at least 60% of the device cost before an upgrade is made available to them.
What's more, Sprint's discount brings its unlimited plan down to $65 per month, with the next cheapest comparable option coming from T-Mobile at $70 per month.
But Sprint's plan also has a couple catches.
First, customers will no longer receive the $15 per month discount once their smartphone is paid in full. Of course, they can also simply keep upgrading their phones to maintain the discount, but that means being indefinitely saddled by a monthly phone payment.
Second, Sprint's One Up website also states that both the monthly discount and "no down payment" options will only be offered for a limited time. As a result, while they could certainly entice more consumers to jump ship and join Sprint in the near term, when that "limited time" expires it'll be much harder for cash-strapped consumers to justify moving away from the likes of Verizon and AT&T, whose currently less desirable early upgrade plans will suddenly look much more comparable.
Sprint's One Up program may appear to be the best deal available right now, but dropping those limited time offers later means running the risk of disappointing consumers down the road.
Advantage, big boys
Remember, this news also comes less than two weeks following Sprint's announcement that it has completed its most recent 4G LTE expansion, which brings the company's total number of LTE markets across the country to 185, including 34 launched in September alone. When all is said and done in 2013, Sprint is aiming to provide LTE service to at least 200 million people.
That may sound like a big number, but note Verizon boasts that 100% of its already extensive network has been upgraded to 4G LTE, and covers 95% of the U.S. population -- or around 300 million people -- in more than 500 markets across the country.
AT&T, for its part, still utilizes a blended 3G/4G network, and its 4G LTE coverage currently encompasses around 288 million people across 405 U.S. markets. But while AT&T can't claim quite as much overall 4G LTE coverage as Verizon, it takes solace in the fact its LTE network has been named the fastest among major carriers by PC World magazine for two years running.
In the end, I think those significantly larger networks offered by the big boys present a much more formidable obstacle for Sprint to overcome than the allure of early upgrades. That's not to say Sprint won't do everything in its power to build out its own network, but the head start held by its larger competitors means it has a lot of work to do if it truly wants to win over consumers over the long term.
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The article Now Official, Sprint's "One Up" Puts Pressure on the Competition... for Now originally appeared on Fool.com.Fool contributor Steve Symington owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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