“You get free iPhone upgrades for life!”
“You get a $500 gift card for switching carriers!”
I can almost hear Oprah shouting the many competing offers from all the carriers — AT&T, T-Mobile, and Verizon — as soon as the Apple “California Streaming” event was over. They’re all offering huge incentives to entice you to trade-in an old device, switch carriers, then sign up for a top-shelf cellular plan. If you’re in the market for a new carrier and iPhone right now, you can probably land yourself a “free” iPhone 13 (or only pay a nominal fee for the flagship iPhone 13 Pro Max), even if you’re preordering before the phones hit stores.
Many of these offers seem too good to be true and are a bit surprising to see on new iPhones that historically have sold themselves. Who can ignore Verizon for giving you a $500 prepaid MasterCard gift card, just for ditching your carrier? How about the sky-high trade-in offers that all the carriers are advertising, like the too-good-to-be-true offer of giving you $350 for a used Samsung A50, which retails about $180? Across the board, the carriers are particularly aggressive with their signup offers this year, as detailed in our preorder guide.
Whether you choose T-Mobile, Verizon, or AT&T, all the offers fit the same basic premise. In exchange for a discount on the newest iPhone 13 device, after you trade-in an older device for whatever value, you’ll be paying for the balance of your device in monthly installments. You also must qualify and sign up for a typically more expensive unlimited plan that ties you to your phone and carrier for at least 24-months — or 36-months if you go with AT&T. The new plan will also likely control when and what device you can upgrade to next, which helps carriers and phone manufacturers better forecast the demand for devices and gives you that “free” upgrade.
“To some extent, we’re back to the subsidy model that existed a decade ago”
For those iPhone 13 shoppers who are already happy with their carriers or existing data plans, or just want the latest unlocked device on a pre-paid plan, the carriers won’t extend as generous offers to you. If you’re already an existing customer, at minimum, you have to be willing to upgrade to the premium plans at Verizon, an unlimited plan at AT&T if you’re not already on one, or take a lesser trade-in offer at T-Mobile.
It is clear that carriers want to take back control over your upgrade cycle by offering scheduled upgrades and want to lock you into a bigger plan than you need by dangling an almost free phone. Sound familiar?
“The offers are more generous, but the big picture is that we’re seeing a shift from the EIP [Equipment Installment Plan] model to the subsidy model,” according to Wave7 Research’s principal analyst Jeffrey Moore. “To some extent, we’re back to the subsidy model that existed a decade ago, when people routinely got an iPhone for $200, but paid higher monthly rates.”
It also may seem like Apple is the one that is driving much of these promotions, as more iPhones sold is always beneficial for the company. But as much as Apple needs people to buy new iPhones every year, carriers need the sales even more.
According to Wave7 Research’s monthly surveys of retail wireless stores in the US, “more than 60% of smartphone activations at national carrier stores are of iPhones, with remaining activations being of Android devices, with Samsung having dominant Android share.”
Carriers also have an extra incentive to nudge customers toward iPhones this year: the on-going global chip shortage has really affected the supply of Android phones, and Samsung phones in particular. In Wave7 Research’s August 2021 survey of retail stores, it found the “supply of the base Galaxy 21 has been particularly weak for Verizon in the U.S., with multiple Samsung models out of stock online.” With a new round of iPhone 13s flooding retail stores, it’s not hard to see why carriers have an incentive to sell iPhones rather than Androids right now.
Chip shortages have made other phone models difficult to stock
It doesn’t hurt that service providers also need to shore up their 5G user base, as they continue to expand the (fractured) 5G network in America. If iPhones are the lures that can hook customers to upgrade to an all-inclusive, multi-year data plan, then the carriers are in for the kill.
The truth is, Americans are holding onto their phones longer than they used to (remember the annual upgrade days?), with each generation of phone being more iterative than innovative. While that’s great news for our wallets and the environment, this trend does carriers no favors — they don’t exactly make the most money when we buy unlocked phones and order pre-paid plans or hang on to our phones for three years or more. Now that new iPhones are on the market, this is the time for carriers to once again capture some new customers with shiny iPhone 13s and fancy plans with built-in upgrade cycles — hook, line, and sinker.
Correction, September 20, 2021, 12:20PM ET: A previous version of this article incorrectly stated that the new upgrade offers from AT&T were only available to customers who are willing to upgrade to the new unlimited plans. The AT&T deals are actually also available to existing customers with unlimited or grandfathered unlimited plans.