Telstra’s 'New Phone Feeling' feels like renting

Summary: Telstra has announced a new add-on for phone contracts that allows customers to upgrade their phone every 12-months. But is it worth the extra money?

By |

Telstra has announced it will soon let customers upgrade their phones after only 12-months into a contract term, but the process will be costly for its customers.

The telco is calling the new system ‘New Phone Feeling’ (NPF) and it will be an optional $10 per-month add-on for any customer signing up for a standard Handset Plan. But, as per the conditions of the product, customers will have to give their current phones back when they upgrade to a newer model, making it that they effectively pay for the phone in its entirety in half the time, then relinquish ownership of it.

To illustrate this, let’s look at how this would work with a phone available today: the Samsung Galaxy S4.

Handset Plan New Phone Feeling Plan
Handset repayment $9 p.m. $19 p.m (including NFP)
Example Plan cost $55 $55
Min. payments at 12-months $768 $888
Min. payments at 24-months $1536 $1776
Cost of phone 12-months $108 $228
Cost of phone 24-months $216 $456

As you can see in the example above, over the life of a 24-month contract you would pay $216 for a GS4 in handset repayments. With NPF, you will pay $228 in the first 12-months, so already you are slightly behind.

You also need to be pretty confident that you will upgrade at as close to 12-months as possible. Every month that you wait there after is damaging the value proposition of the New Phone Feeling.

Furthermore, Telstra charge a $10 premium between the cost of its Handset Plans and its BYO phone plans, so we can assume that this $10 also goes to paying off the phone. Over the 12-months of a NPF plan, this means the GS4 will cost $348.

But the real kicker is that you then hand the phone in. You have paid $350 in repayments for the phone, and then you give the phone back to Telstra (in good working condition) and start all over again with a new model. You basically pay the money for the use of the phone and at the end of the contract you have nothing to show for it.

Why not try a 12-month plan instead?

If you are concerned about being left behind the technology 8-ball every 12-months, perhaps consider a 12-month plan with Vodafone. You will pay a bit extra month-to-month (about $30 in handset repayments compared with the $20 Telstra is charging) but you do retain ownership of the phone at the end of the 12-months. You are free to on-sell the phone or share it with someone you know who needs a new phone.

We'll compare the Galaxy S4 again, this time using a new Telstra $70 Mobile Accelerate plan and a $65 Vodafone Red plan, both of which include 1.5GB of data each month.

Telstra NPF Vodafone Red (12-month)
Handset repayment $19 $32
Plan cost $70 $65
Min. cost after 12-months $1068 $1164
Handset cost after 12-months $228 $384
Keep the phone? No Yes

It’s a shame Telstra didn’t go down the route of offering 12-month plans with these changes, rather than following the current model in the US. An option to pay-out the phone seems much fairer to us than a plan where you give the phone back at the end of the contract period.

Telstra's new Mobile Accelerate plans and the New Phone Feeling offering will be available from March 4, 2014.

To be continued...

The four major US telcos all announced similar early upgrade plans at the end of 2013, starting with the T-Mobile 'Unleashed' plans. Since then, each has made several considerable amendments to how the plans work, and one telco -- Sprint -- shut down its upgrade program altogether.

Which is to say, this might not be the final version of Telstra's upgrade plans either. This is especially true if other Aussie telcos join in with their own 'Unleashed' plans too.

One of the best value of the 'unleashed' plans in the US is from T-Mobile, who bundle in handset insurance into the cost of the program. Currently Telstra charges a $9.95 per-month fee for basic handset insurance, and it were to include this in the cost of its NPF plans then it would make them a lot more enticing indeed.

Watch this space.


Tagged:


News by Topic

Phone Reviews

Featured

Xperia Z3 and Z3 compact preorders go live in Australia

Xperia Z3 and Z3 compact preorders go live in Australia

The waterproof Xperia Z3 and Z3 Compact from Sony are soon to hit Aussie...

The iPhone 6 is not too small, here's why

The iPhone 6 is not too small, here's why

Comparing the 4.7 inch iPhone 6 to a 5-inch or bigger Android is like comparing...

Is it cheaper to buy an iPhone outright with a SIM-only plan?

Is it cheaper to buy an iPhone outright with a SIM-only plan?

Tech types sing the virtues of buying iPhones outright and grabbing a SIM card...

 

Related News

WiFi Calling: where are Aussie telcos on offering this awesome feature?

WiFi Calling: where are Aussie telcos on offering this awesome feature?

WiFi Calling could save you from the frustration of a poor phone signal, but...

Telcos go to war with competitive iPhone 6 pricing

Telcos go to war with competitive iPhone 6 pricing

The iPhone 6 release is imminent and the telcos are vying for your contract.

Which costs more on plans: iPhone 6 or Galaxy S5?

Which costs more on plans: iPhone 6 or Galaxy S5?

Which is more expensive on plans, the Galaxy S5 or iPhone 6? You can probably...

Telstra 4G on 700MHz to launch January 1

Telstra 4G on 700MHz to launch January 1

Telstra will launch its new 700MHz 4G network on New Year's Day, with a...

Telstra fires back bonus benefits in bid for iPhone customers

Telstra fires back bonus benefits in bid for iPhone customers

Telstra matches earlier Optus offers and adds a few unique, enticing extras.

The people vs Telstra: class action lawsuit over 'unlawful' late fees

The people vs Telstra: class action lawsuit over 'unlawful' late fees

ACA Lawyers is calling on Telstra customers to join its class action lawsuit,...

 

Guides

Switch to 3G and save

Switch to 3G and save

By sacrificing the speed of 4G, you can go with a 3G network re-seller and save...

Big Data: Aussie BYO plans with up to 10GB

Big Data: Aussie BYO plans with up to 10GB

If you want big data in Australia then you'll need to combine a data pack with...

5 top tips to reduce your monthly mobile costs

5 top tips to reduce your monthly mobile costs

As our usage of smartphones increases each year, so too does our phone bills....

 

Compare phones and plans from the following carriers...

PERSONAL

Virgin Mobile Mobile Phone Plans amaysim Mobile Phone Plans Hello Mobile Mobile Phone Plans Jeenee Mobile Mobile Phone Plans gotalk Mobile Phone Plans Live Connected Mobile Phone Plans
Vodafone Mobile Phone Plans Vaya Mobile Phone Plans TeleChoice Mobile Phone Plans Boost Mobile Mobile Phone Plans TPG Mobile Phone Plans OzLinked Mobile Phone Plans
Optus Mobile Phone Plans Dodo Mobile Phone Plans ALDImobile Mobile Phone Plans Think Mobile Mobile Phone Plans CMOBILE Mobile Phone Plans Bendigo Bank Telco Mobile Phone Plans
Telstra Mobile Phone Plans Lebara Mobile Mobile Phone Plans SpinTel Mobile Phone Plans Yatango Mobile Mobile Phone Plans

BUSINESS

Vodafone Business Mobile Phone Plans Optus Business Mobile Phone Plans Telstra Business Mobile Phone Plans
 

Mobile Deals

Need international calls?

Need international calls?

Mobile plans with international calls included

Best Phones on Optus

Best Phones on Optus

Love Optus and need a new phone. Here's their best phones

Best Phones on Vodafone

Best Phones on Vodafone

Love Vodafone and want a new phone? Here's their best devices

SIM Only Plans and Deals/ BYO Mobile Phone

SIM Only Plans and Deals/ BYO Mobile Phone

Bring your own phone and save! No fixed contract required