Optus has launched a new initiative for phone lovers which will let customers on My Plan Plus phone contracts upgrade to a new phone after 12 months.
Customers choosing a new phone on a plan will have the option to upgrade to a newer model from 12 months on. These customers will pay a once-off $99 fee, trade in their existing phone and sign a new 24 month contract for the newer model.
You will need to hand in your current phone to upgrade, and your phone needs to be in ‘good working order’. Generally speaking, this means that the phone turns on, isn’t software locked, has no water damage or any significant cracks. Optus does say that small scuffs and scratches are OK.
If you’d prefer to hang on to your existing phone and get the newer model, Optus will let you pay out the ‘remaining full cost’ of the older phone to keep it. Note: this isn’t the remaining handset repayments as listed in your plan, this is the remaining portion of the unsubsidised cost. It’s hard to say exactly what this cost will be, but if your phone costs $1000 new, you can assume it will cost about $500 to keep it after 12 months.
More like a lease?
When Telstra first announced New Phone Feeling (NPF) we made a point of saying that an arrangement like NPF is more like renting a phone than buying one to own. In a way, the same could be said about the Optus New Phone Trade UP option (and seriously, these plan features need better names).
For example, if you were to buy a new premium phone model on a contract today, you can expect to pay about $10 per month in handset repayment costs. After 12 months you will have paid $120 towards the phone and then $99 to upgrade. But, of course, you also need to trade in the phone handset and all of the your equity in that phone goes with it. You’ve paid $219, and all you have for this money is the use of the phone for 12 months. You don’t get a $219 discount off your new phone contract after all, you just sign up for a new plan like everyone else.
This is why paying out the phone after 12 months and selling it online is the best value option. You’ll have paid Optus $120 in repayments plus, say, $500 to pay off the remainder, so $620 all up. If you can find a buyer who is willing to pay more than this then you are not out of pocket. Or you could pass on the phone to someone you know that needs one — either way, you have something to show for the money you’ve spent.
Is this a good deal?
All things considered, this is a fair offer. You don’t have to pay anything upfront for the option and there is no on-going monthly fees throughout the contract; you only pay for an upgrade if and when you want to upgrade.
Similar ‘early upgrade’ plans in the US and Telstra’s New Phone Feeling require an ongoing monthly payment (it’s $10 per month on a Telstra plan), on top of the standard handset repayment costs, plus another once off payment (Telstra charge $149) when you upgrade. This means that the minimum upgrade cost to upgrade on a Telstra plan is $269 and it increases for every month that you wait after 12 months.
From a price perspective, the Optus New Phone Trade Up is a much better option.
Of course, whether or not this is good value is up to you. Second-hand phone handsets in good condition retain a lot of their original value, even after 12 months. A quick search on eBay shows that the most popular phones are sold second-hand for well over half of the original retail price.
This means that you could exit your existing Optus contract early and pay out your phone, then sell the handset on eBay and keep the change. Or you might break even, or you might lose a little money in the transaction. It all depends on what you need to pay Optus and how much someone is will to spend to buy your second hand phone.
If anything, the Trade Up option is a convenient one. The flat $99 fee is a reasonable administration cost and if you don’t want to pay it, you don’t have to upgrade.
Joseph Hanlon
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