Telstra's New Phone Feeling

Is Telstra’s ‘New Phone Feeling’ Meant To Be A Sort Of Creeping Sense Of Dread?

Telstra's New Phone Feeling

Earlier this month Telstra tweaked their plans, and introduced a feature unique to the Australian telco landscape market; a trade-in option they’re calling the New Phone Feeling. So what’s the deal with this add-on?

In a nutshell: you pay an extra 10 bucks a month on your 24 month contract, and after a minimum of 12 months you can trade in your handset (as long as you didn’t smash it, lose it or drop it down a toilet) and get a new one! So every year, new phone! Perfect for us nerds, right?

Here’s the idea from a friendly bearded man named Tom:

http://www.youtube.com/watch?v=ySob–5GOpw

“It’s a new way for you to upgrade to a brand-new phone, without having to wait until the end of your 24 month contract.”
– Tom from Telstra

OK, before we go any further, I’d like to define a term they keep using here: the word ‘upgrade’. An ‘upgrade’ involves swapping your existing phone, grabbing a new one, and going on your merry way, right? Well, no.

By ‘upgrade’, Telstra really means ‘re-contract’.

Upgrade is the New Commitment

You don’t just walk away with a new phone scot-free. When you hand in your old phone after 12 months, you’re simply waiving your termination fees, handset payments & a $50 early re-contracting fee. You’re agreeing that your phone (halfway paid for at this point, subsidies aside) is worth only the value of these fees combined.

You’re also agreeing to stick around on a Telstra plan for at least another 24 months, totalling a minimum length of 36 months.

Nowhere in the fine print of this will you find a mention of ’36 months’. I can picture it now: a Telstra store manager berating a new Telstra retail employee. “Never use that term in my store! Don’t even think of putting a 3 and a 6 anywhere near each other around here! It scares the crap out of people!”

But, let’s face it; you sign up for a New Phone Feeling and that’s the minimum amount of time you’ll have to be on a Telstra (in one contract or another) in order to get value from this add-on.

There’s also a couple of other caveats. You don’t have to upgrade immediately after 12 months if there’s no handset out there that you like, but you will keep paying the extra $10 a month until you do.

Oh yeah, and check that fine print too [PDF]. If your phone is cracked, battery isn’t ‘fully-functioning’, or it has physical or water damage, you’re completely out of luck. No refunds.


 

iPhone 5s

An example: A New iPhone 5s Feeling

All of this was a little bit difficult for me to get my head around, so here’s a concrete example that I found useful to visualise the repercussions of this add-on.

Let’s say you’re an iPhone user, and you’re signing up this month (March 2014) on an ‘S’ plan for a 16GB iPhone 5S (you poor data-starved bastard). That’s $76 a month. You definitely want to upgrade to the next iPhone when it arrives, so you sign up for the New Phone Feeling add-on. So now it’s $86 a month.

Ouch. Kinda pricey, but hey, come next iPhone, free upgrade, right?

Well, no.

You won’t be getting an iPhone 6, because it’s a minimum 12 months before you can upgrade. So sure, you can get an iPhone 6 in March 2015, but by then it would’ve already been out for 5-6 months. Lame!

So you play it cool, and wait for the iPhone 6s. In the meantime, you’re still paying the extra 10 bucks a month.

September 2015 rolls around, and the new iPhone 6s comes out. Keynote! Fanfare! Best iPhone yet! Daring Fireball 3000-word review! Anandtech 10,000 word review! Good times!

You trade in your now-totally-janky iPhone 5s at the local Telstra shop, and ‘upgrade’ with your add-on to a 16GB iPhone 6s. It’s September 2015, and you’re waiving all those pesky termination fees and re-upping for another 2 years. You don’t have to pay that extra $10 a month now too. Sweet!

So now, a contract that you signed in March 2014 has suddenly become one that you won’t fully get out of until September 2017. If we assume the plan prices don’t rise (and that’s a hell of an assumption), you’ll have spent 18 months paying $86 a month, and another 2 years paying $76 a month.

That’s the cheapest plan, cheapest iPhone 5s model, and it’s $3,372 over 42 months. I’m going to say that again in large text.

Three thousand, three hundred and seventy two dollars.

Typically handsets like the iPhone roughly halve in value over 2 years, so I’d estimate you’ve got about $400 worth of hardware at the end. Plus, all that money and you only got 500 measly megabytes of data per month. Gross.

That’s the cheapest plan. If you upped that to a ‘M’ plan (with a frankly sensible 1.5GB of data a month), and a 32GB model instead of 16GB, you’d be looking at $97 a month for 18 months and then $87 a month for the next 24 months — a total of $3,834.

Now, let’s compare this to reigning champ of 2013: pre-paid.

A 16GB iPhone 5s outright is $869. On Telstra’s current $40 Cap Encore, you can get 2.1GB of data total per month (if you follow our little guide). If you sold your phone at the 18 month mark instead of trading it in, I estimate you’d get a return of $400-$450 for it. Buy a new iPhone 6s for $869 (and again, we can only assume prices don’t rise), and at the end of the day, it shakes out like so:

  • Buy iPhone 5s @ $869
  • 18 months @ $40 per month
  • Sell iPhone 5s @ $400
  • Buy iPhone 6s @ $869
  • 24 months @ $40 per month

It shakes out to $3,018 over the same 42 month period. So same network, same coverage, you can upgrade (at any time), get way more data per month, and still save $350-$400 over that period of time. Plus, not locked into any contract.

Maths is hard

Maths is Hard

This is the thing about this kind of add-on; it’s kind of difficult to table. It all depends on when you decide to cash in your ‘upgrade’.

I gave it a crack though.

Here’s a spreadsheet with all the possible outcomes of upgrading your phone contract between 12-23 months for all eligible models (currently iPhone 5s, iPhone 5c and Samsung Galaxy S4.

Hope it helps!

I Have No Other Choice But Unending Telstra Contracts For Some Reason

Question: do you wear a suit on a regular basis? Are you currently charging a bluetooth headset? Are you promising to ‘take things offline’, ‘put a pin in it’ or ‘create an action item’? Then this may apply to you.

I kid, but perhaps for a certain type of customer, they’re completely OK with this lock-in. They were always going to re-contract with Telstra anyway, so they may as well get a little something for their loyalty. I can totally understand that.

If you’re coming at a Telstra contract from that perspective, then consider the ‘New Phone Feeling’ like a cheeky little side-bet you’re wagering with Telstra. It’s almost like anti-insurance; you’re saying to Telstra, “I bet you $10 a month that I can keep this phone in good condition for at least 12 months.” If you’re confident, then I say go for it. Let me say this in closing though — you can be sure Telstra has crunched the numbers, and is happy to take that bet.

I think that tells you all you need to know, really.