T-Mobile will buy out your payment plan or lease if you switch

The carrier is also guaranteeing that prices won't increase for customers on existing plans -- even if you're on a promotional program.

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Roger Cheng (he/him/his) was the executive editor in charge of CNET News, managing everything from daily breaking news to in-depth investigative packages. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade and got his start writing and laying out pages at a local paper in Southern California. He's a devoted Trojan alum and thinks sleep is the perfect -- if unattainable -- hobby for a parent.
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Roger Cheng
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T-Mobile CEO John Legere talks up the carrier's willingness to buy out device payment plans. Sarah Tew/CNET

NEW YORK -- T-Mobile is again upping the ante with another reason for customers to switch to the "Uncarrier."

The wireless carrier, which may be the third or fourth-largest in the nation depending on who you ask, followed up with its business-centric announcement with more traditional consumer-centric fare. T-Mobile said at a press event here on Wednesday that it would buy out the equipment installment or leasing plans for customers willing to jump to its service.

Furthermore, T-Mobile said it was reintroducing the concept of a contract -- but one that it would sign, effectively guaranteeing that prices won't change for existing customers. The company said the "un-contract" would also guarantee that the unlimited 4G LTE will stay unlimited for a "minimum of two years." For customers on T-Mobile's promotional $100 four line, 10 gigabyte family plan, that offer now becomes permanent.

The offer to buy out a customer's equipment installment plan represents a logical follow-on to its previous program to pay off the early termination fees of customers willing to switch. T-Mobile upping its game suggests that the competition wireless customers remains fierce despite Verizon Wireless and AT&T's belief that the pricing wars are cooling off. The offer could trigger a quick response from Sprint, potentially giving consumers more options in the coming months.

"This is one of the biggest things we've done," T-Mobile CEO John Legere said in an interview, who added that AT&T and Verizon customers have written to him asking about relief on device payments.

AT&T and Verizon are in the process of phasing out early termination fees in lieu of monthly device payments, which effectively lock customers with a service. AT&T calls its program Next, while Verizon has Edge. Rather than sign a contract with ETFs, a customer agrees to pay for a smartphone in monthly installments over a certain amount of time. A customer looking to leave early has to pay the full balance of the device cost.

T-Mobile is now going after those Next and Edge customers. It said it will pay off the balance, covering the device cost instead of the ETF. In order to take advantage of the offer, customers will have to turn in their old device and buy a new T-Mobile device. The carrier will give the customer a trade-in value for the device, as well as a prepaid card with the balance of the outstanding phone payments after they submit the carrier's bill to T-Mobile.

T-Mobile said it would also pay off the lease that Sprint offers its customers, part of its "iPhone for Life" program that costs $20 a month.

As with the ETF, T-Mobile will cover up to $650 per line for up to 10 lines.

Businesses with more than 10 lines will get bill credits up to $100 per line after the tenth line.

Bringing back the un-contract

In addition, T-Mobile said it would guarantee that prices for existing consumers, and offered up an "un-contract" that the carrier would sign as a demonstration of its promise and to provide a level of predictability with cellphone costs.

"We're doing something totally different," Chief Operating Officer Mike Sievert said in an interview. "If this is your deal, you can have it for life as long as you're a customer. It might go down, but it will never go up."

Under this new program, T-Mobile's popular promotional family plan, which offered 2.5 GB per user for the first year before reverting to 1 GB, will stay at 2.5 GB for current users. That's a boon to the roughly 5 million customers who took advantage of that deal, according to Legere.

"No exploding plans," he said.

The un-contract feature kicks in for existing customers on March 22.