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Ahead of iPhone 5 launch, T-Mobile touts trade-in program

Customers can trade in their existing iPhones (or other smartphones) for a better monthly rate.

Image composite by Joe Aimonetti

T-Mobile is cranking up the hype for its iPhone 5 launch on Friday.

The carrier added another incentive to hop on its bandwagon, extending its trade-in program to include older iPhones from other carriers. In exchange, customers can avoid putting money down for a new iPhone 5, as well as get a reduced monthly rate.

It is clear T-Mobile is excited to offer the iPhone, a key product that's been missing from its lineup as virtually every other carrier -- big and small -- began offering it. T-Mobile is hopeful that Apple's iconic device can reverse years of subscriber declines and spark a comeback.

The deals are designed to lure in customers from rival carriers, or even existing T-Mobile users with an older iPhone brought over from AT&T. T-Mobile noted that the trade-in offer was a limited promotion that would end on June 16.

A new customer that passes T-Mobile's credit checks would normally pay $99 upfront and $20 a month, on top of the service fee, for 24 months. That covers the cost of the device.

While an AT&T customer bringing an iPhone 5 wouldn't need to switch, a Verizon Wireless or Sprint Nextel customers might consider it, since their versions of the iPhone aren't compatible with T-Mobile's network. An iPhone 5 would garner a $168 bill credit, or $7 in savings each month, which equates to a $13 charge on top of the service fee.

An iPhone 4S would net a $120 in credit, which equates to a $15 device fee each month. The iPhone 4 is worth $24 in trade-in value, or a $19 monthly fee.

"In all cases, you're walking out the door for less. Getting a really great deal for an iPhone 5," said Andrew Sherrard, senior vice president of marketing for T-Mobile.

The carrier actually launched its trade-in program last month with the other big changes, but will extend the program to iPhones on Friday. T-Mobile said it takes the phones from its trade-in program, and either recycles them, or repairs, tests, and wipes them to be used again, such as a warranty replacement.

While consumers have griped about the need to pay an additional fee to cover the total cost of their phones, the T-Mobile plans have been shown to save money over the life of what would have been a two-year contract at rival national carriers. T-Mobile still faces hurdles educating the consumer on the pitfalls of subsidies and higher service fees.

Another challenge that remains is its network coverage. While the company touts a speedy service through its HSPA+ network, which it calls 4G, it is still generally slower than the 4G LTE connection offered by its rivals. Verizon Wireless, in particular, has a wide rollout of LTE, with AT&T and Sprint behind it.

The iPhone 5 was designed to use 4G LTE, and the lack of such a network may have consumers reconsidering T-Mobile despite a more attractive phone plan.

And while the iPhone 5 will likely help T-Mobile keep some of its customers, it's unclear whether other consumers will flock to its service, as Apple's device is offered by almost every other service provider.

Still, its moves have attracted the attention of rivals. Virgin Mobile yesterday promised $100 to any customer who switched from T-Mobile by the end of May.