Virgin Mobile Reinvents Phone Subsidies With iPhone-Only Deal

For many of us in the United States, getting a new phone with a massive subsidy every two years was a longtime ritual. With that subsidy came the baggage of locked phones, two-year contracts, and early termination fees. In general, consumers have welcomed the shift away from that system to the more open approach of paying separately for an unlocked phone and for service — usually on a month-to-month basis.

However, the phone subsidy was addictive. It meant that you felt okay about upgrading your phone every two years, even if you really didn’t need a new phone. So it makes sense carriers have been working to bring that subsidy back in a friendlier form. This week, Sprint-owned Virgin Mobile has gone further than anyone with an aggressive iPhone-only offer for six months of free service every time you buy a new phone — and a year as an intro teaser.

Virgin Mobile’s Inner Circle is a phone plan and lifestyle play

Inner Circle is a pitch to join the Virgin family, embodied by its slogan -- Live Life in the Virgin WorldVirgin’s new plan, branded Inner Circle, starts with a nominally unlimited talk, text, and data plan for $ 50 per month. At the launch event, though, Virgin Mobile CEO Dow Draper and Virgin founder Sir Richard Branson stressed that the Inner Circle is designed to be a portal into Virgin’s wider product offers. To whet your whistle, Inner Circle subscribers get a free flight to London, a free hotel night, and a discount voucher for Virgin’s Wines. Of course, the fine print is that the airplane ticket is a companion ticket, the free night is only for the third night of a stay, and wine clubs litter mailboxes with discount vouchers as it is, so no one knows the actual value of the goodies.

Virgin and Sprint realize that the Virgin brand is probably the best thing Virgin Mobile has going for it. The launch event drove that home in spades. It was staffed by Virgin America flight attendants, and Branson celebrated the launch by spraying Draper with champagne — something I’ve seen at the end of Formula 1 races, but never expected to see at a tech press event.

Like the old subsidies, this isn’t a one-time deal

What makes Virgin’s offer most interesting is that it isn’t a one-time offer. Every time you purchase a new, current-model iPhone, you get six more months of free service (technically for $ 1). Despite Branson’s flip comment that everyone gets a new iPhone every year — perhaps he doesn’t fly in Economy much? — let’s assume you get a new phone every two years. That is a $ 300 subsidy every two years, almost exactly the same as carriers used to provide. If you are one of the lucky ones who springs for a new phone every year, you get half of your cellphone service paid for.

Virgin will also be selling refurbished iPhones (which it calls “pre-loved”) for half-price with a 1-year warranty. They aren’t available yet, but depending on the final details, they could provide an amazing value when coupled with the service subsidy.

The fine print: Is the deal too good to be true?

First and foremost, if you take advantage of the offer, you’ll be on the Sprint network. That may be a good option for saving money, but still has pretty mediocre speeds and coverage.

And despite Branson and Draper repeating that there weren’t any catches in the offer, of course there are. First is the expected throttle for heavy users, at 23GB (similar to the one AT&T has). That’s not likely to be an issue for most. But this might: Video is limited to 480p, music to 500Kbps, and cloud gaming to 2Mbps. There is also a fairly ominous warning in the fine print, “Virgin Mobile may terminate service if off-network roaming use in a month exceeds: (1) 800 mins or a majority of mins.; or (2) 100MB or a majority of KB.” Since the plan is US only, that roaming is for domestic use on other networks.

iPhones in iconic Virgin Red

Finally, the 12-month initial teaser is only available until July 31. The other Virgin perks are only available until September 30th.

Is the Inner Circle for you?

On paper, you can buy a new iPhone SE for $ 280 or iPhone 6 for $ 320, and get $ 600 worth of coverage, plus a few perks, for free. If you live in an area where Virgin Mobile coverage is good, that’s a pretty impressive deal. You do need to move an existing phone line (either one you have with Virgin Mobile or another carrier) over to take advantage of the deal, so you can’t just pick up a new phone and get a free additional phone line or plane ticket.

Of course, if you already like Virgin Atlantic, or are itching to take a trip to London — or Chicago or San Francisco for the Hotel stay — the phone may pay for itself.

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