Tuesday, July 16, 2013

AT&T Next To Offer Unsubsidized Phones, Faster Upgrade Options

Earlier this month AT&T promised to let us know "What's Next" for AT&T with little more than a photo telling us to “get ready for what’s next in wireless.” What exactly that meant wasn't entirely clear until today. AT&T’s big news is a new early upgrade, unsubsidized smartphone option for those customers who want to upgrade their device as frequently as once a year. This new offering, called AT&T Next, won’t replace the other upgrade options currently offered by the carrier, and will work with existing data plans.

Details of the plan are as follows: To use AT&T Next, AT&T subscribers agree to pay a monthly fee for their device on top of their regular AT&T service plan. Monthly fees range from $15-$50; a Samsung Galaxy S 4 costs $32 per month. Customers must agree to make 20 payments. After 12 payments, you can trade in your device and get a new one, and the clock starts again. There are no activation or upgrade fees. After 20 payments, the device is paid off. There doesn't appear to be a contract for service, only for the device itself. If you want out, you can pay off the device price early.

This appears to be a win win for AT&T in that the company no longer has to pay subsidies - which currently amass to $440 on a Galaxy S 4 with a two-year contract. A customer can current get the phone for $199 and be stuck in a contract, at the AT&T Next pricing the same customer will only pay $380 before they are eligible for an upgrade or $640 total. This means over a two-year period someone with an AT&T Next Galaxy S 4 will pay $440 more than a subsidzed customer if they don't upgrade early. If they do upgrade early then AT&T gets to capture the resale value of the used phones, rather than consumers reusing or reselling them on their own. Customers who want to upgrade in months 13 or 14, and who don't resell their own used phones, will find big savings here, though.

While the deal clearly isn't "great" for consumers, it is nice to see more options coming from the big three carriers.

Source: AT&T Newsroom

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