The U.S. carrier market is finally heating up, and the competitive spirit is back. Or at least, it should be. Following T-mobile’s recent ‘UNcarrier’ plans being released, plus the newly launched ‘Jump’ plans, Sprint announced truly unlimited plans and AT&T has just showed its hand. The #2 carrier has released a new set of plans called ‘Next’ which aim to get customers upgrading to new smartphones every year and require $0 down payment.
With AT&T Next, customers can get the newest smartphone or tablet every year with no down payment. That’s hard to beat, and it’s an incredible value for customers who want the latest and greatest every year,” said Ralph de la Vega, president and chief executive officer of AT&T Mobility.
For example, you could get a Galaxy S4 for $0 up front, and pay $34 per month on top of your usual plan. If you want to change your phone after 12 months, you can. But there’s a catch. You have to trade the S4 in, despite having paid $384 in extra charges, and that’s not including the pre-existing charge in your plan that AT&T already applies to cover the subsidized cost of the phone. This cost (as reported by TheVerge) is approximately $20 per month. So, you’ve paid $624 in charges for the privilege of using a Galaxy S4 for 12 months and then have to hand it back.
As a comparison, there’s one UK model just launched that’s comparable. O2’s Refresh plans. Now – as in the U.S. – UK plans with phones do come with the cost of the handset built in to the cost of the plan. Since most phones are free, those plans are typically between £35-£45 per month if you want the high end devices. With Refresh – unlike AT&T – O2 removes the built in cost to cover the phone and splits the monthly handset cost and airtime cost.
Using the Galaxy S4 as an example, a regular plan on O2 would be something like £37 per month and would land you a free Galaxy S4. The plan in question gives you 600 minutes of talk time, unlimited texts and 750MB of data. On the new Refresh plans (O2’s version of ‘Next’), the handset and airtime costs are split. So, Unlimited minutes and texts with 1GB of data would cost you £17 per month. The S4 is worth £600 and will set you back £25 per month as a separate handset charge. The total monthly charge would be £42. £5 more than the usual plan, but it does offer a lot more use in return and the option to pay off the full £600 at anytime. Incidentally, the regular £42 per month plan offers the same usage allowances but without the freedom of being able to pay off the phone’s cost.
In short, whether you opt for Refresh or not, the monthly cost is the same. If O2 approached it like AT&T, you’d pay the £42 per month, plus the £25 per month handset cost, setting you back £67 per month. That to me seems ludicrous. And then you’d have to hand the phone back if you wanted to change after 12 months.
AT&T should have taken a leaf from the UK’s model, and taken out the handset cost already hidden in the plan. Nilay Patel puts it best when he says:
There simply isn’t a scenario in which paying for Next is better than just buying an unlocked phone at retail — AT&T is fundamentally taking advantage of consumers trained to think new phones are a magical gift bestowed on them by greedy, controlling wireless carriers. And as a response to T-Mobile’s Jump plans, it’s as cynical as it gets:Jump may not be the best deal, but at least T-Mobile CEO John Legere is outspoken in his desire to transparently decouple the cost of wireless service from the cost of phones themselves. AT&T’s reaction is apparently to be more deceptive than ever.
If you want my advice. Those of you wanting to buy a new phone whenever you feel like, just go SIM-free. Save up some pennies, buy a phone outright and save on your monthly commitments by signing a SIM-only plan, or go with T-Mobile’s new plans. AT&T’s is clearly not consumer friendly. They’re just taking advantage of those with the mentality of “hey, it’s a free phone”.