/// AT&T’s “Next” Plan Offers A New Smartphone Every 12 Months, With Some Strings
Rather than “rethinking possible,” AT&T is rethinking its plans, as it becomes the latest wireless carrier to offer customers the option to upgrade their phones more frequently. Starting July 26, AT&T will offer new “Next” plans for smartphones and tablets, on a post-paid basis. The plan allows customers to trade in their devices (feature phones excluded) every 12 months, provided the customer pays a monthly installment fee based on a 20-month cycle. So, you would take the full retail price of a smartphone or tablet, divide it by 20 and add that cost to your monthly traditional or family-share AT&T plan. Twelve months later, you trade in that device for a new one, and a new cycle begins. Unlike with T-Mobile’s plans, Next owners still owe the cost of the remaining months’ fees. On the flip side, AT&T’s plans don’t require an extra fee, while T-Mobile’s Jump option costs $10 a month. But trying to make sense of these plans in abstract is hard, so here’s an example of AT&T’s Next plan using Apple’s iPhone 5. The unsubsidized price of the phone would be $650. If you divide that by 20 months, you get $32.50. You’d pay that amount on top of your regular wireless calling and data plan. Provided that the device is still in “good working order” when you turn it in — no cracked screens or waterlogged components — you can begin a new cycle with a new device. If you turn it in damaged, your trade-in value will take a hit. AT&T’s Next plan comes right on the heels of T-Mobile’s announcement last week, a program called Jump in which customers could upgrade to new phones every six months for a $10 monthly fee on top of their existing “un-plan” plan. (It should be noted that AT&T sent out a teaser for this event prior to the T-Mobile event last week — so it’s hard to say which company actually set the plan in motion first. But, yes, AT&T’s announcement chronologically follows T-Mobile’s.) My colleague here at AllThingsD , Ina Fried, did an excellent story on how the economics of T-Mobile’s program works . AT&T insists it’s offering an even sweeter deal for consumers than T-Mobile is, based on the fact that it does not require an activation fee or a down payment on devices, and that the Next plan applies to tablets, not just smartphones. T-Mobile would surely point out that it has taken the cost of a device out of its rate plans, while AT&T’s existing plans are designed to swallow the cost of a new phone every two years. For AT&T, the benefit lies mostly in the company’s ability to keep customers in a cycle with the carrier, according to Chief Marketing Officer David Christopher. “[The plan] keeps customers in the latest technology, keeps them buying new phones, using our network as it advances — basically, it has a churn benefit,” he said in an interview with AllThingsD .