AT&T announced that starting July 26th consumers can get a new AT&T smartphone or tablet every year with no down payment, no activation fee, no upgrade fee and no financing fees. The new billing service is called AT&T Next. Sounds great, but as always the devil is in the details. To qualify you must agree to a 20-month installment plan and give-back the device you don’t want anymore when it’s time to trade-up. What AT&T doesn’t say up front is that you’ll be paying against the non-subsizided price for the smartphone, which is up to $849 for the iPhone 5 or $669.99 for Samsung Galaxy S 4. That means AT&T would add-on a device charge of $32.50 to $42 a month to your monthly phone bill.
The fee structure doesn’t sound much at first, but when you add things up you realize that comes to $390 to $500 for the first year on the hottest smartphones. The good news is that you can get a new device every year without having to wait for your contract to expire or pay a penalty to upgrade. The bad news is you’ll be paying extra for this privilege. Whether the convenience is worth the cost will be up to you.
Think you’re getting a better deal, think again. Let’s compare iPhone 5 purchase options:
iPhone 5 Purchase Options:
|Total paid (1 year)||$199.99||$389.99|
|Approx. Trade-in value (1 year)||($250.00)||$0|
|Termination Penalty (1 year)||$205.00||$0|
|Total Cost (1 year)||$190.99||$389.99|
Unless I am missing something, this new plan is a sneaky way for AT&T to charge you $200 or more per year. Keeping your device longer than 12 months doesn’t reap any savings either. It actually costs you more because the monthly fee is greater than the decline in residual value.
Now for the marketing speak from AT&T read on… With AT&T Next, customers purchase a smartphone or tablet with no down payment and agree to pay monthly installments for the device. After 12 payments, they can trade it in and upgrade to a brand new device — again with no down payment — or they can keep using their device and have no more payments after 20 months. AT&T Next is available for new AT&T customers or existing customers who are upgrade eligible.
“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.
AT&T Next is available for any current smartphone or tablet in AT&T’s industry-leading selection of devices. The interest-free monthly device installments range from $15 to $50, depending on the device selected. For example, a customer purchasing a Samsung Galaxy S4 would have no down payment and pay $32 per month, in addition to the monthly wireless service plan they choose, with the option to trade in their device and upgrade after 12 payments or to keep using the device and pay off the installment plan in full after 20 months. There’s no penalty for paying off the installment plan early.