Like The Herald Business Journal on Facebook!
The Herald of Everett, Washington
Heraldnet.com

The top local business stories in your email

Contact Us:

Josh O'Connor
Publisher
Phone: 425-339-3007
joconnor@heraldnet.com

Jody Knoblich
General Sales Manager
Phone: 425-339-3445
Fax: 425-339-3049
jknoblich@heraldnet.com

Jim Davis
Editor
Phone: 425-339-3097
jdavis@heraldnet.com

Site address:
1800 41st Street, S-300,
Everett, WA 98203

Mailing address:
P.O. Box 930
Everett, WA 98206

HBJ RSS feeds

AT&T introduces option for faster phone upgrades

SHARE: facebook Twitter icon Linkedin icon Google+ icon Email icon |  PRINTER-FRIENDLY  |  COMMENTS
By Peter Svensson
Associated Press
Published:
NEW YORK -- AT&T is making it easier for customers to upgrade their cellphones more frequently, as long as they're willing to pay more.
The country's second-largest cellphone carrier says it's introducing an option called AT&T Next on July 26. Instead of paying, for example, $200 up front to buy a smartphone, customers would pay monthly installments of $15 to $50 on top of their service plan, depending on the device.
The new plan is designed to satisfy customers who want the latest and greatest devices. The traditional two-year service contracts get in the way of annual upgrades. Last week, competitor T-Mobile US Inc. introduced Jump, which provides device insurance and more frequent upgrades for $10 a month.
Under the AT&T Next option, customers can trade in their phone after a year and get a new one, paying no upgrade or activation fees. As an alternative, they can stop paying the installments after 20 months and keep the device.
AT&T says a Samsung Galaxy S4 phone, for instance, would require monthly installments of $32, or $640 over 20 months. At that price, the installment plan makes for a far more expensive phone than one bought for the usual $200 up-front fee.
A customer who trades the S4 in after a year also loses money compared with someone who buys the phone for $200, then breaks the contract after 12 months, pays the early termination fee and sells the phone to finance a new one. With the installment plan, the customer pays $384 in a year. Without it, the customer pays $478 for the phone and for activation, termination and upgrade fees, but can make about $300 of that back by selling the old phone. AT&T Next does eliminate the hassle of ending a contract and finding a buyer.
T-Mobile introduced a more comprehensive change to its plans in March. In effect, it lowered the monthly service fees but introduced installment plans for its phones. The Jump plan announced last week is an extra $10 a month and allows people to upgrade up to twice a year. The customer must pay the $100 up-front fee for each new phone. There's a deductible of up to $175 if the phone is lost, doesn't work, has water damage or has a cracked screen. (AT&T Next does not have an insurance component.)
With Jump, customers break even when they replace at least every 16 months. At that point, a customer would have $160 left in installment payments, and Jump would have cost $160 in monthly fees. A person who upgrades the maximum of twice a year benefits with Jump over the regular installment plan, but would still pay $540 extra over the course of two years, compared with keeping the same device for two years. That's $300 in up-front fees for three additional phones and $240 for the cost of Jump.

Related

MORE HBJ HEADLINES

CALENDAR

Share your comments: Log in using your HeraldNet account or your Facebook, Twitter or Disqus profile. Comments that violate the rules are subject to removal. Please see our terms of use. Please note that you must verify your email address for your comments to appear.

You are logged in using your HeraldNet ID. Click here to update your profile. | Log out.

Our new comment system is not supported in IE 7. Please upgrade your browser here.

comments powered by Disqus

Market roundup