Tuesday, July 16, 2013

AT&T "Next" - The Dollars and Sense

AT&T has followed up on T-Mobile "Jump" device upgrade program, where you have the ability to upgrade a device every 12 months, with "Next". I won't go into too any detail on the T-Mobile side, but I will break down several scenarios for users wishing to utilize the program.

Let us look at the pricing scheme of the iPhone:
On-Contract Price Off-Contract Price Monthly "Next" Fee Costs after 12 Months Overhead from "Next" Fee*
iPhone 5 16GB $199.99 $649.99 $32.50 $390.00 $191.00
iPhone 5 32GB $299.99 $749.99 $37.50 $449.99 $150.00
iPhone 5 64GB $399.99 $849.99 $42.50 $509.99 $110.00

*This is the On-Contract Price subtracted from the Costs after 12 Months

Notice that the overhead costs become cheaper as the phone's price increases. Essentially, instead of waiting a year for your upgrade, you pay the overhead costs to get it now. I liken this to a layaway for a phone. Over time, you pay a little more than what you would if you bought it at the appropriate time you could pay for it all at once, but, the key difference between the T-Mobile and AT&T plans are there is no down-payment for AT&T. I imagine that the taxes are included with your monthly bill, but I cannot confirm this, but I would imagine the sales tax has to come in to play. So depending on your area, you could pay more in sales tax on top of the monthly charge. Update: If I would have kept on reading the AT&T site, I would have seen this: "You only pay taxes up front ...
". Yes, you must pay you respective taxes up front.

So, here are a few things to consider:

  1. The more expensive the device, the less overhead charge you pay over the next year for the upgrade. If you bought an iPhone 5 at release on-contract, and wanted an iPhone 6/5S, you can wait another year, and pay $199 (or $99 if the iPhone in 2014 has released) up-front, extend your contract, while the iPhone 6 is released. If you do utilize the "Next" program, you will end up paying almost double what you would normally have had you waited the 2 years, unless you opt for a higher-priced device.
  2. If you decide to get a new device after 12 months, your current device on the "Next" program must be traded in. So, if you break your phone, you are financially responsible for it. Unlike a contract renewal, you just "wait out" your contract duration and then buy a new phone, without worrying about the previous one. This case, you are on the hook for the full, off-contract price of the device if something happens to it before your trade-in period (between 12 and 20 months).
  3. After 20 months, the phone is yours, and you no longer have a service fee to pay. Essentially, you bought the phone off-contract and paid for it over 20 months. This is especially nice if you just want to wait the normal 2 years for a new device, you can take the money you have been paying for the last 20 months (anywhere from $32 to $42) and save that over the next 4 months, and help pay for a traditional upgrade device (or fully pay for one, depending on your selection).
In conclusion, this is a nice program for those who want the newest phone every year, and don't mind paying for that privilege. Just be careful, if you do utilize the program, to read the terms and conditions. You can visit the official AT&T Next web page for more information.