Carrier AT&T: 40% now opt for monthly installments instead of subsidy/2 yr-contract

[EbookReader]

http://www.cnet.com/news/more-at-t-customers-jump-on-the-next-bandwagon/

Who's 'Next'? Customers are stepping up for AT&T's no-contract plan
A surprisingly high number of customers are opting to pay for their own smartphones in monthly installments, avoiding a two-year contract.

Under Next, a customer would pay the full price of the device themselves, broken down in 26-month or 20-month increments, on top of a service fee. In return, the service fees would drop because the carrier was no longer providing a subsidy. A customer could also trade in their phone for a new device after one year.

When AT&T, the nation's second-largest carrier by subscribers behind Verizon Wireless, debuted Next in July, it was a poor imitation of T-Mobile's own no-contract program. The carrier offered early upgrades and a monthly installment plan, but it didn't provide a financial break on the service fees. It wasn't until AT&T began offering discounts to Next customers in December that the plan was considered a competitive deal.

Since then, the numbers speak for themselves. In the fourth quarter, 15 percent of its customers moving to a smartphone opted to sign up for Next. In the first quarter, it was 40 percent. AT&T said it sold 2.9 million smartphones through Next in the quarter.

"The transformation of our customer base can be clearly seen this quarter," Chief Financial Officer John Stephens said during a conference call Tuesday.

Stephens did warn that the Next numbers were slightly inflated because the company let existing customers move to the program regardless of the time on their contract. Barring the promotion, he said the rate of Next adoption would be closer to 35 percent.

4Q2013: 15%
1Q2014: 40% (35% without the promotion)

He dismissed the notion of doing away with traditional subsidized plans and said they'd be around as long as a significant chunk of the customer base wanted them.

 

[Afbar1114]

This may be the norm very soon. People don't like contracts any more. I would rather pay my phone monthly then be stuck in a contract. But verizon and att need to get their act together and start being more competitive in pricing.

 

[Four oF NINE]

I don't see the appeal of not having a contract. With a contract, your price is locked in, they can't change billing month to month. How many people switch carriers every few months? If you have a grandfathered in unlimited data plan like I do, that alone is a strong reason to not change.

 

[Newtons Apple]

You may not have a contract but are still locked into making the payments. If you leave the full amount would be due.

They need to just have everyone pay for their device up front.

 

[CEmajr]

I don't see the appeal of not having a contract. With a contract, your price is locked in, they can't change billing month to month. How many people switch carriers every few months? If you have a grandfathered in unlimited data plan like I do, that alone is a strong reason to not change.

The benefit is that if you bring your own phone or you have finished the monthly installments on your phone, then your monthly payments to the carrier are reduced.

With the old subsidized plans, once your contract is up you continue paying an inflated rate that included repaying the carrier for the phone even after you have already technically repaid them for the subsidy.

It means no more of that "I have an upgrade available, but I'm waiting for the next iPhone" and still paying a higher rate despite my contract being up. Now if you're "waiting for the next iPhone" then you have the added benefit of a lower monthly rate until you decide to use your upgrade to finance a new device.

 

[Afbar1114]

Some people don't upgrade every two years. So if they don't upgrade every two years it's cheaper. With android phones coming out every month you can get one of those a few times since they go obsolete a lot faster.

 

[groupersandwich]

They need to just have everyone pay for their device up front.

That would be a disastrous business model for these companies.

 

[Four oF NINE]

The benefit is that if you bring your own phone or you have finished the monthly installments on your phone, then your monthly payments to the carrier are reduced.

With the old subsidized plans, once your contract is up you continue paying an inflated rate that included repaying the carrier for the phone even after you have already technically repaid them for the subsidy.

It means no more of that "I have an upgrade available, but I'm waiting for the next iPhone" and still paying a higher rate despite my contract being up. Now if you're "waiting for the next iPhone" then you have the added benefit of a lower monthly rate until you decide to use your upgrade to finance a new device.

yeah, okay.. I guess that would apply to people that don't get a new phone every time they're eligible. I've always gotten the new 'S' cycle which corresponds to the fulfillment of the contract obligation.

Are these existing traditional contract based phone provider plans going away?

 

[rui no onna]

That would be a disastrous business model for these companies.

Why? It might be disastrous for phone manufacturers currently enjoying high, recurring top-of-the-line smartphone sales thanks to subsidies and installment plans.

For carriers though, folks are likely going to need service regardless of whether they're using the latest gadget or, say, an iPhone from back in 2007.

 

[kupkakez]

I decided from here on out I'm just buying my iPhone(s) outright and using them on prepaid.

Right now I'm using my 5c on Aio for $45 a month, tax/fees included for 2.5gb of data.

I'd rather pay up front and get out of the way then pay an extra $35 a month on my phone bill.

 

[Newtons Apple]

That would be a disastrous business model for these companies.

It would be better for the people. If the cost of buying this phone is so high one can not afford to buy it outright, they need to ask if they should buy it in the first place.

Maybe they need to make that Health insurance payment instead.

 

[goobot]

The benefit is that if you bring your own phone or you have finished the monthly installments on your phone, then your monthly payments to the carrier are reduced.

With the old subsidized plans, once your contract is up you continue paying an inflated rate that included repaying the carrier for the phone even after you have already technically repaid them for the subsidy.

It means no more of that "I have an upgrade available, but I'm waiting for the next iPhone" and still paying a higher rate despite my contract being up. Now if you're "waiting for the next iPhone" then you have the added benefit of a lower monthly rate until you decide to use your upgrade to finance a new device.

Correct me if I'm wrong but they only take 15$ off if you go this route. 15X24=360 and they aren't paying the 450$ for your phone, so doesn't sound like a saving to me. Just seems like they are still partially charging a subsidy and expect people not to notice.

 

[Deguello]

Correct me if I'm wrong but they only take 15$ off if you go this route. 15X24=360 and they aren't paying the 450$ for your phone, so doesn't sound like a saving to me. Just seems like they are still partially charging a subsidy and expect people not to notice.

Depends on the data pool size. For 10GB or more, we get $25 off per line. We pay, essentially, $42 a month all-in per phone for unlimited talk, text, and 10GB of data.

 

[rui no onna]

Correct me if I'm wrong but they only take 15$ off if you go this route. 15X24=360 and they aren't paying the 450$ for your phone, so doesn't sound like a saving to me. Just seems like they are still partially charging a subsidy and expect people not to notice.

That depends. On the 10+GB plans, the discount is $25 per smartphone so that's $25 x 24 = $600. Basically, if you still go for the subsidy model, AT&T is making you pay $835 ($600 add'l plan cost + $199 upfront + $36 upgrade fee) for a $649 iPhone 16GB.

 

[iOS7.1]

I decided from here on out I'm just buying my iPhone(s) outright and using them on prepaid.

Right now I'm using my 5c on Aio for $45 a month, tax/fees included for 2.5gb of data.

I'd rather pay up front and get out of the way then pay an extra $35 a month on my phone bill.

This.

My Sprint contract ended a few weeks ago, so I got an iPhone 5s from Virgin Mobile for $375.00.

I pay $45.00 a month for Unlimited Text & Web with 1200 minutes. This is a far better deal than Sprint where I was paying $122.00 a month for the exact same service.

 

[mantan]

Correct me if I'm wrong but they only take 15$ off if you go this route. 15X24=360 and they aren't paying the 450$ for your phone, so doesn't sound like a saving to me. Just seems like they are still partially charging a subsidy and expect people not to notice.

The $15 a month is for the service. You can't expect to jump on and pay nothing per month for service. In fairness, you can't expect to just throw as many phones as you want on the line for the base plan for free.

People are going to be in for a bit of a sticker shock when they buy a new phone. And as a result, expect people to hold off upgrades and or use more hand me downs in family plans.

I'd upgraded my wife's phone every 2 years, just because. But she's completely happy with her 4s. At this point, we're just going to ride it out. Better to pay $15/mo than $40-$50 a month.

Also see this changing how parents buy phones. It used to be a $200-$300 one time purchase as the monthly charge was the same. But now that extra $15+the monthly NEXT fee are going to give parents pause.

 

[EbookReader]

With monthly installments and bring your own phone gaining momentum in the USA, it will give phones like this a fighting chance. Specs on par with Galaxy S5 but at half the price.

$299 for 16GB off-contract
$349 for 64GB off-contract

Superior to the Nexus 5 and at a lower price to boot.

http://www.engadget.com/2014/04/23/oneplus-one-launch-ceo-pete-lau-interview/
Meet the One, OnePlus' $299 Nexus killer

- 5.5" JDI 1080p display
- Snapdragon 801 (MSM8974AC - Quad-core at 2.5GHz)
- 3100+mAh battery (non-removable)
- Sony Exmor IMX214 6-Lens 13MP camera
- 5MP Front-Facing camera
- 3GB of RAM
- 16GB & 64GB Variants
- Stereo Speakers
- StyleSwap Covers - Multiple materials/textures
- Single-SIM card
- Global LTE
- GSM Only
- Something better than pre-orders
- No front branding
- 2 year CyanogenMod support

 

[iZollo]

If you have multiple lines you can just do upgrade swaps every year and sell your iPhone for more than you paid. That is only if your family doesn't mind not updating there phones. I do this every year and I think it's the cheapest route to get a new iPhone every year.

 

[jdag]

It would be better for the people. If the cost of buying this phone is so high one can not afford to buy it outright, they need to ask if they should buy it in the first place.

Maybe they need to make that Health insurance payment instead.

I absolutely agree that many people have phones (and other items) that are beyond their means. But don't be shortsighted about capability to afford the monthy payment vs. having the cash for a $600+ phone.

Also, put yourself in the shoes of a family with several kids (not trying to start a debate about kids having phones). Imagine having to buy 4 or 5 phones outright...upwards of $2,000-$3,000. Even people that can afford it don't want to outlay that kind of cash if it can be avoided.

 

[EbookReader]

monthly installments / bring your own phone in the USA recap:

T-Mobile: 100%
AT&T: ~35-40%
Sprint: ? Framily Plan requires it
Verizon: ? Their new $160 for 4 lines with 10GB shared data requires it

 

[EbookReader]

http://www.fiercewireless.com/story/sprint-spotify-just-first-more-come-framily-plans/2014-04-29

During its earnings conference call, Sprint boasted of the popularity of Framily, noting that it now counts 3 million Framily customers out of its 54 million total customers. Hesse said the plans are the carrier's "fastest growing rate plans on record," and reached the 1 million customer mark in less than 40 days.

 

[Prof.]

On Verizon Wireless:

Monthly bill on contract: $110
Monthly bill buying phone outright: $110

Seems like a great deal.

 

[T5BRICK]

Also, put yourself in the shoes of a family with several kids (not trying to start a debate about kids having phones). Imagine having to buy 4 or 5 phones outright...upwards of $2,000-$3,000. Even people that can afford it don't want to outlay that kind of cash if it can be avoided.

You may spend more up front with these new plans, but over a 2 year contract you can actually save about $500 on a plan with 5 lines. Additionally, if you keep your phones beyond the 2 years(which people probably will now that they see the true device cost), that difference will grow.

I did the math and compared the cost of 5 lines on the old Nationwide Family plan to the new 10GB shared plan. While they're not exactly even feature wise(more data per line on the Nationwide plans, unlimited minutes on the shared plans), you save money on the new plans even though you have to pay more for the phones.

 

[barkomatic]

The benefit is that if you bring your own phone or you have finished the monthly installments on your phone, then your monthly payments to the carrier are reduced.

With the old subsidized plans, once your contract is up you continue paying an inflated rate that included repaying the carrier for the phone even after you have already technically repaid them for the subsidy.

It means no more of that "I have an upgrade available, but I'm waiting for the next iPhone" and still paying a higher rate despite my contract being up. Now if you're "waiting for the next iPhone" then you have the added benefit of a lower monthly rate until you decide to use your upgrade to finance a new device.

Yeah, but he has a grandfathered unlimited plan, so there would be no break on his bill regardless of whether he is on a contract or not.

 

[rui no onna]

You may spend more up front with these new plans, but over a 2 year contract you can actually save about $500 on a plan with 5 lines.

And the thing is you don't even have to buy the phone outright either. You can go the equipment installment plan route via AT&T Next/Verizon Edge/T-Mobile Jump. With Next and Edge, there's no "downpayment" so instead of paying an initial outlay of $1,000 + tax for 5x iPhone 16GB, you pay $0 + taxes and you just pay the $1,000 as part of the installments, too.