Let me start this off with the following article from Dec 2013: http://www.cnet.com/news/at-t-chief-we-cant-keep-doing-big-subsidies-on-phones/ In it, AT&T chief Randall Stephenson says... My question is this... what the hell is he talking about? I mean I know he says "you can't afford to subsidize devices like that", but either way (subsidizing or NEXT) is basically the same: AT&T fronting a bunch of money to the customer so they can get their phone and so that AT&T charge them service costs each month. If AT&T subsidizes a $650 smartphone down to $200 on a 2-year contract, they are basically paying the customer $450 upfront so that they can charge them $70/mo over 2-years. The subsidy was basically built into the higher monthly cost so it didn't end up costing AT&T anything in the end. Does Stephenson mean that AT&T couldn't afford the upfront costs? Because that's exactly what they are doing with the NEXT program as well... With the NEXT program AT&T is basically doing the same thing as they were before: costing themselves a bunch of money upfront ($650 interest free loan) to make money on service charges over time. Except now the customer 'pays' for the $650 phone themselves but is also charged $600 less over 2-years on service costs ($25/mo discount for NEXT customers). So why did he say they can't afford it if they are basically doing the same thing as they were before? If they really couldn't afford to subsidize, wouldn't they simply sell phones for full retail and not bother with interest free loans via NEXT? I don't get it... Thanks in advance for your replies. I look forward to hearing your thoughts P.S. I know the first few responses might the typical quick/snarky ones from people that don't get what I'm asking and say "What do you mean? one you pay for the phone and the other you dont jeez", but I'm more looking for the intellectual responses from those who understand what I'm asking.