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AT&T starts forgiving contracts to lure customers to its Next upgrade plans

You would figure once AT&T(s t) has you locked down to a contract it would want to keep you there, but that turns not to be the case. Ma Bell said today said it would forgive the remainder of its customers’ contracts as long once they’re six months into their two-year commitments. The catch is they have to sign up for one AT&T’s Next upgrade plans.

Next was AT&T’s first foray into the world of unsubsidized pricing. Instead of paying a highly subsidized rate for a phone (say $200 for $650 smartphone) and locking yourself into a two-year contract, Next puts you on installment plan where you pay off the full-retail cost of the phone in installments. After 12 months, customers become eligible to upgrade their phones for a newer model. The remaining payments are forgiven, and you start making fresh payments on the new smartphone.

Many smartphones feature

When AT&T first launched Next it was actually a raw deal for customers because they wound up paying for their smartphones twice: in monthly device installments as well as in the fees of their month voice and data plans. But in December, AT&T unveiled a second tier of data plan pricing, called Mobile Value Share, offering up cheaper rates to Next customers and any non-contract subscribers.

AT&T is now signaling this kind on no-contract no-subsidy model is exactly where it wants to place its customers. Not only is it letting any customer who signed a contract before January 19 into the Next program and onto Value Share’s cheaper rates at no penalty, those customers also get to keep their original phones, an AT&T spokesperson confirmed. Furthermore, customers can actually trade in those phones they bought on subsidy for up to a $300 credit on a new Next phone.

I’ve been trying to find the “gotcha” angle here, but so far there’s none. AT&T is simply forgiving contracts in an effort to move people to its new pricing plans.

For instance, if you bought a new iPhone 5s for $200 when it went on sale with AT&T in September, you’ll be eligible a month from now to move over to Next plan. That means you can get a new smartphone for $0 down, you can also trade in that old 5s for a credit of up $300 toward whatever new phone you choose, halving the number of installments you have to pay. Plus you could move over to AT&T’s value share program, which in general cost about $15 less each month than its contract plans.

The offer does have a half-life though. It’s only available to customers who signed their contracts before Sunday. If you sign a new contract starting today, then you’ll have to wait at least 20 months before you’re eligible to move to Next.

Smartphones image courtesy of Shutterstock user Reno Martin

8 Responses to “AT&T starts forgiving contracts to lure customers to its Next upgrade plans”

  1. I think the reason for this change is to create a termination fee for AT&T customers now that T Mobile is paying your AT&T ETF charge. If you’re on the next plan, you have to payoff the value of the phone to switch. If you have an new phone, the amount the other carrier will pay for it will exceed their phone buyout cap and you will be stuck with AT&T unless you pay hundreds of dollars. So while this might help some customers, I think the point is to lock the customer into AT&T with a termination fee to pay off the Next phone.

    • That is a good point, however, the great thing about this method is that you can sell the phone to pay off the remaining balance. Most iPhones hold their value so you could easily sell your phone and pay off whatever remaining balance you have. I personally like this approach and think it will be a welcome change for ATT customers. As an ATT customer I’m currently on the Mobile Share Value plan and I’m paying $130 a month for 2 GB of data. With the new plans announced today, $145 a month will get us 10 GB of data between all of our phones. It’s tempting.

  2. The gotcha comes to those who currently have unlimited plans, which I bet it allot, will not longer be unlimited and you will probably end up paying more for the same data that you use. Also they want people to “finance” their phones, since it pretty much locks you in for 20-24 months and they can record it on their books in a differnt way making their financials look better.

    • VernonDozier

      Well, apparently, nearly 30-40% of Sprint customers are looking to change carriers.

      Sprint wants the plan to go away so badly, they are rumored to make a $50,000,000,000.00 ($50B) offer to buy T-Mobile US.

      This is about double the contract amount Sprint committed to iPhone sales before Steve Jobs Croaked.