AT&T just one-upped the company it couldn't buy and may force Verizon to follow its lead. The second-largest wireless carrier has rolled out a program that lets customers get new smartphones or tablets every year with no down payments, no activation fees, no upgrade fees and no financing fees.
Dubbed AT&T Next, the new offer rolls out on July 26. Here's how it works: Customers pay monthly installments for the devices they select. After 12 payments, they can trade them in and upgrade to brand new devices or they can keep using their devices. After 20 monthly payments, the devices belong to the consumers free and clear. And there's no penalty for paying off the installment plan early.
Ralph de la Vega, president and CEO of AT&T Mobility, called the deal "hard to beat." He may be right. T-Mobile last week announced a similar program called Jump. T-Mobile's plan charges consumers $10 a month for the freedom to upgrade their phones as often as twice a year after six months of service.
AT&T's Shotgun Blast
We asked Jeff Kagan, an independent wireless industry analyst, for his take on the new AT&T plans. He told us this may signal a reinvention of wireless industry rules. Indeed, he expects Verizon Wireless will have to respond to AT&T's big move.
"T-Mobile recently introduced a similar idea, but AT&T goes much further for the customer ," Kagan said. "They were both working on this idea. T-Mobile pulled the trigger first, but AT&T has a shotgun compared to T-Mobile, which has a smaller, 22 caliber."
AT&T's "shotgun" fires off deals with better phones and much lower costs to customers compared to T-Mobile's offering, he explained, and there's no monthly fee.
"This AT&T plan is for normal, post-paid devices, not pre-paid. Customers pay the full, non-subsidized price for the phones, but [they] can pay for the phone monthly over 20 months," Kagan said. "They can trade up throughout the program as long as their existing phones are in good shape."
What's Your Monthly Cost?
AT&T Next is available for new AT&T customers or existing customers who are upgrade eligible. Here are some additional details on the plan: It's available on any device the wireless carrier offers. The interest-free, monthly device installments range from $15 to $50, depending on the devices consumers choose.
"Finally the wireless industry in the USA looks like it is starting to change, once again, and this time it is moving in favor of customer," Kagan said.