AT&T Next scam: you're paying twice and ETO is a better option
This article may contain personal views and opinion from the author.
I was actually just about to start writing an article on this very topic, when I saw in my news feed that T-Mobile exec Andrew Sherrard had essentially done my job for me (although he was far more succinct than I was likely to be on the subject.) Sherrard called out AT&T on its new "Next" frequent upgrade program as essentially being a scam.
Sherrard talked to CNET earlier, and started out by calling AT&T Next a "poor imitation" of T-Mobile's JUMP plan. The crux of Sherrard's argument was exactly the point I had wanted to make, as he said:
The AT&T Next plan is set up to sound good, because it removes the up-front costs, and allows you to upgrade your device after 12 monthly payments. For example, with the normal route, you would pay $200 for a Samsung Galaxy S4, not be able to upgrade for 2 years, and at the end of that time you would own your Galaxy S4. With Next, there is no up-front cost, but you have to pay $32 per month for the device. If you pay for 20 months ($640), you can keep the device; or, if you pay at least 12 months ($384) you get to upgrade a year early, but you don't get to keep the device.
with either option, you're paying the same monthly service cost which already includes the phone subsidy. You remember subsidies, right? It's that thing that allows you to pay $200 for a device that would normally cost $600+ outright. T-Mobile removed subsidies from its monthly service charges when it first switched to Equipment Installment Programs (EIPs), but AT&T still has the subsidy built into the monthly service charge, which effectively means that with AT&T Next you're paying twice for a device that you don't even get to keep. You may not get to keep your T-Mobile JUMP device either, but at least the costs work out similar to a lease.Here's the problem:
Of course, AT&T doesn't see it that way. AT&T sees it as a simple matter of giving the consumer more choice, with a rep telling CNET:
The AT&T rep also pointed to AT&T's larger LTE network as if that had something to do with the argument, although I'm struggling to see the connection. Sure, AT&T has better service in many areas, especially rural areas, than T-Mobile, but AT&T's LTE isn't always faster than even T-Mobile's HSPA+. But, that's not even the argument, because AT&T's service is already more expensive than T-Mobile's even when you remove the subsidy.
A single line on AT&T with unlimited voice and text with 4GB of data will cost you about $115 per month. Let's say that the subsidy is about $20 per month, that means just for the service alone, you should be paying $95 per month on AT&T. T-Mobile doesn't have a plan that exactly matches up, but for unlimited voice and text with 2GB of data, it would cost you $60 per month, or for unlimited data, it would be just $70 per month. So, even accounting for the subsidy, you're paying an extra $25+ per month just to have the "better" service (depending where you are) on AT&T.
Conclusion: ETO may be better
In the end, while it is nice that AT&T has added the choice for users to upgrade sooner, as T-Mobile CEO John Legere said when he announced JUMP, there are a lot of steps that had to come before T-Mobile could do this properly, including removing subsidies, killing contracts, and moving to EIPs. He said at the time that even if other carriers tried to do what T-Mobile has done, it wouldn't work, because they hadn't done the proper building towards it.
Frankly, it looks like he was right, because here's the truth about AT&T's Next plan: signing up for it will cost you at least $384 plus your service costs in order to get your early upgrade after one year, and you don't get to keep your device. But, if you sign up for a normal plan, and pay $200 for a device, and pay your service charges for one year; at the end of that time, your early termination option fee would be $205 ($325 minus $10 for each month: 325-120=205). Even if you add in the activation fee of starting a new contract, you could terminate your agreement, and get to keep your device for just $56 dollars more than if you signed up for AT&T Next. Then you either have an extra device, or something you can sell on craigslist for a few hundred dollars.
So, where exactly is the deal again?