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.
AT&T Next scam: you're paying twice and ETO is a better option
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.

Device cost

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

Here's the problem: 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.

Subsidies

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?

source: CNET

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50 Comments

50. nastynate187

Posts: 1; Member since: Aug 31, 2015

i get a 25 dollar discount per line that i use the next plan on. note 4 was 27 and s6 edge 64gb was 30 so i pay 8 dollars a month for 2 badass phones for 30 months and i keep em. thats 240 in total compared to the 700 plus tax and upgrade fees if i did it the 2yr contract way..

49. ajlem23

Posts: 1; Member since: Oct 26, 2013

Do the math. 16 GB : iPhone 5s = how much? 649.99 + tax Next : no upgrade fee 27/ month for 20 months. In the 12th month that means you've spent $324 with the option to get a new phone. Only good credit can have this. Or 2 year. 199.99 + 36 upgrade for two years. 2nd year early upgrade add $250 plus another 36 and another 199.99, but likely more people moving to 32gb or 64gb. 32= $32 per month or 64 at $37 per month. Option to get a new phone. Att discounts the phone right off. You get a monthly agreement and your phone can be paid off and unlocked at any point you pay it off. Keep it sell it get another one whenever you want. The manufacturers now know the 2 year cycle is dead. Devices are going to be more exciting and aggressive. I'll be a part of a 12 month considering manufacturers have a 12 month warranty not a 2 year. Easy choice. Pay more to get more. Keep trying to blog your way to try to get prices to go down. Not gonna happen. Invest your money how you like.

46. laheelahee

Posts: 213; Member since: Apr 09, 2012

where's the same article, but for Verizon?

48. MichaelHeller

Posts: 2734; Member since: May 26, 2011

Verizon's Edge plan isn't yet official, so we can't really write a similar article on the topic.

44. ZayZay

Posts: 571; Member since: Feb 26, 2011

When did At&t get a 4GB plan with Unl Talk / Txt for $115? It's $110 and its part of a MS Plan which is a new family plan. Why go for that on a single line when you all know not everyone needs the unlimited talk part of the plan. The 450 min to landline with unl M2AM , Unl txt and 3GB data fits a lot of people needs for $89.99... "The louder they are, the weaker they are." this quote def. applies to T-mo.

40. renegade626

Posts: 54; Member since: Dec 12, 2008

Guys You phonearena trying to view this next program as something it is not. If you dont want to overpay, finance your phone by getting a 0% intrest credit card, buy it outright and pay that off. this program is meant to essentially be a rent-to-own program for people who want to frequently upgrade to the latest devices or get into a tablet without paying 600 up front of course its going to cost you more. Its like renting a movie from redbox, you pay $1 a day for a movie until you return it and if you never return it you have overpaid on the price you could have bought it for in the first place, but then they let you keep it. subsidies still remain, AT&T is just trying to give you options!

38. Epicness1o1

Posts: 334; Member since: May 30, 2013

Can I get that toilet paper?

31. nnjerzy

Posts: 126; Member since: Jun 19, 2013

Your right about the internet speeds on AT&T..but there call quality and customer service it's horrible..I left them a few months ago ago and at least T-Mobile has better call quality..and just as fast lte speeds

41. renegade626

Posts: 54; Member since: Dec 12, 2008

How is it horrible?

30. nnjerzy

Posts: 126; Member since: Jun 19, 2013

Your right about the internet speeds on AT&T..but there call quality and customer service it's horrible..I left them a few months ago ago and at least T-Mobile has better call quality..and just as fast lte speeds

27. MartyK

Posts: 1045; Member since: Apr 11, 2012

Wow!, Where are all those defenders of the big 2?, this is exactly what the consumer needs more real information about the carriers, they are always trying to fleece us. With gimmicks like more coverage, faster connection,.... Etc

26. rakista301

Posts: 5; Member since: May 25, 2013

Bitches please., here in the Philippines, I pay 1800php a month or let's say about 35 dollars a month and i get to enjoy unlimited calls and text, unlimited internet(only a few areas have 4g though) and 30 minutes of international calls...LoL

15. letgomyeggroll

Posts: 139; Member since: Jun 13, 2012

Regardless how T-Mobile and ATT word it out......IT WILL COME OUT THE SAME AT THE END!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! T-Mobile charges $20 per month on top of your monthly service fee with upfront cost of the phone. And ATT does the same per month but higher with less upfront. From my understanding T-Mobile still charges $20/month still after. So I'm with Sprint, I pay $200 for my phone plus a 2 year contract with my monthly service......TMobile requires the a upfront fee of the phone plus your monthly service plus $20 per month for 2 years. Which equals to $480.00 puls your service fee you paid for the 24 months and the upfront fee. SO I THINK I STICK WITH THE OLD SCHOOL PLANS. Its worth the cost to upgrade every year. What people don't get is that it is these company move the numbers around to different area of the bills and make it look better. BUT IT'S NOT!!!!!

22. willard12 unregistered

T mobile doesn't charge a $20/month subsidy for an unsubsidized phone. If you buy the phone outright or bring an unlocked phone, you don't pay the $20 a month. If the phone is subsidized, the $20 a month is for $24 months.

34. nnjerzy

Posts: 126; Member since: Jun 19, 2013

Exactly your right other people on here should get facts straight before posting anything

35. letgomyeggroll

Posts: 139; Member since: Jun 13, 2012

Get my facts straight? The last time I checked and research about this, -Mobile charge an additional $20 a month on top of your monthly service fee. If you choose to leave T-Mobile before the 2 years, you can. BUT you still owe the $20/month for the phone. And yes you maybe are right about them not charging subsidized. Because they label it else where in your bill!!!!!!!!!!!!!!!!! I use to have TMobile, and they are famous for not telling you all what you need to know up front. But it is in your fine print of your contract, THAT NO READS BECAUSE IT IS TOO SMALL AND LONG!!!!!!!!! So head stand up for the European provider, it still the same crap no matter how you think different!!!

25. Whateverman

Posts: 3295; Member since: May 17, 2009

No. That's wrong. I'm on an EIP plan with 4 devices, 1 feature phone and 3 smartphones. Once the EIPs are done, my bill goes from $220 down to $150. Sprint just can not compete with that. You should really check it out if it works in your area, because I haven't regretted the move one bit.

28. MartyK

Posts: 1045; Member since: Apr 11, 2012

Oh really?, humm going to look into that, I like saving money. I think I have the best plan with sprint tho Mobile to mobile Unlimited text,data 3 &4g 1500 minutes Nights And weekend @6pm $69+the other junk fees carrier add on

39. Whateverman

Posts: 3295; Member since: May 17, 2009

Okay so it would come out around the same for you then. And as they say, "If it ain't broke, don't fix it". But if you ever need unlimited minutes, 3G, 4G, and text, you know where to go. Peace!

33. nnjerzy

Posts: 126; Member since: Jun 19, 2013

Get your facts straight they don't charge after that anything

13. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

But, but, the carriers maintain that our monthly service costs don't include the cost to subsidize a phone, and that they eat the cost of the phone, even if you pay the full retail cost! No joke, that was the BS a Verizon rep tried to spoon feed me. But this article makes me think Verizon might, just maybe, be lying to their customers! What next?!? Are they gonna tell me the government lies to us too? NOOOOOOOOO!!!!!!!!

20. PAPINYC

Posts: 2315; Member since: Jul 30, 2011

That rep should be fired, Verizon is the only carrier that doesn't d¡¢k screw customers with regard to subsidy vs full retail vs 2-year contract. If you sign a new 2-year contract with Verizon or "Upgrade" and extend your contract, you get a SUBSIDIZED device; if you choose to pay "Full Retail" or "Upgrade" at Full Retail (as in my case because I'll do everything in sovereign power to keep my Unlimited Data) your contract term is not affected and, once out of contract, you can continue month-to-month and, more importantly, you still have a subsidy available to you if you soever choose to use it!! Sure, for all those subscribers coming late to Big Red's party it can be expensive but, for me, it's dirt cheap; cheaper than T-Mobile-less Prepaid and definitely cheaper than AT&Tragic's nonexistent service. AT&T should be shot!!

24. roldefol

Posts: 4745; Member since: Jan 28, 2011

"once out of contract, you can continue month-to-month and, more importantly, you still have a subsidy available to you if you soever choose to use it!" But you're still paying the monthly subsidy whether you upgrade or not! This is why I try to convince people to upgrade as soon as they can get the subsidized price (used to be 20 months, but will be 24 starting this year.) Ok great, you're out of contract, but you don't save anything by holding out. And let's be honest, how many Verizon customers are looking to switch carriers? The contract to me is nothing but a waiting period before I can upgrade. And as I see it, if you don't upgrade, you're overpaying.

29. snowgator

Posts: 3630; Member since: Jan 19, 2011

Excellent point, and one I make in my area a ton. I may be repeating myself here, but in my area we have AT&T and Verizon and really that is it. Once you hit the end of the 2 year contract, you do not get a discount. It is free money for them. Unless you are waiting on a specific device release or moving carriers, just upgrade and make them give you a new toy.

37. VZWuser76

Posts: 4974; Member since: Mar 04, 2010

I'm in the same boat as you carrier wise. The only reason we're looking at paying retail on phones isn't because of the unlimited data, although it is a plus. The reason is we got on a promotion a few years ago that basically gives us a $20 discount per line if we keep data on all the lines. If we were to go to Verizon's Share Everything plan, not only would we lose unlimited data, but our bill would increase at least $100 a month. Once Verizon finds a way to kick us out of that promo, THAT'S when we start shopping around. I'd love to have T-Mobile here, but all we have of them is roaming (I'm guessing through AT&T). Basically Verizon and AT&T are trying to have their cake and eat it too. They'd love for everyone to pay full price for their phones while keeping the monthly rates the same as if we were subsidized. It'd be as if we bought 2 phones but only took ownership of one every two years, that's an extra $20-30 a month extra for them.

32. nnjerzy

Posts: 126; Member since: Jun 19, 2013

Verizon is just as atrocious

12. HeWhoDoesNothing

Posts: 158; Member since: Jul 15, 2013

What greedy bastards.

11. papss unregistered

Yeah I wouldn't jump on this deal, I'll just keep my normal plan. I rarely ever go into edge, always in LTE or "4g".. Tmob just doesn't have the coverage that I need. Heck I got an astounding 33.54 Mbps down and 12.53 up in my area on AT&T.. Tmob who? Yeah no thanks, Ill pay more for those speeds. If tmob had better service I would jump but not how it is currently.

42. Doakie

Posts: 2478; Member since: May 06, 2009

Hmm. On my T-Mobile Galaxy Note 2 I just ran Speedtest and it did 52ms, 36746 Kbps down, 21683 Kbps up. So I would say your speed is average. I've seen those speeds on Verizon, AT&T and T-Mobiles LTE networks. Right now it's only Sprint that I've seen have abysmal LTE speeds. The best I've seen my Sprint HTC One ever pull was 54 ms, 21298 Kbps up, 11466 Kbps down. But Sprints LTE on a normal day it's usually around 5000 Kbps down 3000 Kbps up, if you can find their LTE network.

47. papss unregistered

Not in my city/ state... On tmob I'd be lucky to even get service due to their lack of coverage.. AT&T rapes tmob in overall coverage.. Again if they put some money into coverage they might get a new customer but no phone in the world would get me with the service they provide in my area

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