When Verizon mimicked its free 5G iPhone offer, AT&T moved the goalposts with a 3-year phone contract
AT&T just nixed its 30-month equipment installment plans (EIP), i.e. cell phone contracts in disguise, and instead replaced them with even longer, 36-month plans.
This way the monthly payments look much better to the uncritical eye, plus more and more people are keeping their phones for 3 years now, instead of the two when contracts were all the rage, or even instead of AT&T's previous 30-month option that Verizon also offered for some phones.
If you have a 30-month installment plan you can keep it, of course, but all new phone payment schemes going forward will be 36-month plans. According to Jeff Moore, principal of Wave7 Research:
I think the No. 1 correlation is there’s really nothing that revolutionary about newer phones. They’re 4G/5G capable, and the upgrades are marginal, where the camera gets a little better and the processor a little faster, but one is very much like the other and it’s been that way for a while now. The big picture is obvious. We’re moving toward longer EIPs.
To top it all off, all three major carriers are now emphasizing trade-in offers that equate to a free phone, with Verizon joining the frenzy with its "biggest 5G upgrade" campaign a week ago by giving $700 toward new iPhones and $800 toward flagship Androids to match what AT&T and T-Mobile were already offering.
Now that the unlimited plan price war that never was is over, carriers are focused on keeping its customers, lowering churn rates, and trying to leverage those newfangled 5G phones and networks for the longer run.
At least for AT&T, that strategy seems to be paying off - it has been offering the free iPhone and then $700 credit towards a new phone since last fall, and managed to clock its best quarter in ten years with 823,000 wireless postpaid additions, in contrast to Verizon losing 178,000 in Q1.
T-Mobile added a hefty number, too - 773,000 - yet its profitability is still a fraction of what Ma Bell and Big Red are netting each quarter despite the uptick in free phone offers which reportedly costs AT&T $2 billion per quarter.
With the prolongation of its cell phone contracts equipment installment plans from 30 to 36 months now, AT&T is again one step ahead of the pack when it comes to churn strategy, so we'll keep an eye on everyone's second quarter results.
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