AT&T_Pirate

It’s that time of year again when AT&T contract customers begin scampering for ways to get their phone upgraded before their two year contract has expired. Sure, you can break your contract and pay the ETF, then close and open your account and start all over again. But why should you have to do that?

I don’t work for AT&T, but I have been a customer for a long time. So, I may miss some of their logic here, and if so, please correct me. From where I see it, AT&T’s business objective is to have as many “contract customers” as possible. Contracts ensure future income and retain customers for future contracts. With so many options for month to month plans with unlimited everything available to consumers today, what do contract plans actually offer, aside from a guarantee that you are paying more than anyone else for cellular service. Ok, it might give you access to a carriers highest speed network. The biggie though, is subsidized phones.

There are probably lots of different ways to do the calculation, but working with round numbers, let’s assume that as an AT&T contract customer, you are paying $20 per month, or $480 over the course of your contract (24 months) towards the cost of your phone. That’s $580 for a $99 contract phone, $680 for a $199 contract phone, or $780 for a $299 contract phone. Close to what you would pay off-contract for mid-range and premium smartphones. I know AT&T doesn’t pay retail for these phones, but you do need to account for; interest, returns, defects, etc. So it’s probably a fair number.

Instead of going through the whole ETF thing, why doesn’t AT&T (along with every other US carrier) allow you to;

  • Pay the $20 x the number of months remaining on your contract
  • Sign a new two year contract
  • Get a new phone at the subsidized price

Here is an example. I purchased my Lumia 900 for $99 in April 2011. That’s 16 months I have been paying the $20/month subsidy (as a part of my $85/m bill). So that works out to $419 paid down ($99 + (16 x $20)) to date. There are 8 months remaining on my contract, so how about I pay $160 (8 x $20) to buy out my subsidy. That’s a total of $579 paid for the Lumia 900. More than enough I would think. I sign a new two year contract and get a Lumia 1020 for $299. So, the Lumia 1020 costs me $459 ($299 + the $160 pay down) vs. $699 $659. But AT&T has me locked in for another two years.

Does this not make both AT&T and the consumer happy. A win-win so to speak. What is AT&T losing on this deal? They got the Lumia 900 totally funded and locked me in for two more years. I am happy, cause I got a spanking new phone after only 16 months. The alternative would be for me to buy the Lumia 1020 off-contract for the full $699, and as I am now total pissed at AT&T, when my contract does expire next March, maybe I choose to go month to month and never, ever sign another contract. My understanding is that AT&T does has some kind of early upgrade option deal for iPhone. Time to level the playing field guys.

Now, there would have to be some rules. You would have to wait a minimum of six months into your two year contract, to prevent abuse and avoid excessive administrative costs. Oh, and only make this program available at AT&T brick and mortar stores. That brings in more foot traffic to the retail stores providing opportunities to upsell accessories, phones for Junior and Sissy, or maybe even Uverse. Let Amazon, Wal-Mart and BestBuy continue to offer the great deals with new two year contracts.

Ok, so what did I miss? Why can’t AT&T implement this new policy tomorrow at absolutely no down cost to them, aside from some new codes to create the transaction in their system.

Hey there, Mr. de la Vega, if you want to discuss further. let’s do lunch. Any day is good for me.

8 COMMENTS

  1. I realize as a long time AT&T customer you are unlikely to switch to T-Mobile but if you want to stop being held hostage to upgrade subsidies then you need to check out the new JUMP! Initiative that allows tonsils customers to upgrade their phone every six months without paying any penalty and at the same price as a new customer. All you need to do is pay $10 per month and you get full insurance coverage for anything from a lost or stolen phone or throwing your phone in a pool. It is an amazing offer for smart phone enthusiasts who want to always have the latest and greatest in New phone technology.

  2. Agreed. Not ready to make the jump (no pun intended) to T-Mobile, but I have been paying attention to their new plans. I do think they get it. And hopefully it will rub off on the other Big Three. As long as OEM are going to continue releasing new, better hardware every 6 months, consumers need a way to get their hands on this stuff. Two year, locked down contracts are so 1990s. Time for a radical change.

  3. It would be nice if Big Blue followed suit. I already know that TMo ISN’T where I want to be, so I know I won’t be switching.

  4. Preach! I too am Stuck with my old Lumia 900 for about another year. I am more than ready to upgrade to the 1020 but I’m not willing to pay the retail value. So I have to play the waiting game and see what Windows Phone has to offer in a years time.

  5. Yep. We are mulling through it with our internal emails as I type. What it comes down to though is, AT&T is not giving you anything for free. Let’s go with the Jimski Plan instead. I buy a Lumia 1020 today for $299 on a two year contract. Each month, for the next twelve, I put $25 under my mattress. In July 2014, I buy a new phone for $659 off contract. I use the $300 under my mattress ($25 x 12), plus the $250 I will net (minimum) selling my 1020 to offset the cost of the new device. So now I am out $109, plus any activation fees. But I am one year into my two year contract and I have a new phone. In another 12 months, I have squirrelled another $300. I get another new phone with my upgrade for $299 and sell my old phone (the one I bought off contract) for $250. So now I am “up” $142 ($300+$250=$550 – $299 = $251 – $109 = $142), minus any activation fees. And the longer I wait to upgrade, based on OEM release cycles, the more cash I store under the mattress (although the phone also depreciates, but by a smaller percentage). I just saved you at least $84/year ($7/month x 12 (estimated lease for a 1020)), and provided you with a more flexible plan.

  6. Fantasy math looks good.
    But unfortunately we don’t get to write policy.
    We have to take what they offer, or try another, losing our grandfathered plan for something that turns out to be not as good.
    It atleast maybe, it is a step in the right direction.
    Peace

  7. Understood JR. But I am going to keep my grandfathered plan (although I don’t need it) and buy the 1020 off contract in two weeks. $659 (minus hopefully a little bit if I negotiate), minus the $100 trade for my L900 (not worth much more on eBay these days) = $559. Gonna start stowing away that $25 (not under my mattress for you would be burglars). Next April, when my AT&T contract has expired, I will have a nice phone and $300 saved towards my next purchase. I will honestly be thinking long and hard about renewing my contract at that point. Or instead, subscribing to one of these $50/month plans. But the important thing is the choice will be mine, with no pressure or carrots from AT&T.

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