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.