Faster upgrade plans like AT&T Next could be new frontier in wireless

Main targets of new plans are the young and tech savvy, who want latest phones sooner

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Plans like Next from AT&T "are not for everyone ... but for the segment of customers who live on the cutting edge, this is for them," said Jeff Kagan, an independent analyst. With Next, "as customers swap out and get their hands on the newest technology, they will stay with AT&T to keep feeding that hunger."

Jack Gold, analyst at J. Gold Associates, predicted that the majority of AT&T's customers won't take advantage of Next and will continue to wait two-plus years to upgrade.

AT&T didn't respond to a request to describe the motivation behind its Next plan and only issued a brief statement explaining how the plan works.

Starting July 26, AT&T will offer customers its Next plan, which provides a new smartphone or tablet every year with no down payment, activation fee, upgrade fee or financing fee. After making 12 payments of $15 to $50 apiece (depending on the device), they can trade-in the device and upgrade to a new one or keep the older one and make no further payments after 20 months.

T-Mobile last week launched its Jump! plan to allow new phone upgrades twice a year after enrolling in a program than costs $10 a month.

With all the plans, the carriers are willing to pay for part of the cost of the devices at upgrade time. Still, that amount will be less than a carrier subsidy under the existing approach, where smartphones can cost as much as $650, but carriers discount the price to an average of $200 with a customer commitment to a two-year service contract.

"The actual cost to AT&T and the other carriers [for the new upgrade plans] is relatively small when compared to the press and goodwill they get," Gold said. "These plans are a way to look more competitive, while at the same time look like they are keeping the cost low."

Gold said that consumers will need to be careful that each time they upgrade they aren't also forced to sign up for new wireless service that costs more than before. T-Mobile has said its $10 monthly fee guarantees new customer network service plan pricing. AT&T's Web site includes a footnote that says an upgrade prior to 20 months requires purchase of a new service agreement "under then-applicable terms and conditions."

This article, Upgrade plans like AT&T's Next seen as new frontier in wireless, was originally published at Computerworld.com.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is mhamblen@computerworld.com.

See more by Matt Hamblen on Computerworld.com.

Copyright © 2013 IDG Communications, Inc.

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