News from two major wireless carriers Verizon and AT&T show that T-Mobile’s new pricing announced in March was successful in disrupting the industry.
Several months ago T-Mobile started eliminating contracts from their pricing plans. Instead of offering subsidized pricing of handsets, subscribers pay installments on their phones each month in addition to data charges.
Today, AT&T announced a new, similar plan which will allow subscribers to get a new device each year, and leaked documents from Verizon show preparation to roll out a comparable idea at the end of summer.
AT&T’s new plan, “AT&T Next” (not to be confused with Pepsi Next) builds on the T-Mobile’s offering. Let’s say in July 2013 you buy brand new Device A. At the time of purchase you don’t pay any activation fees or down payment for your phone, only sales tax on the price of the phone. The total price of the phone is split up in to 20 installments. Each month, you pay an installment in addition to your normal plan payment for airtime, data, etc. For example, at retail cost of $699.99, a Samsung Galaxy S4 would be around $35/month. There’s no contract, so you can quit your plan but you’ll still owe each month on the device installments. In July 2014, you can trade in Device A and start over with something new, Device B. If you so choose, you can keep Device A as long as you keep paying the monthly installments until all 20 are paid.
If you’re willing to pay upwards of $100-200 a month for your phone, you can have a new, top of the line device each year.
Verizon conveniently concurrently leaked a training document hinting at a feature called “VZ Edge”, which is designed to let customers upgrade to a new device once 50% of the current device is paid off. This program is reportedly set to launch at the end of August.
T-Mobile is not happy with their big-name imitators. CNET reports that a T-Mobile exec responded to AT&T’s copycat plan by saying it is a “poor imitation” and will cost subscribers more in the end.
Since the two carriers were formerly “in a relationship and it’s complicated”, it’s easy to see why there might be some bitterness.