Today, AT&T announced its brand new "Next" mobile-device upgrade option, which offers its customers "a new way to get a new device every year." All you need to do is pay the sales tax on your AT&T device up front, then pay for your monthly wireless service, along with a monthly fee for the device for 20 months, and you're eligible for an upgrade.
You can also trade in your AT&T device, be it a smartphone or a tablet, after a year of monthly payments, for a brand new device. (Trade-in devices must be in "good physical and fully functional condition.")
AT&T's announcement comes in response to T-Mobile's "JUMP!," or Just Upgrade My Phone! plan, which was unveiled last week. JUMP! is similarly designed to let wireless customers upgrade their devices more often. In fact, JUMP! lets T-Mobile customers upgrade twice a year, assuming they're willing to trade in their current devices for new ones.
AT&T's move suggests that T-Mobile has successfully started a significant shakeup of a U.S. industry that has accepted the two-year device-upgrade cycle as the norm. And it also suggests that other leading carriers, including Verizon Wireless and Sprint, will likely offer similar upgrade plans in the not-so-distant future.
So which plan, AT&T Next or T-Mobile JUMP!, offers the most value? The answer depends on the individual, and customers should always consider network coverage in the areas where they live and work before choosing a carrier. Each carrier also offers different device selections. But here's a quick breakdown of the nuts and bolts of each plan.
Let's say you're looking to purchase a 16GB Galaxy S4 smartphone.
T-Mobile offers the GS4 for $149.99 up front, along with a two-year service agreement and $20 a month throughout the contract period. (T-Mobile says the suggested retail price of the 16GB GS4 is $629.99; $150 plus 24 monthly payments of $20 equals $630.)
T-Mobile JUMP! Graphic
The minimum T-Mobile service plan you can purchase is the "Simple Choice Plan: Unlimited Talk + Text," which, as the name implies, gives you unlimited voice and text, and minimum data option is 500MB of "high-speed data." That costs $50 a month. The JUMP! add on is $10 a month, and it enables the frequent upgrade plan and gives you "Premium Handset protection" which helps protect your device from "lose/theft, accidental damage and mechanical or electrical breakdowns." (Premium Handset Protection costs $12 a month without the JUMP! option.) When you include the $20 a month device fee, you'd be paying $80 a month.
So to sum that up, you'd have to pay $159.99 up front, plus $80 a month for two years to get the Samsung Galaxy S4 on T-Mobile, with the option of upgrading twice a year. (You can also pay off the balance on your device whenever you want.) If you decide to hold on to the GS4 for two years and pay by the month, you'd end up paying $1920 in monthly service fees, plus that $149.99 up front for a total of about $2070 over 24 months.
T-Mobile JUMP! plans are also available to existing customers who trade in eligible T-Mobile devices for new ones.
Now on to the new AT&T upgrade plan.
AT&T Next is not available until July 26. But here's a quick breakdown of the new offering. (Existing AT&T customers are not Next eligible unless they're also eligible for an upgrade, and there's a limit of two Next devices per AT&T account.)
AT&T's full suggested retail price for the 16GB GS4 is $639.99. No specific monthly Next pricing details are available yet because Next plans are not yet active, and fees depend on the device model, but $640 divided by 20 comes to about $32 a month. As previously mentioned, no payment is due up front except for sales tax. (Sales tax will vary by location, but it came to about $35 when added the device to my queue on AT&T.com.)
You don't have to sign a wireless-service agreement to take advantage of Next, but you do need an "installment agreement to pay for the device over 20 monthly payments upon credit eligibility." If you cancel your wireless service, you break the installment agreement, and you're responsible for the full balance of the device.
The cheapest AT&T voice plan available is the $39.99, 450-voice-minutes-per-month plan, which includes free mobile-to-mobile calls and 5000 nights and weekend minutes. The DataPlus plan gives you 300MB of monthly data for $20. That's $60 a month, plus the approximate $32 device installment, which comes to $92 a month. To sum that up, you'd be paying roughly $92 a month over 20 months, or $1840, plus around $35 for sales tax, for a total of $1875.
T-Mobile JUMP! vs. AT&T Next: Which Offers the Better Value?
If you're simply looking to pay the least amount of money up front, and you don't care about the option of having multiple upgrade options per yearand, let's face it, most consumers don't really need to upgrade phones or tablets more than once a yearyou'll find a friend in AT&T's new Next offering. All you pay is sales tax up front and you can get a new phone every year. And your phone is fully paid off in 20 months instead of 24 months.
If you value the ability to upgrade as frequently as possible, you may want to go the T-Mobile route, though you do have to pay up front for the device. T-Mobile's cheapest service option also lets you pay less per month, so if you're concerned about paying a bit more every month, T-Mobile offers the better value.
It's worth noting, however, that network reliability and service quality should really be your primary concerns. For example, if you don't get any T-Mobile service inside your home or office, but AT&T works well, it might not be worth saving ten dollars a month, or having an extra upgrade option per year. On the flip side, if your office has terrible AT&T coverage, it could be better to pay more money up front for at T-Mobile device. So it's a good idea to research network coverage in your area before investing in a new wireless carrier.
This story, "A Closer Look at AT&T Next and T-Mobile JUMP! Upgrade Options" was originally published by CIO.