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AT&T Launches No-Subsidy, No-Contract Option To Counter T-Mobile

7/16/2013 05:11:00 AM Eastern

Dallas – AT&T plans to emulate rival carrier T-Mobile by offering consumers no-contract wireless-service plans with unsubsidized handsets and tablets, an installment plan to pay off the devices over time, and greater flexibility in switching handsets without penalty.

Under the program, called Next, AT&T subscribers will be able to change handsets once every 12 months without a penalty or upgrade fee.

 The program goes into effect July 26, but only through the carrier’s direct channels, including AT&T stores. A spokesperson said there is no set date to offer Next through the indirect channel.

The program is AT&T’s response to T-Mobile’s no-contract Simple Choice plans, launched this year to offer unsubsidized handsets with an installment-payment option and a paid-for option to upgrade handsets twice a year. T-Mobile’s Simple Choice plans, part of the carrier’s uncarrier strategy, have featured prominently in ads targeted in large part to win over subscribers from AT&T.

AT&T also hopes the Next program will help wean consumers off sizable handset subsidies that hurt profit margins.

Next differs from T-Mobile’s program in several ways, At AT&T, Next is an option for consumers, whereas T-Mobile’s Simple Choice plans are the only plans offered by the carrier direct to consumers and by most of the carrier’s indirect retailers, excluding big-box retailers.

As a result, AT&T continues to offer consumers its previous options to buy a subsidized device with a two-year service commitment, pay full price for a device with no-commitment, get a partial discount for an early upgrade after six months with a two-year service commitment, and bring their own compatible device to the network. The Next plans’ monthly service prices are the same as those under AT&T’s contract plans.

In another difference between the T-Mobile and AT&T programs, T-Mobile’s installment-payment plan requires an up-front down payment up to $99 with 24 monthly installments up to $20, whereas AT&T doesn’t require a down payment. T-Mobile also allows for twice-a-year upgrades compared to Next’s once-a-year limitation.

Next is available with any current AT&T-network smartphone or tablet. Interest-free monthly device installments range from $15 to $50 depending on the device. A Samsung Galaxy S 4, for example, would cost $32 per month for 20 months with no down payment, plus monthly service charges.

Under the plan, consumers get the option after 12 payments to trade in their device and begin payments on a new device. AT&T doesn’t charge a penalty for paying off devices early.

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