AT&T Next and Phone Upgrades: The Smart Scam

Let’s face it: we’ve become a smart phone culture. We take our phones everywhere. They answer our questions, coordinate our plans, and often serve as an image-building accessory. Lines form at Apple stores upon the mere mention of a new device, and we hold our breath for that exciting event: the phone upgrade.

Last summer, AT&T unveiled the ‘Next’ plan, a system in which users make monthly installment payments for the phone of their choosing, and after a span of either 12 or 18 months, can upgrade to a new device for peanuts – that is to say, retail taxes. This move has made it possible to upgrade your phone without a new two-year contract, without early termination fees, and no upfront purchase price. Sounds exciting, right?

It is quite the excitement in the tech community, with an article at Phone Arena detailing the scam-like nature of the setup. But the article itself begs the question: is this actually a scam, or is AT&T using a savvy marketing strategy, growing with the changing desires of the wireless population?

Apple and Samsung have a pattern of releasing a new, top-of-the line phone once a year. This move spurs a large amount of upgrades, and not just because the phones are better, lighter, faster – the legions of more fanatic users attach a certain amount of cache to being in possession of the latest phones and technology. This is exactly why the car leasing industry has lasted so long – the consumer need to drive the newest, prettiest vehicle, and when a newer, prettier one makes its debut, they want to upgrade without the hassle of buying, selling, trading or getting a new auto loan. With AT&T Next, the service provider is adeptly taking advantage of our national impulse purchase habits, our constant submission to that feeling of ‘ooh, shiny’ when we see a new phone or device that we want.

And to be financially realistic, the ultimate price to be paid is not much different than what a new phone upgrade would cost without the help of subsidies provided by standard two-year contract agreements. Part of the monthly payment was always a cushion, padding that would allow the customer to buy a new iPhone or Samsung Galaxy at a cost of, say, $200 instead of the standard retail of $500. Those subsidies are no longer a part of the payment in the Next plan, and the monthly rates are clearly lower for it. In addition, this method of upgrade is optional – you can pay installments for twelve months and get a new phone every year by simply turning in your old one, or you can pay over eighteen months and own your phone at the end of the cycle.

According to an analysis at BuyVia, the yearly upgrade option is ideal for the growing population of buyers who will simply trade in their phone for a lower price on a new handset – it eliminates the need for selling to a third party, does not necessitate the use of risky unlocking procedures, and allows the customer to upgrade smoothly to the new phone of their choice. All of this results in less stress for the customer.

Ultimately, what is really being expressed in the ‘scam’ sentiment is a mentality that might well be fading within the cell phone world, that idea of device ownership. Some users are very content to hold on to an older generation of iPhone or Samsung, but the majority of consumers live up their title, always snapping up the newest phone. The culture of newer, better, faster has overtaken the mainstream and created an almost Pavlovian response upon the release of new technology. On the heels of this changeover comes the reality of unlimited data and its nearly unavoidable demise – with such powerful devices being used across networks, carriers are scrambling to make sure that not only do the networks avoid coming to a halt under such intense use, but they are hard-pressed to consistently provide their customers with the best phones and plans to satisfy the need for memory, gigabytes and speedy processors as we communicate across the country and with the world at large.

Photo courtesy AT&T