AT&T Next Offers Free Device Upgrades Annually, But With Added Costs

By Wesley Fenlon

Next will add something like $30 to your existing monthly payment plan on AT&T--the price varies by device--but you won't pay $200 up front, and can switch to a new phone every 12 months.

Less than a week after T-Mobile announced Jump, a $10 per month plan addition that allows users to upgrade to new phones at a subsidized price twice a year, AT&T has done the same. It's called AT&T Next. This is the new trend in the smartphone world: Why wait two years to refresh your hardware when you could have a new phone every year, or every six months? With AT&T's new plan, there's no waiting for a two-year contract to expire, but it doesn't work exactly like T-Mobile's Jump.

Next isn't attached to a $10 per month fee. It also doesn't let you upgrade more than once a year. But it does let you swap to a new phone annually, rather than waiting the typical two years for a contract to expire. Here's the gist of how it works: First, forget that typical $200 subsidized cost you pay for a phone. You're paying $0 up front. The cost of your phone, which is often $650+ for a smartphone, is divided up into 20 monthly payments and added to your service plan.

If you were previously paying $70 per month for AT&T service, with AT&T Next you'd be paying an additional $15 - $50 on top of that to pay off the device. But after 12 months, you have the option of trading that device in, abandoning those last 8 payments, and getting a brand new phone. A damaged phone will, of course, have less trade-in value than one that's in good shape.

The same catches apply here as they did with T-Mobile. Trade that phone back into AT&T, and you lose the option to sell it yourself and make some money back. The value of this deal is questionable, as GigaOm points out:

"Under its usual pricing, AT&T subsidizes the device with a steep discount up front (say knocking $450 off the cost of an iPhone), but locks you down to a two-year contract. You then gradually pay the cost of your phone through fees factored into your service plan. So if AT&T is making you assume all or most of the cost of your phone, it should lower its rates right? It’s not. It’s charging the same rates as it charges contract customers.

"That’s where T-Mobile has tried to differentiate itself. It’s no longer subsidizing any devices, but it charges far less for service as it’s no longer including device fees in its plans. Let’s put some real numbers to this: AT&T’s cheapest individual smartphone plan with a reasonable data package (450 minutes, unlimited texting and 3 GB of data) is $90 a month. The closest T-Mobile equivalent (with unlimited talk, text and data) is $70 a month. If you factor $20 over 12 months, you wind up with $240 in savings, which more than makes up for the difference in cost between the Jump and Next programs."

AT&T's pricier plans mean you'll likely end up paying more for your phone, over time, than you would with T-Mobile. You'll also have access to a more robust LTE network, something that T-Mobile is still working to get off the ground. AT&T Next goes into effect on July 26.

If you're on Verizon, don't think about jumping ship to either provider just yet. Verizon Edge, a similar program, is rumored to be debuting in late August. Once all three are up and running concurrently, it will be easier to tell which upgrade plan offers the best deal.