After Leap, AT&T Next Takes On T-Mobile's Jumphttp://www.fool.com/investing/general/2013/07/16/after-leap-att-next-takes-on-t-mobiles-jump.aspx Evan Niu, CFA
July 16, 2013
Just days after AT&T (NYSE: T) announced its intention to acquire smaller carrier Leap Wireless in a spectrum play, Ma Bell has announced a new upgrade plan not unlike T-Mobile's (NYSE: TMUS) new Jump program. Called "AT&T Next," the carrier will allow customers to upgrade their devices every year with no down payments, fees, or service contracts.
There will be monthly installments that range from $15 to $50 depending on the device. For example, AT&T says a Samsung Galaxy S4 requires monthly payments of $32. The plans pay off the devices in full after 20 months, but AT&T will let you upgrade after 12 months.
There are some notable differences from T-Mobile's Jump, but the underlying goal is to facilitate more frequent upgrades for smartphone users.
AT&T Next is undercutting T-Mobile Jump's upfront cost by requiring no down payment, but that results in higher monthly payments over a fewer number of months (T-Mobile's plans are for 24 months). There's also no monthly fee to participate in the program like with Jump, but most of that fee is going toward the handset insurance that T-Mobile is bundling in. After the first six months, T-Mobile offers two upgrades per year as opposed to the one that AT&T is promising.
Customers that trade in a 1-year-old Galaxy S4 have already paid $384, which is 60% of the full retail price of $640 for that device. After trading in, remaining payments are waived but AT&T is hoping that it can resell the device for more than that balance. On average, smartphones lose about half of their value after the first year,