Larry Magid: AT&T New No-Contract Plan A Hit
SAN FRANCISCO (KCBS)— AT&T's new no-contract plan for wireless devices is proving to be a hit with 40 percent of new customers and those upgrading their services choosing the plan.
T-Mobile had started the whole no-contract concept and now AT&T seems to be picking it up and running with it.
AT&T's Next plan allows customers to purchase a phone over time with the company financing it. Instead of them subsidizing it (for example, a typical latest model iPhone goes for $200 under a contract) and locking you into a two-year deal, they'll instead sell you the phone at full price ($650 in the newest iPhone's case). With the financing, it comes to about $25 or $30 a month depending on the contract lengths and the purchase of the phone.
AT&T New No-Contract Plan A Hit
By doing this, AT&T is able to lower their fees and still make money. The subsidized plans were basically them charging you a lot of money for service and them paying for the phones.
In a way this really works out for the carriers because they do not have to buy these expensive phones, but it can actually work out for customers as well. You could end up paying less for service and you end up owning your phone. It's kind of a win-win situation if the deal is right. You have to read the fine print.
The numbers the company reported were unexpectedly high. They only expected that it would be small segment of their population, likely the ones who had to have the latest gadget.
They found out that by pricing it correctly that it really opened up their market for people that wanted to take part in the plan.
It turns out there's a really big interest in people wanting to buy unlocked phones and buying phones that are not under contract. Personally, my pay-as-you-go plan with my Android Nexus phone is $60 a month.
Speaking of unlocked, Sprint announced that they plan on making all of their devices un-lockable by next February. They've actually been under enormous pressure from the government to do this. However, just because a device is unlocked doesn't mean it can be used on another carrier's network.
