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AT&T gets in on no-contract, early upgrade plans too

People who waited in line for the iPhone 4. (Credit: Maggie Reardon/CNET) AT&T isn't going to let T-Mobile steal all of the spotlight when it comes to big shake-ups to its plans.



(Credit: Maggie Reardon/CNET)

AT&T isn't going to let T-Mobile steal all of the spotlight when it comes to big shake-ups to its plans.

The Dallas telecommunications provider unveiled AT&T Next, a new program for customers that allows them to pay for their own smartphones in monthly installments, and enables an annual upgrade to a smartphone or tablet.

AT&T Next represents the second move by a carrier following T-Mobile's introduction of its Jump early upgrade program last week. T-Mobile CEO John Legere spent a large chunk of his presentation talking about his vow to transform the wireless industry, and his dramatic, flair-filled moves seem to have caught the attention of his rivals. A few days after the event, Sprint cut the price of its plans and guaranteed unlimited data for life. Verizon Wireless is reportedly considering a tweak to its upgrade plan as well.

AT&T, for its part, doesn't want to be seen as a copycat which is why it sent out a teaser a day before T-Mobile's event last week. Still, the plan offers many similarities.

An AT&T customer can opt to pay a monthly installment plan for 20 months rather than pay an upfront fee and sign a two-year contract. If a customer leaves early, he pays the rest of the installment fees rather than an early termination fee (some critics argue they are essentially the same). The installment fee, which comes on top of the unchanged service plans, ranges between $15 and $50 a month, depending on the device.

An iPhone 5, for instance, costs $32.50 a month, a Galaxy S4 costs $32, while an HTC One costs $30. The plan also includes tablets. A 16GB iPad Mini costs $23 a month, while a Galaxy Note 8.0 costs $25 a month.

There are no activation fees or upfront payments, and after a year, customers can trade in their devices for an upgraded model. AT&T Next is available to new customers and existing customers eligible for an upgrade.

The early upgrade option comes after Legere railed against AT&T and Verizon Wireless for recently extending the upgrade eligibility wait to 24 months from 20 months.

AT&T Next sounds similar to T-Mobile's no-contract plans, with a few tweaks. T-Mobile charges an upfront fee that goes as high as $150 for the Galaxy S4, with monthly payments of $20 on top of the service plan. The monthly installments go for 24 months, unlike AT&T's 20 months. Under T-Mobile's Jump plan, which costs an additional $10 a month, users can upgrade their phone twice a year after the first six months, and the fee includes insurance.

T-Mobile's Jump aims to get a rise out of wireless rivals

When T-Mobile first unveiled its no-contract model, the carrier also cut the prices of its plans to just a handful of options. Its thinking: if you're not paying subsidies, you shouldn't pay a higher subsidy-based rate on your service plan. AT&T, while providing another option for consumers, isn't changing its rate plans, so the economical benefits are muted. The typical customer, for instance, may not want to tack on an additional $32 on top of their already expensive phone bill. Customers who are eager to pay for their own phones and don't want to get locked into a contract may find this plan useful.

AT&T is also keeping the two-year contract option, as well as the option to pay full price on a phone or bring a phone to the network.

AT&T argued it still offers superior LTE coverage, covering roughly twice the markets as T-Mobile.

But T-Mobile has moved extremely quickly with its LTE deployment, and some of its big moves appear to be having a ripple effect on the other industry players.

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