Hello, AT&T Next

AT&T announced a new program this month called AT&T Next. It basically allows you to spread out the cost of an expensive smartphone on a monthly basis and gives you the option of trading in your smartphone for something brand new after 12 months.

AT&T Next Costs More Money

Sounds great, right? Except you’ll end up paying more money.

Let’s look at a typical iPhone user. And by typical, I mean you’re the type of guy or gal who works from home on the release day of the new iPhone every year waiting with eager anticipation for a knock on your front door. Let’s assume 3 things:

1. You own an iPhone 5.
2. You paid $450 for that iPhone 5 since you upgraded from an iPhone 4S.
3. You plan on purchasing the iPhone 5S when it’s announced in October.

Going with the cheapest voice option ($40 for 450 minutes), text option ($20 for unlimited texts) and the sensible data package ($30 for 3GB) you spend $90 a month. Tack on the $450 you paid for that iPhone 5 last year, you’re looking at a total cost of $1,530 a year.

If you used the AT&T Next option, you’d still be paying $90 a month for voice, text, and data, but you’ll also be paying an additional $32.50 for the full-unsubsidized cost of the iPhone ($650) split out into 20 monthly payments. Over 12 months you’ll pay $1,470… which seems to be $140 less expensive than the first route, BUT in order to upgrade to the next iPhone you have to trade in your old iPhone, which… on eBay can net you upwards of $300.

Here’s a chart:

Service Phone Cost Monthly Cost 12 Mn Cost 20 Mn Cost 24 Mn Cost eBay Resell Price 12 Mn w/ Resell Cost 20 Mn w/ Resell Cost 24 Mn w/ Resell Cost
AT&T Next $0 $122.50 $1470 $2450 $2810 $0 $1470  $2450 $2810
Early Upgrade $450 $90 $1530 $2250 $2610 $300 $1230 $1950 $2310
Normal Upgrade $200 $90 $1280 $2000 $2360 $300 $980 $1700 $2060

So as you can see, if you upgrade on a yearly basis with the Early Upgrade option (available 6 months into your two-year contract), you save about $240 if you sell your phone on eBay for $300. Even if you sold your phone for $65 on eBay, you’d still end up $5 ahead of the AT&T Next option. If you wait every other year to upgrade your phone you save even more money… upwards of $400!

The only reason I can imagine someone would knowingly sign up for the AT&T Next program is if they are too lazy to sell their old iPhone on eBay or Craigslist or Amazon, etc…

Don’t be lazy.

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