AT&T Will Stop or Reduce Subsidies on Mobile Phones

AT&T Will Stop or Reduce Subsidies on Mobile Phones

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For small business users reliant upon the latest mobile technology, the terrain may be shifting.

The largest provider of mobile phone service in the U.S., AT&T, was one of the last to eliminate voice minutes in favor of unlimited calling. But the move was part of a strategy to change the company’s business model, moving from charging for voice service to charging for data transfer.

Now it seems AT&T is pushing to reduce or eliminate phone subsidies which enable rapid and inexpensive upgrades of mobile devices. For business users these upgrades can be critical to keep up with equally rapid changes in technology.

AT&T Introduces ‘Next’ Program

Of course, AT&T is promoting these changes as a benefit to help users upgrade their phones faster — but at a price.

Here’s how it works.

A new pricing plan, AT&T Next, lets you upgrade to a new phone within 12 or 18 months instead of waiting up to two years for the standard contract to expire.

But there’s a catch.

In addition to your monthly service bill, AT&T will charge a “low monthly installment” essentially to finance the cost of your phone over 20 to 26 months.

If you upgrade, the financing payment continues to cover the new device. However, if you keep it and pay it off, the added installments will be removed from your bill and you’ll see some savings.

AT&T Chief Says End of Big Subsidies Is Goal

AT&T is hardly being secretive about its intentions. Company CEO Randall Stephenson announced the move away from subsidies at a recent investor conference in New York, CNET reports. And another AT&T competitor, T-Mobile, got rid of subsidies earlier this year.

Still, the new strategy seems a bit unfair to customers given the cost of devices is essentially already covered by high service fees, TechCrunch observes.

The result will be higher costs for small businesses and other users seeking to upgrade or add smartphones. It will also require you to look more carefully when shopping for a mobile plan.

One other option is to look at prepaid cell phone plans with a smartphone purchased upfront to determine whether this might make more financial sense for your business.

Image: AT&T


Joshua Sophy Joshua Sophy is the Editor for Small Business Trends and the Head of Content Partnerships. A journalist with 20 years of experience in traditional and online media, he is a member of the Society of Professional Journalists. He founded his own local newspaper, the Pottsville Free Press, covering his hometown.

4 Reactions
  1. I think that it is a wise move because more and more people are now using the Internet on their mobile phones. I think that they will make more money from data transfer than calls. After all, there are now some free calling apps that utilizes the Internet.