ATT seems to be in cost-cutting mode of late. Following news of a new $0.61 monthly administrative fee on May 23, the carrier has modified its rules for subsidized phone upgrades. On Sunday, ATT changed its policy and now customers must wait a full 24 months before becoming eligible for a handset upgrade at the lowest subsidized price.
This allows ATT to recoup another 4 to 6 months of handset subsidies before providing the next one to a customer. The company says “it applies to any customer whose agreement expires in March 2014 or later,” so it retroactively applies to ATT subscribers that signed a two-year contract during or after March 2012.
Ironically, my wife’s contract with ATT is up this October. And under ATT’s eligibility rules before the change, she can actually upgrade now at the fully subsidized cost, i.e.; an iPhone 5 for $199, for example. But when she does that, she’ll sign a new two-year agreement and will have to wait the full 24 months under the new rules.
ATT says that early upgrades are possible after six months of a contract, but “you qualify for partial discount off the full retail price.” And you’ll have to sign a new two-year agreement at that point. For those that don’t like their handset or get bored with it in the first few months, that’s a reasonable out. Don’t expect the lowest price for your new phone at that point, however.
It does make logical sense for handset upgrades aligned with contract lengths. ATT is doing anything nefarious in that regard. It’s simply taking something away that consumers could take advantage of.
Ideally though, the carrier would follow in the footsteps of its peer, T-Mobile, and simply abolish contracts while decoupling device costs from voice and data services. (Note: ATT says you can bring your own phone and it will provide contract-free service, but there’s no mention of lower monthly costs.)
Then consumers could be in control of their own hardware costs and upgrades. Instead, in this generally saturated market, ATT is looking to grow revenues from fees and slower upgrade cycles.