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Sea change in buying a cellphone: What should I expect when I upgrade phones this Fall?

Discussion in 'Mobile Phones / Entertainment' started by DaveF, Aug 7, 2015.

  1. DaveF

    DaveF Moderator
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    I haven't had time to visit an AT&T store, and checking online wasn't immediately obvious. I've read that all the carriers have now gone to a full-price, non-subsidized pricing system now. For ten years I've been used to 'new every two'. What should I expect, or consider, when it's time to upgrade my iPhone with AT&T (or switch to Verizon?) this Fall?
     
  2. Ronald Epstein

    Ronald Epstein Founder
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  3. DaveF

    DaveF Moderator
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    Thanks. That article is from last year, and I think the shift to no-contract has moved even further. The NEXT and EDGE plans are still there, but look like they're getting, if not sidelined, to be no more than peers to monthly plans.
     
  4. Ronald Epstein

    Ronald Epstein Founder
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    Yeah, sadly, it is from last year.


    I am aware that changes were made. I was just talking to someone yesterday who inquired to Verizon about upgrading to the new iPhone 6S and was pushed to go with the EDGE plan.


    So, I *think* that is still how the carriers are moving forward -- that is what I last read -- but all that could have changed over the past year.


    I am in the same boat as you. I am looking to upgrade but not certain what I will be forced into.


    I buy a new phone every year, so generally I pay full price and sell off my old model to help subsidize.
     
  5. DaveF

    DaveF Moderator
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    Interesting, that they're pushing EDGE at Verizon. Yesterday's news is that Verizon is now moving to the no-contract model. Things seem to be changing as we speak :)

    http://techcrunch.com/2015/08/07/verizon-kills-off-subsidies-and-contracts-simplifies-data-plans/


    I think this Fall is going to be expensive, out of pocket. But if it reduces my monthly bill commensurately, I'll pay up front. But I don't like not knowing what to expect from my Carrier coming into a big purchase.


    I'll stop by AT&T this weekend, time permitting, and see how it works currently.
     
  6. Ronald Epstein

    Ronald Epstein Founder
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    Dave,


    This is exactly what I am talking about.


    Here is a quote from the article you referenced:

    It's their EDGE program whereas you either pay for the device upfront in full or over installment payments added on to your bill.


    No contract.


    I think AT&T is exactly the same with their NEXT program.


    I look forward to hearing what AT&T tells you because I am very dependent on what they say.


    Thanks, Dave!
     
  7. DaveF

    DaveF Moderator
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  8. Ronald Epstein

    Ronald Epstein Founder
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    Talk about in the moment....


    Sitting here watching MSNBC. One of the top headlines: Verizon announces it is no longer subsidizing smartphones. Either pay in full or in installments.


    I am certain that AT&T is also doing the same thing.


    Look forward to what you find out Dave.
     
  9. DaveF

    DaveF Moderator
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    I spent the afternoon reading AT&T and Verizon's websites, pricing plans, and I built a spreadsheet to compute prices for new No-Contract and traditional 2-year contracts. (It's a Numbers file -- OS X and iOS compatible. I'll be happy to share, if you or anyone else wants it.) I was hoping it would be a simple answer, but there are pricing details that affect what plan is cheapest. In fact, in some cases, the old 2-year contract is still cheaper!


    Here's what I've concluded.


    No-contract is simple to understand: Buy the smartphone(s) yourself and then activate a monthly contract with AT&T or Verizon at their published rates. Both plans are the "Family Share" type: a base price for a data pool (and unlimited talk and text) plus a per-device connection fee.


    Verizon's "Experience More" plan is a trivial variation: they divide the price of the smartphone over 24 months and add that to your monthly bill.


    AT&T's NEXT is a little funky: For the 24 month plan, they divide the cost over 30 months and add that to your bill. At the end of two years, you trade in your phone and you get some residual value as trade-in for an upgrade. The other EDGE plans are similar: the smartphone cost is computed over about 6 months longer than the actual contract, and some measure of its residual value is used for upgrade. If you don't want to upgrade, you can pay off your phone and keep it (and your monthly bill reduces accordingly). And there's a split-the-difference option: make a downpayment and the rest is spread over e.g. 30 months for the two year plan. If you want to upgrade every year, or even every two years like 'normal', and don't want to even think about trade in with Gazelle or Apple (let alone eBay) and want the perception of lowest monthly bill (and don't want to pay upfront for a $600+ phone), this is an attractive option. My assumption, however, is the residual value provided by AT&T at upgrade time will be the lowest value possible, even compared to Gazelle. But I don't know. Finally, this spreading of phone cost over a period longer than the contract makes it impossible to compute true cost of ownership.



    Activation fees are a factor. AT&T has two different fees, $45 on a two-year contract and $15 on NEXT / No Contract. Verizon has waived this fee (at least for new customers).


    This leads the to discovery that the 2-year contract is still a better deal on both carriers for data plans somewhere below 6GB! I'm surprised by this. I've checked my numbers with multiple pricing scenarios, and believe I'm correct. Still, I'll have to check carefully this Fall when I really upgrade. And because plans have been evolving, even if true today, relative pricing might change in three months.


    The other unexpected conclusion, is that Verizon is now cheaper than AT&T at larger data plans, perhaps at 6GB and higher.



    Conclusions:

    * If you want lowest cost and accept smaller data plans,
     
  10. Josh Steinberg

    Josh Steinberg Executive Producer
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    My girlfriend recently got an iPhone 6 at the AT&T store. She had previously been on a contract, but ended up switching to the NEXT plan. They did a bit of a high pressure sales pitch on it and glossed over some of the comparisons between NEXT and the two year contract, but fortunately everything was in writing so she was able to take her time looking it over. She doesn't frequently trade in the phone, so being able to upgrade every year wasn't a big factor in her decision. That the NEXT monthly price dropped after the phone is paid off was a plus for her compared to the contract, because the contract doesn't decrease after the period of the contract is up. Crunching the numbers for both a new two year contract and the NEXT plan, they were almost identical over her expected life of the phone. The thing that ended up pushing her to do NEXT was that the AT&T store was offering a free iPad mini for getting the phone on NEXT, and it was one of the iPads that has the cellular data and not just wi-fi, and tethered to her phone account sharing the same data. It's not the very latest iPad model but she was interested in just having one for simple web browsing and for mirroring content to the AppleTV, so it certainly was good enough for that.


    I'm not sure if the free iPad was a specific promotion from this specific store, if it was a limited time offer that has since passed, or what. But that's what made the difference.
     
  11. schan1269

    schan1269 HTF Expert
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    When I jumped ship to VZW(not really a choice when T-Mobile drops your area, Sprint is a joke and AT&T doesn't offer 3G) I did a Share Everything(More Everything??).

    Paid up front for the G3(which netted an included no charge G Pad). I pay $150/month for 40g.

    Each device adds $10 or $20(three total) and I pay $8 insurance on the G3 and G Pad. My bill runs just north of $200, unless I hit 40g, which I hit 47g once and 42g another time.

    When I added the Pantech, it was thrown in with a 2yr(otherwise it was $40 with a separate m2m bill) re-up(although my original G3 replacement date discount is the same).

    I keep checking, my "future phone discount" drops about $10 each month. By the time a G4 Pro materializes, it should cost 50% retail.
     
  12. DaveF

    DaveF Moderator
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    That's a great point. I've heard from folks that you can call AT&T after a two year contract and have your monthly bill reduced by the subsidy amount. Maybe that's been eliminated, or was never a consistent policy?


    On the free iPad: AT&T is currently running a promo with an iPad mini 2, but I didn't read the details. And Verizon presently has a promo for $300 for any phone trade-in from a new customer. I didn't consider any special offers. I do plan to factor in my employee discount later. (But I don't know what it is presently. I'm grandfathered into an old one, and don't know what my current corp plan is.)
     
    Josh Steinberg likes this.
  13. DaveF

    DaveF Moderator
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    The big winners in the no-contract plans are folks who buy used smartphones and lag current gen by a year or two.


    The non-winners are folks like me who buy iPhones. The high premium is now going to be paid out of pocket. It didn't matter when they cost the same as any other smartphone, good or bad, thanks to hidden subsidies.
     
  14. schan1269

    schan1269 HTF Expert
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    Speaking of which...

    The LG G4 slipped into the market place unnoticed.

    Better screen color(many consider the G3 the prior benchmark)

    More MP on the camera, with better onboard editing.

    Available leather backside.

    So...VZW is offering both...

    $100 prepaid card...
    Higher return price(but not by much) if you are "recycling" a LG or Samsung phone(Motorola and iPhone excluded).
     
  15. DaveF

    DaveF Moderator
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    Here's what I find, comparing monthly bills and two-year cost for two $750 iPhones. Of Verizon's no-contract options, it appears 6GB Plan is same price as 3GB Plan for two phones; likewise 10GB and 4GB. And Verizon is cheaper than AT&T at 6GB and higher.

    But the AT&T 2 yr contract 3GB plan remains a sweetspot considering total plan cost: over $300 cheaper than Verizon 6GB no-contract.



    Smartphone Plans 2 Phone Monthly.

    Smartphone Plans 2 Phone Total Cost.
     
  16. DaveF

    DaveF Moderator
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    I'm confused by Verizon's corporate discount. My new company has a 15% Verizon Wireless discount. Using the company link to Verizon, pricing is unchanged; the multi-device discount, available to anyone, is relabeled as a corporate discount.


    It doesn't apply to Off Contract (buy device up front). It does apply to 2-yr contracts and the More Everything plans.
     
  17. Clinton McClure

    Clinton McClure Rocket Science Department
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    I get a 20% corporate discount with AT&T.
     
  18. DaveF

    DaveF Moderator
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    Nice. I've got currently 14% at AT&T from a former employer. My current employer offers 12% with AT&T, so I've hung onto my previous discount. And I can now get 15% with Verizon (caveats, noted in previous post).
     
  19. schan1269

    schan1269 HTF Expert
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    I get 14% at VZW as well.

    Does AT&T do Corp discount on m2m?
     
  20. DaveF

    DaveF Moderator
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    Monthly bills hide the phone cost at the end of AT&T's 30-month payment plan. Total plan costs are the truest comparison, but they're so divorced from regular billing experience. So I made an effective-bill comparison, which is the total cost divided by 24 months. In making this, I re-checked my math, improved the spreadsheet, and allowed for company discounts. (This plot is for a 0% discount.)


    Smartphone Plans 2 Phone Eff Monthly.


    My conclusion remains the same: AT&T's two-year contracts are the best deal for under 6 GB*. Verizon's More Everything is the better deal for 6GB** and up.***


    * AT&T is GSM, so if you're an international traveler, AT&T with an unlocked phone would be better than Verizon?

    ** If you're on Verizon with 3GB and multiple phones, jump to 6GB. It's the same price at 2 phones, and cheaper at 3 or more

    *** Pre-iPhone 6, Verizon can't do Talk + Data. That's been a deal killer for me previously, but this finally got fixed last year



    View attachment 21519
     

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