American telecom service provider AT&T announced lower tariffs to mobile customers who pay for their own devices. With this, AT&T is joining the footsteps of T-Mobile in reducing monthly fees.
Telecom analysts say it’s the latest break from a longstanding practice of offering subsidies on devices to lock customers into two-year service agreements. Many customers have been forgoing those subsidies anyway as they opt for plans that allow frequent phone upgrades. But until now, AT&T’s and Verizon’s service fees have still factored in the costs of those subsidies, whether the customer uses them or not, AP reported.
The new AT&T mobile phone scheme will be live from Sunday. AT&T mobile customers will be able to switch to the cheaper plans if they buy or bring their own phone. That includes paying for the device in installments through the frequent-upgrade Next plan. Those whose contracts have run out also qualify.
It follows the decision of T-Mobile US in March to separate the costs of service and devices, allowing customers to see reductions in overall monthly bills once the devices are paid off. T-Mobile already benefitted from its March decision.
Most customers will save at least $15 a month under the new AT&T plans. This will be a major relief to customers.
Customers switching from contract plans to Next may end up paying more at first, as high-end devices such as Apple’s iPhone 5S and Samsung’s Galaxy S4 typically cost $27 a month for 20 months. However, those already on Next have been paying that monthly charge without any reduction in service fees. So their bills will now go down.
AT&T is also offering a new Next option to stretch out the payments to 26 months. Assuming AT&T charges the same prices, the high-end devices will cost $21 a month. Those people will be able to upgrade to a new phone every 18 months, instead of every 12 months.
Sprint also reduces the monthly service fees for customers who pay for the phones separately in installments. But unlike T-Mobile, Sprint’s discount ends after the phone is paid off over two years. T-Mobile customers can keep the lower service rates indefinitely.
Verizon doesn’t currently offer any service fee reductions and won’t comment on its plans.
