No-contract phones help AT&T win big in Q1 2014
When it comes time to change carriers or get a new mobile phone, a lot of us don’t want to be stuck where we are for two years. Many people are opting instead for no-contract phones that they buy outright giving you the ability to go to another carrier or cancel whenever you want.
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AT&T has a no-contract phone plan called Next that has turned out to be very popular with buyers according to CNET. Under this plan, the buyer gets a new smartphone but pays for the device in monthly installments. It works very much like having a contract as far as the monthly rate goes.
If you cancel the plan before the smartphone is paid off, you have to pay whatever your outstanding balance is when cancelled. That is basically the same way a contract plan works for the consumer. The big thing here is that AT&T doesn't have to give a subsidy.
AT&T recently said that 40% of its smartphone gross customer additions and upgrades were with Next installment plans. 1.1 million Customers went for Next in Q1 2014. Next takes the full price of the smartphone and breaks it into 20 or 26 monthly payments and the monthly service is cheaper since there is no subsidy with the plan.
AT&T says that it sold 2.9 million smartphones through Next in the quarter. "The transformation of our customer base can be clearly seen this quarter," Chief Financial Officer John Stephens said during a conference call Tuesday.