New plans such as AT&T Next and Verizon Edge have forced dedicated customers to fall into cheaper plans. My AT&T family plan of four lines dropped from $240 to $160 per month, but of course there was a catch...
Our four-line family plan only sticks at $160 per month as long as no one in our family upgrades their phone with AT&T. Since upgrades are inevitable in today's tech-hungry world, two different scenarios can now occur:
1. Buy your phone for full cost upfront, however the monthly bill will increase $15 per line. (No end date on when $15 addition to bill will end)
2. Participate in the AT&T Next program where phone is borrowed for 12 or 18 months, increasing the monthly bill to $20-$30 per line. (Added benefits include no activation fee and ability to trade-in and upgrade to new phone each year).
In other words, if all four family members are to upgrade by paying full price upfront, then our bill is back where we started at $240 with activation fees possibly driving the price up further. Although I have been due for an upgrade for over two years now, there is absolutely no incentive for me to buy a phone through AT&T. Purchasing an unlocked cell phone from anywhere else will guarantee my bill will stay the same (at $160).
The question to ask is how the hell is this business and revenue model sustainable?
Cell phone carriers' previous revenue model locked their consumer into a 2-year contract, guaranteeing monthly revenue from the cell plan, but more importantly profiting from the discounted phone upgrades and activation fees. This new model not only cuts down customers' monthly bill, but forces the educated consumer to not even consider buying a new phone through their carrier. Google, Motorola, Samsung, Apple...these companies will all offer unlocked flagship phones in which AT&T and Verizon will not see a penny of profit. Sure plenty of customers will upgrade their phone through their provider, but are they going to enjoy the $15 bump on their bill?
So why stick with AT&T or Verizon?
Enter T-Mobile and Sprint, carriers that have long fell behind AT&T and Verizon in U.S. market share. Their new plans offer to buy out existing contracts and offer the discounted phone and plan rates we all want. Unfortunately none of us can pull the trigger. Cell tower reception is still spotty for these players, and AT&T or Verizon still offer more smartphone compatibility options. More data, more minutes, more roaming....whatever. At the end of the day, connectivity is king.
