AT&T's New Upgrade Policy & Paying Full Price

AT&T, unsurprisingly, announced today that customers will have to wait the full 24 months of their contact before being eligible for an upgrade, a change from the previous 20 months that had to be fulfilled. This is falling in line with the rest of the industry, and comes as a shock to no one. I'm frankly surprised it took them this long. I don't have a problem with them requiring this, as consumers are of the terms of their contracts up front.

At the end of the blog post they politely remind people of the ways you can acquire a new device, if you haven't fulfilled your contract or do not want to enter into a contract; one of the options listed is pay full price. This is where I have a problem. Consumers beware - paying full price is just putting more money in AT&T's pocket.

Let's look at a couple examples:

Scenario 1: You're brand new to AT&T and want iPhone 5. It will run you around $150/month and with a two year contract the device will only run $199.

  • Upfront Out of Pocket: $199
  • Monthly Service for 24 Months: $3600

Scenario 2: You're brand new to AT&T and want iPhone 5. You're still looking at that $150/month price, but this time you don't want a contract and decide to buy a device in full, lets say for international travel. It's going to run you $649.

  • Upfront Out of Pocket: $649
  • Monthly Service for 24 Months: $3600

The difference? If you sign a contract, it's in exchange for a subsidy, or discount, on the device. In this case the subsidy is $450, which AT&T plans on recouping over the course of that contract from your monthly service charges. Here is my problem - if I want to pay full price for a device, why do I not get a discount of $450 over the course of 2 years? I would be ok with a $37.50 discount per month for 24 months - it keeps me around. 

Maybe one day AT&T will wake up and become a little more customer friendly, but as a former manager in a retail store, I highly doubt it.