Feature Article

November 04, 2014

AT&T Adds 30-Month Device Installment Plan

When telecom markets get more competitive, both “price” and “non-price” elements of retail offers start to change. One example is device installment plans.

Where AT&T once offered device installment plans with a 20-month or 24-month payment period, AT&T now has added “Next 24” plans with a 30-month installment term.

On the Next 12 plan, customers can upgrade devices by turning in their working phones after 12 months. On the Next 18 plan the upgrade can happen after 18 months.

On the new AT&T Next 24 plan, available Nov. 9, 2014, a new device can be gotten after two years.  

Customers buying devices using AT&T Next, and purchasing service on AT&T’s Mobile Share Value plans also get a monthly discount on the access charge for that smartphone line.

When adding an AT&T Next line to a Mobile Share Value plan, customers can save $25 per month on that smartphone line’s access charge for plans 10GB or higher or $15 per month on plans less than 10GB.

Offering longer installment periods for phones works in a manner similar to longer payment periods when people buy cars. The longer term results in lower monthly payments, which is viewed as an advantage by some consumers.

The AT&T move is another way the company can increase perceived value relationships in ways other than price, though the offer obviously does result in lower installment payments for new devices.

We sometimes forget that, as recently as 1995, nine nations in the Organization for Economic Cooperation and Development still had monopoly mobile markets. About five nations had at least three mobile providers, while 10 nations had two operators.

Until the early 1990s, most users of mobile communications were in the business segment. The consumer market had yet to begin growing substantially. So you would not be surprised to be reminded that prices were universally high, as mobile phones were a “premium” service sold to businesses, not a big consumer product and service.

Since then, most markets have developed into a pattern where there are three to four suppliers, though there are some markets—notably India—where the number of contestants is much higher.

In some areas of India there are as many as a half dozen leading suppliers.

In 2011, there were in some areas of India as many as 14 mobile operators. By virtually all assessments, that was too many for a sustainable market and market consolidation since 2011 has proven the accuracy of that belief.

Though price seems always to be a key feature of highly-competitive markets, many forms of non-price competition also come into play, ranging from the structure of service plans to forms of device sourcing.

The new longer-term AT&T equipment installment plan terms are one example of non-price competition, as AT&T is trying to make its service more attractive to price-conscious users, or users who want to buy high end devices. 

Edited by Maurice Nagle

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