Eric Slivka:
Later that evening, I checked my AT&T online account and to my surprise saw that I was eligible for full subsidy on the iPhone 5: $299. I then canceled my Verizon pre-order and resigned myself to camping out this Friday to buy my iPhone 5 on AT&T because pre-order shipping estimates had long since moved out to 2-3 weeks. AT&T did call back on Saturday to confirm with me that due to my status as a valued customer I was eligible for full subsidy, and I thanked them while sharing just how close they’d come to losing me as a customer.
Lots of bad stories around about how AT&T is handling the pricing of iPhone 5 upgrades today, but there’s a good one too.
I guess I just don’t have a lot of sympathy for these people who are upset that AT&T is enforcing the contract they signed. I’ve gone from 3G to 4 to 5, my wife went from 3GS to 4S. Maybe I’m in the minority.
I follow your path as well, just upgrading every-other when my upgrade eligibility allows it.
The point of these stories though isn’t that AT&T would like to enforce the contracts you signed, it’s that AT&T’s contracts are a mess and if enforced as-written generally encourage people to just pay the ETF if they want an early upgrade. They should get their pricing in order so that isn’t true.
I think you may have it wrong. This is about AT&T having a policy that is contrary to their own goals. If I can pay an early termination fee, switch carriers, buy the device with my new carrier, and come out $200 the better for it, that’s bad for AT&T, since they’re effectively offering me a $200 incentive to switch carriers. I’m not going to be upset about something like that, nor will I be looking for sympathy. I’m going to use AT&T’s contract to my advantage to pocket $200, thank you, and afterwards I’ll think less of AT&T for valuing me so little as a customer.
That’s what’s happening here. It’s not that these people want sympathy for having a contract that’s getting enforced. It’s that AT&T enforcing the contract is making them look horrible while providing monetary incentives to jump ship, and these people are pointing out the ridiculousness of it all.
Exactly. I don’t have a pony in this race (I’m on a two-year cycle), but it makes no sense for the early upgrade fee to exceed the early termination fee if you want to retain customers. If the ETF is really there to recoup subsidy money, as is claimed, then charge the lower of the ETF or early upgrade fee.
If I upgrade, I continue to be a revenue source every month AND you’ve got me in a new two-year contract. If it’s cheaper to jump ship, my monthly revenue goes with me. Why drive customers to the competition? The cherry on top is that, especially among less-savvy and business buyers, a new phone means new high-margin accessories bought directly from the carrier. This is not a losing scenario.
But I do recognize we are talking about a company that subsidizes phone purchases for people who immediately ETF out of their contracts. Want an unlocked iPhone but don’t want to pay $649?AT&T will gladly help you out there, but heaven help you if you actually want to be their customer.
You realize there are early upgrades available right? also do you have any clue how long it takes any cell phone provider to recoup the cost of these high end cell phones? plus, what happens when you switch and then can’t get a new phone at the full discount? I guess you’ll sit around and moan about it, cancel and switch to another provider because of the “ridiculousness of it all”
i just checked my account, which was upgraded last November to a 4s and it says I have to pay full price to upgrade. So I have to wonder if the folks that are getting ‘early’ discounts are actually those very close to the end of their contracts. Or those that are paying much higher fees like the old unlimited voice etc (I barely talk on my phone so I’m at the bottom rate).
After 6. months you can get the phone for early upgrade, check cust service or a store
you raise an ungoing point. We are told that the ETF is tied into our contracts because the carriers paid a huge chunk of the device costs and they need to recover that if we leave the service since we won’t be paying our monthly fee, part of which was to pay those costs.
AND YET, at least with the iphone they aren’t reducing the ETF by 1/24th of the subsidy (which works out to something like $17 dollars not the $10 they reduce by) and if one stays with the same phone for 24 months there isn’t a reduction in rate in month 25, nor is there if you bring your own phone. And yet this is legal.
If they are still doing early upgrades. There was a rumor going around that ATT was going to drop that ‘meet you half way’ pricing just as Verizon did. I’m going to call but I suspect I’ll get the same answer as what was on the site.
Contracts are nice. But good business means you continue to look for the best deal you can find and either take it or try to get your current supplier to match it.
Everything is negotiable. Get everything you can, whenever you can. Because AT&T didn’t stop doing that after you signed that contract. And they sure as shit didn’t stop lobbying weak-kneed Congressmen to let them take more money from you for less service.
I do realize that early upgrades exist. Do you realize that early upgrades were exactly what I was talking about? And that AT&T is asking early upgraders to pay the full, unsubsidized price on the iPhone 5? That’s the problem: it’s cheaper to switch carriers and buy a new phone there than it is to pay the unsubsidized price to early upgrade with AT&T.
Regarding how much it costs AT&T, I do realize they need to recoup costs, but their costs are not being managed correctly. If an early termination fee is designed to recoup the cost, then you’d expect it to be equal to the added cost for an early upgrade, since that’s supposed to serve the same purpose. Instead, they’re asking people to pay the full, unsubsidized price for early upgrades, which is hundreds of dollars more than the early termination fee. The two should be equal, but they’re not, hence why jumping ship can save hundreds of dollars.
And with other carriers, I’d hope they’d have more sense, since AT&T’s pricing scheme is self-destructive in nature. I can’t think of very many successful companies that offered their customers hundreds of dollars to leave for a competitor, which is exactly what AT&T is doing here.
As for me, you’ve painted me with broad strokes that don’t hold true. I’m actually still using the iPhone 4 I’ve had since late 2010, am tentatively planning on skipping this generation since my iPhone 4 continues to work great, and am also a somewhat satisfied AT&T customer. That doesn’t stop me from thinking their handling of this is ridiculous, however.