AT&T and T-Mobile SIM cards

One is another option to buy a device, the other is giving the carrier more money for no good reason

We've seen a big couple of days in the mobile space. Following T-Mobile's announcement of its "boldest moves" last week that included a new way to upgrade your phone more often, AT&T announced today that it has launched its own device financing and upgrade scheme. "AT&T Next", as it is called, gives you another option to buy a phone outright on the carrier by paying the unsubsidized price spread out over 20 monthly payments. Similarly, T-Mobile's newly-announced JUMP! upgrade service lets users build on its device financing service to also allow returning of a device twice a year for a new handset with a monthly fee.

Both of these plans are new ways for you (and the carriers) to think about the device purchasing agreement, but that doesn't mean they're created equal. Let's do some (simple) math after the break.

By the numbers

While both AT&T and T-Mobile offer plans that look and sound similar on the surface, the numbers break down in different ways. To help illustrate how each carrier plans to have you pay off a phone purchase with JUMP! and Next, we're going to break down the purchase of a Samsung Galaxy S4 on both networks with the latest upgrade options.

T-Mobile JUMP!

T-Mobile's new JUMP! upgrade service offers you the option to pay a $10 monthly fee, which includes handset insurance, to then have the option to upgrade your device twice per year for no additional fee. The fee is separate from an Equipment Installment Plan (EIP), which lets you purchase a phone with little money down and the rest of the cost spread out over 24 monthly payments. When upgrading a device, you must return your current device to T-Mobile in order to move on to the new one.

Although this new plan does offer the ability to upgrade your phone potentially every 6 months, we break down the cost over 12 months with just 1 upgrade in order to keep it consistent with AT&T's plan, which we'll detail next.

The breakdown of T-Mobile charges after a year is as follows:

  • $150 down for the handset
  • $20 per month EIP x 12 months = $240
  • $10 per month JUMP! fee x 12 months = $120
  • Total at 1-year trade-in = $510

AT&T Next

AT&T Next is more of an all-in-one package, which combines both the upgrade features of JUMP! with the EIP program that T-Mobile offers separately. With Next, you purchase a phone by agreeing at the start to pay 20 equal monthly payments which in the end total the full off-contract/unsubsidized handset price. For example, the Galaxy S4 retails for $640, so the monthly payment is $32. After 12 months of payments, you then have the option to return the working device to AT&T and have the final 8 monthly payments wiped out, letting you then purchase a new handset for $0 down and with 20 new payments.

Next only allows you to upgrade once per year, and while it does not carry an additional monthly fee like JUMP! it also does not include handset insurance. For the breakdown below, we've included AT&T's $7 per month handset insurance to even the playing field a bit.

Again, the breakdown of charges after a year:

  • $0 down
  • $32 per month x 12 months = $384
  • $7 per month insurance x 12 months = $84
  • Total at 1-year trade-in = $468


As we noted, there are a few differences between these upgrade schemes. First up are the upgrade cycles -- T-Mobile will offer you two upgrades per 12 month period, while AT&T only offers 1 per year. T-Mobile's more frequent upgrades come at no additional cost, however, meaning that an upgrade at 6 months costs the same as at 12 months. This means that you can trade in that Galaxy S4 for an HTC One after 6 months, and swap even once more if you want before AT&T offers you the first and only upgrade of the year.

The flip side is that T-Mobile charges a monthly fee for the ability to upgrade, whereas AT&T simply charges the handset price. That is almost a wash if you choose handset insurance on AT&T, but in the end it is optional. As we noted above, T-Mobile requires a down payment for most handsets, whereas AT&T bakes the price into the monthly payment instead. In both cases, you're agreeing to buy the phone for a full off-contract price, and simply have the option to return it before you've paid it off to get a new one -- in essence, you're renting a phone.

The biggest difference of all is what T-Mobile's JUMP! and AT&T's Next mean for your final bottom line when pairing that device with the service it needs to run.

What about that subsidy?

And this is where we get to the big sticking point on AT&T's Next upgrade plans. Based purely on a device vs. device purchase basis, AT&T actually does offer the cheaper option for buying a phone on an installment plan and upgrading once every 12 months. What the above numbers don't show is how your monthly service charges don't change on AT&T regardless of whether or not you choose to buy a handset subsidized.

AT&T's service plans are structured and priced to factor in the cost of buying a subsidized handset on-contract every two years. The reason why you pay $200 on-contract for a Galaxy S4 is that the other $440 of the MSRP is spread out monthly in your service contract already. That roughly $20 per month subsidy is still included in your monthly service fee whether you choose to use that subsidy or not.

Calling AT&T's bluff


When T-Mobile introduced its Equipment Installment Plans, it also dropped its monthly service charges by about $20 across the board. You aren't using a subsidy anymore, so they removed the subsidy from the cost of service. AT&T hasn't done this, but it sure seems to think that it has done something just as good -- and in AT&T's eyes, it has.

In effect what AT&T has done is create a situation where it entices you with a yearly upgrade in order to have more people buying phones at full retail price, while continuing to pay the same monthly fee as if they had a subsidy. AT&T wins all-around in this situation -- they don't have to subsidize a device, you continue to pay the same for service, you pay 60-percent of the cost of the phone over 12 months and you also give the device back to them so that they can re-sell it to another customer.

All for the "freedom" of being able to buy yet another device and do it all over again.

In a sense, instead of following T-Mobile's lead and decoupling the cost of the phone from the cost of the monthly service, AT&T has doubled up on its tried-and-true method of charging you for a phone subsidy whether you're using it or not. Not only will AT&T now let you finance a phone that you're already paying for, they have the balls to tell you it's a great deal.