Getting a New iPhone
Among other issues, Apple has longstanding problems with their customer identity infrastructure and how it intersects with their device registration, DRM rules, and messaging systems. Under iOS 8, for example, there appear to be 4-5 different authentication channels for Apple products even when a user has only one AppleID.
Which is why, in the course of moving the kid’s iPhones around, I made a list of the steps I take when deactivating an old iPhone (for sale, disposal, or migration to the backup stack).
The complication comes from AT&T naming the plans with numbers that don’t match the months you’re paying — they’re the number of months after which you can trade in for an upgrade So while the Next 12 plan divides your payments over 20 months, you’ll be eligible to trade in for an upgrade after 12 months. See? Not that confusing.
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With all Next upgrades it’s a trade-in — it’s rent-to-own. You’re paying equity into the phone, and you can trade it in for a new phone partway through, or you can keep paying and in the end the phone is yours.
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A 2-year contract will cost about $50 more [than Next] over the long haul, but that the phone is still yours at the end after putting $500+ into it makes the old way of doing things mighty tempting.
- If you plan to update your phone frequently, purchase on the Next 12 plan. It has the lowest cost to upgrade (either by waiting the requisite 12 months or waiting at least 2 moths and paying off the remaining balance to 12) of any of the Next plans (Next 12: 60%; Next 18: 75%; Next 24: 80%), and while you’ll pay more per month, you’ll pay less per phone.
- If you plan to upgrade every other year, don’t bother with the Next 24 plan and go for the traditional 2-year contract. It costs you about the same over 2 years, but in the end you get to keep your old phone instead of having to trade it in. Or you can trade it in for an additional rebate. Yes, it feels weird to be recommending you buy on contract, but the match checks out.
However, it looks like you can’t buy an AT&T phone with a 2-year contract from Apple’s online store. You don’t want to get the 2-year contract if you aren’t going to upgrade when it’s over, because you’ll still be paying an extra $15/month for nothing.
Update (2015-09-11): Whitson Gordon:
But I always wondered whether it was more cost effective to sell your old phone early, while it still had value, or run it into the ground. Which saves you more money in the long run?
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Looking at those numbers, it seems that it’s most cost effective to sell your phone every three years or more, but just by a nose. Doing so will save you around $100 (plus tax) over the course of six years on Swappa. If you use my Cragslist numbers, it comes out closer to $160. Even more interestingly, selling your phone every year and every two years is pretty darn close to equal. So if every three years is a bit too long for you, you might as well upgrade every year and have the latest and greatest!
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Most of this math hinges on one very important fact: you should sell your phone using a site that doesn’t take a bunch of extra fees.
Update (2015-09-12): Josh Centers and Adam C. Engst:
It took us hours to sift through the carrier sites to put together these lists, and frustratingly, it’s difficult to make exact comparisons, due to the carriers offering differently sized data plans. Nonetheless, here are our conclusions.
Update (2015-09-25): Lloyd Chambers:
A year ago I wrote What does an iPhone 6 Plus cost?, in which I showed how no matter what you do, AT&T will nick you. There exists no good deal; all deals are variations on the same pricing in which you end up paying in full for the phone (or more), one way or another.
Update (2015-10-14): Adam Fields:
“Because the iPhone Upgrade Program isn’t tied to a single carrier, you don’t need a multiyear service contract. If you don’t have any carrier commitments, you’re free to select a new carrier or stick with the one you have.”
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Except - that’s not the case. As Apple has now revealed on their LTE specifications page, the two phones are not cross-compatible. The AT&T phone works on AT&T and only on AT&T. The “everything else” phone doesn’t work on AT&T at all. And by “works”, I’m talking about LTE service. It’s 2015 - you can’t say that a flagship iPhone (or any recent iPhone for that matter) is really functional without LTE service.
9 Comments RSS · Twitter
@Sean Aha, it looks like if you buy outright you get the same $15 monthly discount as with Next. It’s complicated with all the different fees that have changed over the years. But it looks like overall the prices have gone up. Buying outright I would be paying roughly the same monthly fee as with my original iPhone and iPhone 3GS, but I’d have to buy the phone, too.
The way I calculate it, to use and then own a 128 GB iPhone 6s at the end of 2 years costs $1,449 for buying it outright or Next 24, or $1,399 for the 2-year contract. So I don’t see any advantage, aside from simplicity, to buy it outright when you are getting a 0% loan. Next 24 is better than the contract if you want to have a longer than 24-month upgrade cycle or if you want to upgrade and give your old phone back to AT&T because you think you wouldn’t be able to sell it for more than $119.80 ($169.80 for buying out the last 6 months, minus the $50 price advantage for the contract). My guess is that the phone would be worth more than that.
@Michael Tsai - how is the AT&T Next compare to going with the new Apple purchase program? Trying to figure out one versus the other. They seem really similar other than if I pay for AppleCare upfront or in the payments.
@Andrew Yes, they seem very similar. I haven’t fully looked into Apple’s program because I don’t have a local Apple retail store and don’t plan to buy AppleCare.
@Michael - All this makes sense. I do wonder how this changes if you're comparing not just a single phone contract vs. Next X vs. buying unlocked but comparing AT&T Family Share plans at various data usage amounts and for 2+ phones.
Also, with a contract or Next, isn't there's the issue of unlocking the phone to put in an international SIM card if you travel internationally from time to time?
@Sean I’m not sure how the family share plans work; we’re on separate plans, currently. Yes, I think you’re right about the international travel. I guess you could always buy out the rest of your Next contract if necessary to unlock it.
Anyway, I planned to buy the phone on contract from AT&T (because Apple doesn’t sell it). I got numerous errors today from the order site. Then it finally told me that the monthly price would be about $63 more than I had calculated. After 45 minutes chatting with AT&T, the representative agreed that it was incorrect but couldn’t explain or fix it. He suggested that I buy Next instead. I tried one more time to go through AT&T’s order process and got a System Error telling me to call on Monday for help. So, finally, I just ordered the Next plan from Apple, which was really easy.
Another option is to switch to prepaid. The tradeoffs I've found are:
• having to manually configure an iPhone for MMS (instructions are widely available)
• giving up roaming (though international roaming with every US carrier but T-Mobile is so expensive, you might as well buy a SIM abroad when traveling)
• tethering disallowed on most plans (but realistically I never use this, and can pay to temporarily upgrade my iPad's data plan if I really want)
I ended up doing that this year, as AT&T, which I had been using, has No Service in the apartment where I've lived for the past year or so. My 2-year contract expires on 9/21, so I was just stuck. In the past few months T-Mobile went from 2G to LTE in my area and now has great service here by comparison (which I've been able to try thanks to their 200MB free iPad data plan).
Were I to renew, the no-contract price for AT&T with 5GB data, even with the 24% employee discount I get, would be $57/mo + taxes/fees; T-Mobile no longer offers employee discounts and would be $70, and Verizon (with 22% discount) would be $51/$63 for 3/6 GB.
Instead, today I paid full price for a 6s and signed up for a $45/month plan with Straight Talk (on T-Mobile's network, though other networks are similar) that includes 5GB data before throttling. It's closer to $43 or $41/month if you prepay for 3 or 12 months at a time. If you don't qualify for employee discounts, it's even more of a no-brainer.
Then I'll recycle my iPhone 5s as a bike computer (my 4S has been serving that purpose admirably for the past couple years).
http://www.prepaidphonenews.com/2011/02/best-prepaid-data-carriers-and-plans.html has a nice summary of the available prepaid plans in the US.
@Nicholas Thanks for mentioning that. Prepaid makes more sense now that the carriers are switching away from subsidies. AT&T’s $45 GoPhone plan looks like a good deal, but I wouldn’t want to lose tethering.
Rather than Next 24 or a two-year contract, buying outright doesn't seem like a bad option, and is a lot less confusing:
http://robservatory.com/the-atdont-get-burned/
http://robservatory.com/an-att-family-share-planiphone-6-cost-calculator/
http://robservatory.com/a-few-tidbits-about-the-att-next-plans/