AT&T recently announced some new plans. These new plans favored users with a contract-free device by giving a monthly discount. Moving forward, it looks like AT&T is going to be further changing gears. There has been some recent talk about how they may reduce device subsidies and start shifting customers to a place where they use a device they own, or one they finance.
Randall Stephenson, AT&T CEO, recently spoke about how smartphone penetration is over 75 percent and will soon climb to 90 percent. He went on to mention that carriers need to find a way to get customers to use more of the network, as opposed to getting them on the network. He said “as you approach 90 percent penetration, you move into maintenance mode.”
This means more device upgrades are taking place and according to Stephenson, “the model has to change” because the carriers “can’t afford to subsidize devices like that.” This could mean users will simply keep their existing phone for longer. Or alternatively, those customers could go for the financing route, which AT&T already offers through the Next program.
Further comments from Stephenson touched on how they need to break customers of the habit of upgrading every 18-24 months and that moving from a focus on subsidy to a focus on financing will be “transformative” for the wireless industry. Essentially, reducing or removing the device subsidy will bring higher prices for the customer.
Or at least the appearance of higher prices. Some are already familiar with the retail price versus the subsidized two-year agreement price, but for some this may come as a surprise. Anyway, so far there hasn’t been any timeline given as to when this may go into effect with AT&T, but Stephenson did touch on how he thinks this “will be very powerful” and how this is where they “see the market going.”