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Chronicles

The story behind the story

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AT&T counters T-Mo's Jump with Next, its own phone upgrade program.  Is it a better deal?

Not to be outdone by T-Mobile's new smartphone upgrade program Jump, AT&T is launching its own plans next week that will let customers trade up to new handsets before their contracts are up.

GigaOM Kevin Fitchard

Context & Ripple Effects

AT&T had already used handset breadth as a competitive tool, including a 2011 expansion of its Android lineup. Next moves the contest from which phones a carrier sells to when a customer can replace one.

T-Mobile's Jump established early upgrades as a visible point of differentiation. AT&T's response makes upgrade timing a feature that subscribers can compare across carriers rather than simply a contract restriction.

First-order effects

  • AT&T customers gain an option to move to a new handset before their contract term ends, changing the timing of the carrier-device relationship.
  • T-Mobile loses sole ownership of the early-upgrade message as AT&T fields a directly comparable program.

Second-order effects

  • AT&T and T-Mobile face pressure to distinguish their programs through the terms that govern eligibility and handset trade-ins, not merely the availability of an upgrade option.

Third-order effects

  • If early-upgrade programs spread, handset replacement cadence becomes a core carrier-retention mechanism, shifting competition away from fixed contract-end upgrade cycles.

The trend: U.S. carrier competition is turning handset upgrades from an end-of-contract event into an ongoing subscriber-retention product.

Related: AT&T · T-Mobile · Jump · AT&T expands its Android handset lineup

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