When the dust settles after a new iPhone launch, people shift gears, thinking about contracts, carriers and subsidies. During the first few years, there were no choices. If you planned on getting a new iPhone, your choices started and ended with AT&T. That all changed when Verizon got the iPhone in February,2011 followed by Sprint in October, 2011. While there are always a few customers who jump ship, there isn’t the groundswell that appears to be happening with the iPhone 5. After years of questionable policies that adversely affected iPhone users, an unprecedented level of discontent with AT&T looks to bring a good number of new customers to Verizon Wireless for the new iPhone 5.
When Unlimited Is No Longer Unlimited
Back in July of 2011, AT&T issued a statement regarding their smartphone customers with unlimited data plans, specifically “those whose extraordinary level of data usage puts them in the top 5 percent of our heaviest data users in a billing period.” The rub was that if you were in the top five percent, you may experience slower speeds once you reach the top five percent. While customers expressed their concern, the prevailing thought was that it wasn’t so easy to hit those numbers. This five percent was thought to be a select group and AT&T’s very own press release described them as customers who are ‘streaming very large amounts of video and music daily over the wireless network‘.
Most understood this as targeting a few who in all honesty might have been abusing the unlimited plan. Fast forward to earlier this year, when customers started receiving notices about being throttled. AT&T defended their policy, saying it only affected less than 1% of customers. Customers who barely breached 2GB were receiving notices of throttling, at the very same time AT&T was pitching a 3GB data plan for $30 per month, the same rate as those under the unlimited plan. For those following at home, loyal users with a grandfathered unlimited data plan were being throttled at 2GB, while customers on the 3G plan also priced at $30 were buzzing along their network. After much hullabaloo, the Internet won resulting in AT&T updating their policy to offer 3GB of data before throttling would ensue. For 4G LTE customers, including those on the iPhone 5, that number gets raised to 5GB due to the increase in data used by these phones.
No FaceTime Over 3G
Apple’s iOS 6 announced in June offered hundreds of new features including support for FaceTime over 3G. Now you could video chat with friends and family over a wireless network. The assumption for many that it would not be an issue for AT&T, considering everyone has a data bucket of some sort. Those with unlimited plans were struck down to 3GB before throttling, so it would be the customers responsibility to fall within their data usage guidelines. Not so, as we learned during an early beta of iOS 6 which prompted users to contact their carrier.
Curiously, this message only occurred on AT&T phones. The corporate posturing of AT&T followed with quotes from their CEO Randall Stephenson saying,
“I’ve heard the same rumor,” but “it’s too early to talk about pricing.”
An official statement followed in mid-August, confirmed what had been alledged. AT&T now required an entirely new MobileShare plan in order to use FaceTime. Don’t fret, because AT&T assured us that “FaceTime will continue to be available over Wi-Fi for all our customers.”
No Subsidy For You
It’s not the wireless carriers responsibility to provide you with a complete subsidy each year that we see a new iPhone. However, AT&T has seemed to flexible in nature, rewarding customers with early upgrade pricing. Given the recent lack of love from the carrier, this would have been a great time to kick start that policy. If you support the theory that our forums are a microcosm of the iPhone userbase, then the picture doesn’t look bright for those hoping for early discounts. The lack of early upgrades makes the move for many more feasible. Let’s take my case for example. I purchased the 64GB iPhone 4S from AT&T back in October, 2011 and checked my eligibility to upgrade to the iPhone 5. I’m eligible for a full upgrade on June 5th, 2013, just a few months before the iPhone 6 is released. If I want stick with AT&T, they will offer $200 off the iPhone 5, if I extend my commitment. So $449 for a 16GB iPhone 5 as opposed to $199.
AT&T charges a $325 ETF (early termination fee), which is reduced $10 per month that you are with them. Having my iPhone 4S for 10 months, that’s $100 off the ETF, bringing my penalty for leaving to $225. If I leave for Verizon, my cost for a new iPhone 5 is $199 plus my AT&T ETF of $225. Total: $424 vs $449 if I stick with AT&T. If I weren’t in the unique position of owning a family of smartphone sites which requires I trial different smartphones, something which is allowed for on AT&T through swapping of SIM cards, I’d be all about joining big red.
The ill will generated by the policies of AT&T have left those seeking out options, primarily a move to Verizon. With 4G LTE, AT&T can no longer cling to their longstanding advantage of offering the capability to talk and surf at the same time. Despite being on 4G LTE, Verizon and Sprint won’t offer support for simultaneous voice and data. The size and scope of Verizon’s 4G LTE coverage map isn’t hurting matters either. If you can find a suitable iPhone 5 plan on Verizon, there aren’t many reasons to stick with AT&T, especially if you are frustrated with how they’ve treated you as a customer. You have choices. Vote with your wallet. Tomorrow’s iPhone 5 pre-order might not spark a mass exodus from AT&T to Verizon, but it wouldn’t come as a surprise to anyone if Verizon saw an influx of new customers.
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Chris this was an awesome article. I really didn’t think about it and was (uncharacteristically) going to walk into the $250 + $36 + new AT&T Contract pricing today and pay $686 for an iPhone 5 for a discount of $164 assuming the 64GB iPhone 5 is $850 without contract. After reading this, I saw that I am in the same boat facing a $225 ETF. This would set me up with a Verizon iPhone 5 (who has LTE available in my area while AT&T does not) for $399 + $225 or $625 instead of $686.
The only curveball I have is that my fiance is also on my AT&T plan. I am wondering if it is a ETF of $225 for her too? Also, when you pay the ETF, do they unlock the phone so she could use her current 4S with Verizon?
AT&T’s network is GSM, Verizon’s network is CDMA. The networks are not compatible. Therefore AT&T iPhones can not be used on the Verizon network.
Only true for the iPhone 4 and earlier. Both the 4S and 5 support both GSM and CDMA.
After i wrote the prior post, I gave AT&T a call and expressed my interest to switch. What came next was completely unexpected and resulted with me choosing to stay with AT&T. Let me explain.
The lady asked why I wanted to switch to which I replied, “you don’t have LTE in my area (Philadelphia) and Verizon does, black and white. Also the ETF is $215 and the upgrade fee is $286, you do the math.” She agreed and offered the following. $30 off of my bill for the next 6 months ($180 total) and then gave me the idea that left me staying with AT&T. I was directed to open an additional line on my plan to buy the iPhone 5 at full contract pricing. When the phone came, I could then downgrade the line to a ‘basic’ line causing me to incur an additional $10 a month on my plan for 24 months. Well, 18 of those months is covered in the $180 i will save in the next 6 months. The other $60 i can suck up and pay instead of a $215 ETF or $286 early upgrade fee. Did I mention i sold my iPhone 4S for $400? So when all is said and done, I am spending $60 net and actually getting $20 off of my normal bill for the next 6 months!
Ive seen several polls now asking the carrier question, it doesn’t appear that this mass exodus is happening if these polls are to be a trusted guide.