AT&T Extend Next Plan To Cover Expensive Accessories

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Equipment installation plans have in a comparatively short space of time transformed the North American wireless 'phone market. It was T-Mobile USA that introduced these plans to the American market when it started to transform itself into an uncarrier. Equipment installation plans provide the customer with a subsidised device up front, which must be paid off over an interest-free term. In the case of AT&T, their equipment installation plan is called "Next" and interest-free payment options range from one to three years, depending on the device in question. AT&T explain that Next allows customers to more easily afford expensive smartphones and that in the first quarter 2016, some ninety percent of postpaid smartphones sales were via a Next installment plan. Next has only been around for two years, but these style of plans have transformed the US cellular market. Nowadays, of the four national carriers, only Sprint still sell a traditional two-year subsidised handset plan.

Today, America's second largest national carrier, AT&T, is broadening equipment installation plans to include certain selected accessories. These accessories use a shorter term, of 6-months, with an interest-free offer from the carrier. AT&T explains that wireless customers visiting an AT&T retail store may buy one accessory per device, or two per account, valued between $149 to $400. This includes items such as the Bose SoundLink speakers and the LG Tone Infinim headsets. For the customer, this means that he or she benefits from a high-end accessory paid off interest-free over two years. For AT&T, it should help the business sell more accessories through retail outlets. Accessories are traditionally a higher margin product when bought from cell 'phone stores.

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AT&T have explained that they are able to afford an increase in equipment installation plans – carriers do not receive the cash for sold devices immediately but instead must fund this over the length of the plan. John Stephen, AT&T's Chief Financial Officer, said this at the recent Q1 earnings call: "We continue to find ample demand and great rates in the securitization market to help us manage our Next receivables." The business received around $1.5 billion over the first quarter, matching the first quarter 2015. Although AT&T isn't the first carrier to include accessories over its equipment installation plan, the offer could help the business going forwards.