Tips for iPhones and AT&T’s New Mobile Shared Value Plans to Save Money
Recently, AT&T introduced new Mobile Shared Value Plans. After careful consideration we switched; and we’re seeing significant savings. Still, there’s some fine print that needs to be brought to light. Future upgrades can incur some nasty extra expenses if you’re not careful. In this article I highlight how your bill could inflate based on your phone’s relation to a new 2‑year contract, and how to strategically upgrade iPhones to avoid ugly surprises in your bill!
Why Switch?
We were on a unlimited grandfathered plan. Well, technically, you could say it was unlimited — practically it wasn’t! Under these unlimited grandfathered plans, whenever a phone pushed past 5 Gig of downloaded data to your phone, AT&T would promptly throttling back your phone’s internet connection speed. Faster download speeds would only return once your billing cycle restarted. My normal LTE download speeds were cut from 35 Mbps to 0.2 Mbps around day 20 of my billing cycle. The last ten days were painful. I wasn’t even able to stream a YouTube video. (BTW, the FTC filed a lawsuit against AT&T for doing this … I’m unclear of the outcome.)
The Good News
After switching, we aren’t being throttled anymore. (Hummmm … will AT&T start throttling these plans again at some point in the future?) And, we’re saving over $60 a month compared to the cost of our old plan — and that’s after over-estimating our data needs! With these new plans, unlimited text messaging and unlimited talk-time aren’t options; they’re standard — they just come with the plan. The only decision to be made is: How much data do I need? Although we never broke past 15 Gigs of data with the three phones in our plan, we opted for 40 Gigs of data per month. I’m anticipating increased data consumption with two newer phones that have larger screen sizes, and the future possibility of tethering data to a laptop. Tethering, (which you can do by setting up a personal hotspot), is also a standard feature with these new plans. Again, we’re seeing savings upwards of $60.00 as opposed to what we were paying, and not being throttled anymore. 🙂
The Bad News
There’s one little gotcha that can creep up and bite you with these new plans. It has to do with the access fee of each phone in your plan. Each phone, when added to the plan, is charged an “access fee” — and it will either be $40 or $15.1 AT&T calls the $40.00 fee the normal access fee; and the $15.00 fee is considered a special discount fee. You qualify for the discount fee if you meet certain conditions — and you’ll even see it listed on your phone bill as a $40 charge followed by a $25 discount credit. It seems like they are setting up for the day that the discount may be removed? If so, I’m bolting from AT&T! But, for now, the $40.00 access fee is what you want to avoid at all cost. It’s really highway robbery in my opinion. Each line not receiving the reduced fee is increasing your bill by $25.00 — the difference of the two fees. Say you have three phones in your plan, if each phone is charged the higher access fee — you bill is inflated by $75.00! Put another way, you could take steps to cut your bill by $75.00 if each phone meets the conditions for the reduced access fee.
There are three ways a phone line qualifies for the reduced access fee.
- The phone line is already in a 2‑year contract that started before March 2014.
- The phone is not in a 2‑year contract — it’s contract-free.
- You elect to upgrade a phone using AT&T’s Next ( ℠ ) plan.2
The first option is not going to hang around for too much longer — and it’s not something you can control today anyway. You either have a phone in an older 2‑year contract or not. Most people who switched to these new plans do — and if they have not read the fine print, they may be in for rude surprises in the future if they upgrade under a normal 2‑year contract. The last option is also not optimal as explained in the footnote. This leaves the second option — you need a contract-free phone. You may either grab one from EBay, get a passed-down older phone from some family member or exceptional friend, or else you’re going to need to buy a new contract-free phone. This is where things get interesting with some little-know information.
If you decide to upgrade by purchasing a new phone, I have some tips for you that will save you money. There are two ways to get a new contract-free phone, both are shown in the table below. Most people know the straight forward way to do this. You simply pay the non-contract full price of the phone. This is labeled Method 2, in the table below. But few people know about Method 1, as outlined in the chart below. You simply purchase the phone with the 2‑year contract discount price — then pay the fee to end the contract. It’s cheaper than the full price of the phone, by just over $150 — and it will save you $600 over the next two years due to the higher access fee.
I’ve done this, it works quite well. I purchased my wife’s iPhone 6 Plus with the AT&T 2‑year discount price. She wanted a 64 Gig model, so we left the Apple Store paying $399 plus tax — that’s $426.93. Twenty minutes later, I called AT&T and asked to pay out of the contract. This is a flat non-taxed fee of $325 to end the contract3. The net result is that we got a new, contract-free iPhone for $156.50 less than the full contract-free phone price! This will keep her line’s access fee set at the reduced $15.00. So, the total savings is $156.50 (initial phone cost) and $600 (the reduced access fee over the next two years) — which is a savings of $756.50 — about the cost of an iPhone!
| iPhone 6 Plus | 16 Gig | 64 Gig | 128 Gig |
| upgrade cost for 2 year contract | $299.00 | $399.00 | $499.00 |
| local tax (7%) | $20.93 | $27.93 | $34.93 |
| contract termination fee. | $325.00 | ||
| Phone Cost Method 1 | $644.93 | $751.93 | $858.93 |
| non-contract price | $749.00 | $849.00 | $949.00 |
| tax | $52.43 | $59.43 | $66.43 |
| Phone Cost Method 2 | $801.43 | $908.43 | $1,015.43 |
| Phone Cost Savings | $156.50 | $156.50 | $156.50 |
| Bill Savings over next 2 years reducing access fee from $40 — $15 | $600.00 | $600.00 | $600.00 |
| total savings over 2 years | $756.50 | $756.50 | $756.50 |
Additional Perks of Purchasing a New iPhone by paying out of the contract
- You may immediately have you phone unlocked — which will bring about $30.00 higher when you sell it on EBay
- You are immediately eligible to upgrade — there’s no 2‑year wait time since you are not in a contract.
Let me know what you thought about this article.
—– footnotes —–
- The access fee for grandfathered plans was straight-forward; It was $9.99 without any complicated rules. So, even the reduced fee is somewhat of an increase. [↩]
- This upgrade option is not really optimal. Under this option, you’re agreeing to pay the full price of the phone with payments over the duration of the contract. If you decide to upgrade before the end of your contract — you are allowed to do so by simply giving AT&T your old phone — in which case, your payments just converted to rental fees. At this point, you get to start all over with payments on a new ℠ contract, and AT&T gets to sell your old phone after renting it to you! Otherwise, you may upgrade before you contract is over by paying the full remaining balance of the old phone. Either way, you’re not enjoying the AT&T discount price of a new phone. [↩]
- The price for ending your contract starts at $325 in month one of the contract, and is reduced by $10.00 for each month after that. For example, if you are in your 5th month of the contract, the early termination fee (ETF) is $325 — (4 * $10.00). [↩]