AT&T has added a 36-month equipment installment plan (EIP) as an option for customers buying new phones.
The move was expected and became official on Friday, according to Wave7 Research, which reported that AT&T had dropped the 24-month EIP as an option some time ago. The move should help on churn, extending the amount of time customers are able to pay off new devices.
According to AT&T, the 30-month installment plan has been retired for new purchases after June 4 and will be replaced with the new 36-month plan. Customers currently on a 30-month installment plan will remain on their plan. The new 36-month plan will be applied only to new purchases.
It can be applied to any new smartphone or connected device purchases; it's also applicable for device purchases on either a promotional offer or full retail cost of the device, according to an AT&T representative.
Wireless carriers in general right now are more focused on taking care of their established bases and driving higher APRU than grabbing customers away from other carriers, said Jeff Moore, principal of Wave7 Research.
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While the longer EIP at AT&T will help keep churn as low as possible, the other part of the equation is phone upgrade cycles are getting longer, he said.
“I think the No. 1 correlation is there’s really nothing that revolutionary about newer phones,” he said. They’re 4G/5G capable, and the upgrades are marginal, where the camera gets a little better and the processor a little faster, but one is very much like the other and it’s been that way for a while now, he noted.
“The big picture is obvious,” he said. “We’re moving toward longer EIPs.”
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At Verizon, most EIPs are for 24 months, but it depends on the phone. Some 30-month plans are available for more expensive phones, he said. It’s pretty much the same at T-Mobile, which, incidentally, emphasizes that it benefits the most of all the carriers when churn is high.
Earlier this year, AT&T CFO John Stephens, who retired in March, talked up the operator’s focus on keeping the customers it already has, including through offers that provide the opportunity to bump existing subscribers into higher tier plans or sign on to services like HBO Max.
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When the 5G-capable iPhone 12 came out last year, AT&T put out an aggressive offer that it made available to existing customers as well as new ones. It had already started offering deals on 5G Samsung smartphones to current and new subscribers in August.
AT&T’s focus on growing wireless customers paid off in its first-quarter results, when it reported its best first quarter for net additions in more than 10 years.
AT&T added 595,000 wireless postpaid phone customers in the first quarter, driving 823,000 postpaid net additions overall. Verizon reported a loss of 178,000 postpaid phone subscribers in the first quarter, while T-Mobile reported postpaid phone net adds of 773,000.
Article updated June 7 with comment from AT&T.