AT&T is veering away from subsidized phones, and it's paying off

The wireless industry in the United States is in the midst of some rather significant changes. Ever since T-Mobile implemented its Jump program early last year, the carrier has turned subscriber loss into massive gains. The company's success is rubbing off, too.AT&T's Next program is very similar to Jump, which lets customers pay off their phones in monthly installments and become eligible for upgrades earlier, and is just one example of a major transformation taking place throughout the industry.

According to AT&T's earnings report, the company saw more than 1 million Next sales, which accounted for 15 percent of all smartphones sold in the quarter. AT&T CFO John Stephens elaborated in today's investor call, saying that Next accounted for 20 percent of total sales in December alone. This doesn't sound like much right now, but the big picture shows a different story. Next is actually growing at an incredibly fast pace, and it's unlikely that AT&T will change course anytime soon.

At present, 1.5 million subscribers have signed onto Next. Again, this is a small number compared to the company's total customer base (there are now 110 million subscribers, with nearly 73 million of those being postpaid), but what's interesting is how quickly that number has grown. According to the numbers, 1 million people signed onto Next just in the past quarter; this means that only 500,000 subscribers -- one-third of its current total -- were activated in the three months following its July launch.

The fourth quarter is a huge one thanks to holiday sales, but AT&T is quite optimistic that this is the way forward for the company. In today's investor call, Stephens said the market is embracing these kinds of plans, and AT&T customers are loving it. "You have to be aggressive in the marketplace and have your ear to the ground to what the consumer wants," Stephens said.

That's talking the talk, but AT&T is showing that it can walk the walk. Last week, the company announced that any postpaid subscriber currently on a standard two-year contract will be able to switch to Next and upgrade to a new phone once they're six months into their commitment. In August, the carrierlowered Next device prices to compete with Verizon's Edge plans; and last month, it added more pricing options and offered monthly discounts to anyone who is signed up for the service.

Engadget