re: When you upgrade your phone with AT&T (not AT&T Next)

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Smart Phones are about $700. Your data plan subsidizes your phone. With Next you trade back your phone after X number of months and get a new one. But even a "free phone" you're paying $500 for the phone that comes off the data plan.

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Sometimes the next plan is a better deal. You get the phone after paying just taxes ($50-100 depending on where you live) on the un-subsidized phone (~$600 to $900) pay off the full cost of the phone with an interest free loan. Also with the next and a 10 gb / month data plan they give you a $15/month discount on the $40/month smart phone usage fee. If you have a 15 gb / mo data plan the discount is $25/month.

If you choose to upgrade outside of Next, you don't get the discount at all and pay the whole $40/month + $199 for the phone + $40 activation. In my case, with a 15 gb/month family plan it was cheaper (~$200) to do Next.

ETA: you can't have a grandfathered unlimited plan on ATT Next.