AT&T forsakes current customers to generate new business

AT&T forsakes current customers to generate new business

Summary: Customer retention is now a meaningless concept; it's all about funding low-cost phones for new customers.

TOPICS: AT&T, Mobility

I’ve been an AT&T Wireless customer since before the company was called AT&T. I selected them, originally, because they were the only provider that actually had service that worked at my home and where I most often traveled. But over the last decade  I've stuck with them primarily because of good customer service and reasonable prices for the services I need.


But apparently AT&T has decided that customer loyalty no longer needs to be rewarded.

The most obvious sign of customer loyalty being rewarded was that AT&T was always willing to waive their $36 activation fee when I upgraded phones or added additional lines. After all, I was a customer with a long history and was extending my services with them, so waiving that fee was a way to help retain that loyalty and at least tell me that my business was appreciated.

So when I upgraded a line to a new phone and added a new tablet last month I was a little surprised when the AT&T corporate store manager told me he was no longer allowed to waive the fee and that I had to call customer service directly.

It was an annoying additional step, but not as annoying as the conversation I had with customer service when they told me that they would no longer waive fees for existing customers. In my conversation with a customer service rep, I was now told that while they used to waive the fee, the decision had been made that the money was critical to the operation of the company and necessary so that low-cost phones could be offered to new customers.

Furthermore, I was told that if I wanted to save the activation fee expense when my contracts expired, I could move to the “AT&T Next” plan — which would allow yearly updates with no activation fees. When I pointed out that the “Next” plan would actually cost significantly more money, I was ignored and the pitch continued for the potential future plan change. The customer service rep seemed to believe that saying “Yes, it will cost more, but you won’t pay a separate activation fee” was a reasonable statement.

If you’re not aware of how the "Next" plan works, here's one example: A Galaxy S4, which would cost $199 with a 2-year commitment, will instead cost $27/month for 20 months.  You could trade the phone in for a new one after 12 months, but if you kept the phone until you owned it outright it would cost you $540, so the premium for the ability to trade in your device every 12 months is a hefty one, given that you would have paid $324 for the device and have to surrender it for the next one.

And that, of course, doesn’t touch on the fact that I have eight lines for phones and tablets, for both business and personal use. With that many devices I would be looking at a device rental charge of over $200/month; basically the cost for a new device plus activation fee every month, using the 24-month contract model.

So it’s easy to see why AT&T and the other carriers want to drive customers to these plans; the customers pay a fixed percentage of basically the full retail price of a device forever, but don’t actually own the device (unless they break it, in which case they keep paying, anyway, as far as I can tell).

Now if I had called customer service and been told something like “to standardized our practices we no longer offer that waiver” or simply “we don’t do that anymore” I would have been mildly annoyed, but gotten over it. While I would have liked the waiver, the extra cost itself wasn’t a deal breaker. But to be told that they no longer do it so they can fund low-cost phones for new customers and then be given a sales pitch to move me to a significantly more expensive service model is just insulting and incredibly arrogant.

I will definitely be taking AT&T's advice

This change has accomplished one thing; as my contracts end with AT&T there will no longer be an automatic continuation or upgrade.  AT&T will have to compete for my business with other carriers. And this story will provide a good example to my clients as to why they need to regularly re-evaluate their service contracts with their mobile providers; especially those who went with AT&T on my recommendation.

See also:

Topics: AT&T, Mobility

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  • Plus . . .

    You are paying for a new phone in your monthly service charge anyway. If you get a phone on their 2 yr contract and, at the end of 2 years, decide to keep it, your rate doesn't go down. So, whether you get a new phone or not, you are paying for one. I'm hoping that the T-Moble phone selection and coverage continue to improve. I will be seriously considering them. Like you, I have been an AT&T customer since before the merger with Cingular, but enough is enough!
    • AT&T

      You may wish to stay with AT&T. Both AT&T and Verizon cover more ground. I have T-Mobile, and they are low priced, but I find their coverage wanting. Will be switching some day after I get my use out of the Nexus4 I have.
    • Not really .....

      You are confused. Keep in mind tmobile charges a down payment PLUS per month. Next for att and edge for verizon don't. Make no mistake, carriers are paying through the nose for these handsets and are making nothing to sell them. If your power company offered you a new furnace or airconditioner every 2years just to keep you using the service, we'll that is what wireless phone providers are having to do. Make no mistake, they have all done a great job getting us the most entertainment and communication in the palm of our hands for a FRACTION of what it used to cost to communicate around the world, not to mention the countless movies and music. Remember the $70 landline, the $18 CDs with one song you liked, the $60 VHS prerelease only available at blockbuster for a $5 rental. Thank you at and t and verizon and everyone else that has brought telecommunications to this level and insist on remaining profitable in these tough economic times!!!
      Jjaassoonn Kkeennjjii
  • I hope AT

    How not to script customer handling. Your account, with all the lines and services should result in you being treated like royalty!
    Luke Skywalker
  • Switch to prepaid

    I switched to AT&T's prepaid plan on my nexus 4 and never looked back. I am on their $40 plan with 500 mins, unlimited messaging and 200mbs of data. Works great for me. My wife is on straight talk AT&T sim(no longer offered) for $45 and my son is on T-mobiles $30 plan with 100 mins and 5GB of data with unlimited messaging. Contracts are simply not worth it.
    • I agree - prepaid is better

      I went to a prepaid carrier in 2009 and haven't looked back.
    • Nexus4

      I am on T-Mob with a Nexus4, but was told that AT&T with this phone would be much slower for data. If I can switch and have decent speed, I will do so in a few months. Maybe wait for an aio store to open on the Central Coast of Cal.
  • This has been SOP for a long time with a lot of different companies

    When Comcast puts out a 6 month reduced rate for new customers, do you get to take advantage of it as an existing customer? Yes, it's annoying as all get out. Your solution is to switch providers. But AT&T is banking on the fact that its more of a hassle for you to change than to pay the activation fee.
  • AT&T is clearly one of the worst

    Their treatment of employees is just as bad as their treatment of customers. Truly one of the most vile and degenerate companies in existence.
  • Get over it!

    I think its so stupid to hear yall complain about a stupid activation fee. I can guarantee you are one of the customers that would like to get a new phone every time something new comes out. i cant tell you how many times my friends have been mad at phone companies because they dont have an upgrade yet and they want what everyone else has. I also dont think its fair to single out AT&T when other phone companies are doing this too. This is what cell phone providers are going to do from now on. You are right when you say you dont keep the device which i dont like either but everything is changing in cell phone companies. Oh well, what can we do about it? Just get over it!
    • Re: Get over it!

      "I think its so stupid to hear yall complain about a stupid activation fee."
      And I think it's stupid to hear "yall [sic]" talking like you didn't read the column. The crux of the problem is as follows:
      1.) David has been a loyal AT&T customer for over a decade, spending hundreds of dollars a month for them.
      2.) For all of that time thus far, they've been willing to leave $36 on the table to assist in retaining David's loyalty.
      3.) They no longer do this, and the reason given (keeping phone costs down) was directly contradicted by the CSR's attempt to sell him on what ultimately amounts to a higher cost phone.

      "I can guarantee you are one of the customers that would like to get a new phone every time something new comes out."
      I'd dare say that MOST customers would like to get a new phone every time something new comes out. That's orthogonal to the point here.

      "i cant tell you how many times my friends have been mad at phone companies because they dont have an upgrade yet and they want what everyone else has."
      The only thing that has ever stopped your friends from this is their lack of desire to pay for a new phone outright. They can upgrade whenever they want - they just won't have a subsidy to do it.

      "I also dont think its fair to single out AT&T when other phone companies are doing this too."
      T-Mobile isn't.

      "This is what cell phone providers are going to do from now on."
      Hence, David's point that AT&T got a bit too comfortable with his checks every month, and now is starting to look to see who else can provide him with the service he needs.

      "You are right when you say you dont keep the device which i dont like either"
      If nobody signs up for the "6-month phone rental" model, you'll see the program die pretty quickly.

      "but everything is changing in cell phone companies."
      This is an accurate statement, but it doesn't inherently make the situation better. Some changes are good - I like how T-Mo doesn't do handset contracts anymore, and will pass the savings onto you if you keep your existing phone a bit longer. I like how Boost gives incentive to pay your bill on time, once again, passing the savings on to the customer. I like how Verizon is addressing some of the issues with the amount of backhaul available at many places; I've seen better data speeds in high-density areas as a result. However, the logic of getting $36 from someone who clearly spends several hundred dollars a month is not a positive change.

      "Oh well, what can we do about it?"
      In David's case, he can write a blog post, seen by tens of thousands of technologically inclined people per day, to expose the fact that AT&T clearly doesn't value his loyalty nearly as much as they value $36. AT&T can decide whether it was truly worth it. Personally, I hope that they call him groveling, profusely apologizing, offering him new iPhones on launch day...and David saying "Here's what I want: I want to leave with no early termination fees."

      "Just get over it!"
      ...And this is why these policies work.

      Come to T-Mobile, David. We have no contracts, Wi-Fi calling, great customer service, excellent 4G speeds, unlimited data, and I'm fairly certain you'll find your bill cut in half to boot.

      • .

        Joey tmobile and verzion has these plans too they arecalles jump and edge. I used to be a tmobile customer and by far its one of theworst service providers along with sprint. People go into stores such as AT&T and verzion knowing that the service and phones are going to be more expensive yet they are still the top 2 companies. They keep their customers because if they were to switch to tmobile or sprint they know the service sucks! As far as tmobile having wifi calling, customers care more about internet on devices than anything else.
        • coverage

          Yes - coverage matters. T-Mobile needs to cover more ground. I may have to switch to AT&T soon.
          • did not mean to flag

            Tho we have Verizon family plan because my parents are elderly and where they travel to - for yrs only Verizon would work. I camp lots and same with me. But att has awful support for their uverse, especially network.
  • What did you decide to do?

    Did you continue with service? Or did you switch to another provider?
  • You're paying too much for the phone to begin with

    Why anyone would buy pay $199 for a Samsung Galaxy S4 on a two year contract when you can get the superior Nokia Lumia 920 for $49 is beyond me. If I was going to spend $199, I'd get the Lumia 1020 with the 41 megapixel camera. Actually, I wouldn't since the Lumia 920 camera is great and it has wireless charging built in.
    Sir Name
    • about that....

      Superior is a matter of perception. The Lumia 920's wireless charging "built-in" requires an additional purchase for the charging plate, and there are 3rd party accessories that do the same for all the popular Android phones. By the way, the Lumia 1020 is 299.99 on contract, a full $100 more than the Galaxy S4, so that suggestion is irrelevant.
      • re:

        When I got two 920s for my wife and I, they came with charging plates for free. The total price was $99 for the two including the charging plates. As for the 1020, I just went on to AT&T's website and the price is $199.99.
        Sir Name
      • 1020 is officially $199 on two year contract
        Ram U
    • I'll second that

      I never had much use for cell phone cameras until I got a Lumia 920. The camera is so good I find myself constantly using it for all sorts of things. A cell phone has only a small fraction of the mass of DSLR, so even a minuscule amount of hand shaking causes a slight blur. Not so with the 920. It has built-in image stabilization (the entire optical assembly is suspended in a liquid), so there is no blur and extraordinary detail. One of my favorite tricks is to hand a contract to a customer to sign, then use a scanner app on the 920 to make a high res copy of it, and then email the resulting PDF to him all in a matter of seconds. Completely blows them away.