New AT&T Mobile Share Value plans save you money

By Jeff BlyskalConsumer Reports

AT&T Wireless customers can save 10 percent to 15 percent a month with the No. 2 carrier's new Mobile Share Value plans, according to a Consumer Reports analysis.

The plans, announced this morning and available starting Sunday Dec. 8, come fast on the heels of our 12th annual cell service and phone ratings report, which applauded T-Mobile for being the lowest-priced major national carrier with the most honest phone pricing, while AT&T and Verizon Wireless were highest priced. (Check our cell phone buying guide for more details.)

Continue Reading Below

AT&T's new plans change that dynamic by providing more value. You spoke, and the giant AT&T listened. "Our customers told us loud and clear that they want more value and no contract," Mark Siegel, an AT&T spokesman, said.

For example, a couple who uses only 400 voice minutes, sends just 200 text messages, and consumes a mere 500MB of data per month with one smart phone and one mostly voice flip phone will pay AT&T $90 a month, down $25 from $115 under the current two-year contract-plan pricing and only slightly more than T-Mobile's $80 per month. That makes AT&T the second-lowest-priced major carrier for this low-use customer type and leaves Sprint and Verizon vulnerable as the most expensive at $110 per month.

A family of four that uses 1,800 minutes of talk time, 7,600 text messages (kids!), and 4GB of data per month across two smart phones and two slider phones will save even more with the AT&T value plans. This family can now pay $160 a month, down $50 from $210. Again, that's still behind T-Mobile's bargain $110 per month, but well below Sprint's $200 and Verizon's $210.

Even lower-priced deals are available from smaller no-contract and prepaid carriers, of course, but most consumers buy from the big four.

AT&T's pricing shake-up now leaves Verizon looking overpriced. Once the undisputed king of cell service quality, Verizon now shares the top spot among major carriers with the low-priced upstart T-Mobile in 17 of 23 metro areas where we have ratings, making T-Mobile a steal.

Meanwhile, AT&T's overall ratings are not meaningfully different from Verizon's in 11 of 23 rated metro areas, including Boston, Dallas, the District of Columbia, New York, Philadelphia, Seattle, St. Louis, and Tampa, Fla. And nationwide, AT&T earned our highest satisfaction rating for its 4G cellular service, while Verizon 4G was merely so-so, according to the judgment of 58,000 subscribers surveyed earlier this fall by the Consumer Reports National Research Center.

So AT&T is suddenly back in the game, and Verizon may need to re-examine its lavish prices, which is good news for consumers all around.

Get the full ratings of cellular service nationally and in 23 major metro areas plus ratings of dozens of smart phones sold by the big four national carriers in our complete smart phone shopping guide, and learn 7 ways to cut phone costs.

The AT&T price cuts above might look like a 22 percent to 24 percent savings. In fact, they're only about 10 percent to 15 percent, and here's why.

Traditionally, the major carriers have offered what look like free or deeply discounted phones. But you actually paid back those bogus discounts and phony freebies through phone-cost repayment charges concealed in your monthly bill for service. Thus, your monthly plan price paid for the service, and it also partly paid for the phone each month. Consequently, AT&T's current two-year contract plan monthly price covers the cost of service plus a hidden phone-repayment charge. The new value plan monthly price covers only the cost of service.

To properly measure the actual savings, we also toted up the total cost of service plus the cost of an Apple iPhone 5c, which adds $550 to the total bill. We then calculated the cost over two years, the traditional contract term. With Verizon, you pay the full $550 for that phone through a combination of an up-front fee plus hidden charges in the monthly service fee. With AT&T and T-Mobile, you can now pay the $550 in fully disclosed installment payments over about two years.

When we added the price of an iPhone 5c and the lowest-cost data plan for each carrier, AT&T's $1,630 no-service-contract cost over two years (for 300MB of data per month) beat even T-Mobile's $1,760 no-service-contract bargain, which comes with 500MB of data per month. (All major carrier plans now come with unlimited talk and text.) Verizons two-year contract-plan price (offering 500MB of data) is laughably almost $400 more than AT&T's no-service-contract deal over two years, at $2,020.

AT&T's new no-service-contract 5c and cheapest plan price is 10 percent less than the same deal under the carrier's current two-year contract-plan price. The savings grow to 15 percent over a 2.5-year time span, because those hidden phone-repayment charges keep piling up under the contract plan, month after month as long as you stick with the same phone. AT&T's set installment payments, by contrast, stop after 20 months, once you've paid off the phone. A 26-month installment plan is also available.

AT&T will continue to offer two-year contract plans as an option, but it's a no-brainer bad deal now compared with the new value plans with the installment payment option, which involves no down payment, no activation fee, no interest charges, and no early-termination fees. And although there is no contract for service, the installment payment agreement is a contract, of course, which still must be paid off, even if you quit AT&T service.

—Jeff Blyskal

Copyright © 2005-2013 Consumers Union of U.S., Inc. No reproduction, in whole or in part, without written permission. Consumer Reports has no relationship with any advertisers on this site.