Previously, the iPhone cost $32.50 per month under AT&T Next, making it more expensive than comparable plans from Verizon and T-Mobile. Now, however, the 16GB iPhone can be had for $27 per month -- one dollar per year cheaper than under a comparable Verizon plan.
Through the program, customers end up double paying for their devices through both the new monthly handset payments and the portion of the monthly service charge that has traditionally been collected by the carrier to recoup its upfront handset subsidies. Assuming that $20 of AT&T's monthly service fees go toward recouping the carrier's handset subsidy, a customer looking to upgrade after 12 months would have paid $324 in device payments on a 16 GB iPhone 5 and $240 from monthly service fees, yielding total payments of $564 for the $650 device, although they also have to turn in the device to AT&T.
Verizon's Edge program appears to work in a similar manner, and now, for a similar price. Splitting the $650 iPhone cost over 24 months yields monthly payments of just over $27, and thus a customer looking to upgrade after 12 months would have paid $325 in device payments and $240 from monthly service fees, making for total payments of $565 plus the device trade-in.