Jul 16, 2013 10:44 AM EDT
(Reuters) - AT&T Inc (T.N) said on Tuesday it plans to allow its customers to make annual device upgrades and pay via monthly installment plans to compete with a similar option by smaller rival T-Mobile US (TMUS.N).
AT&T, the No. 2 U.S. mobile provider, said that starting on July 26, customers could pay monthly installments for their phones or tablet computers and upgrade every year. This compares with its previous requirement to stick with the same device for about two years in exchange for a discount.
No. 4 U.S. mobile provider T-Mobile US recently announced a plan under which its customers could upgrade their smartphones as often as twice a year.
The operators, which tried but failed to merge in 2011, are grappling to filch each others customers in a market where most people already have smartphones.
AT&T said that under the new plan - branded AT&T Next - it will not charge an upfront device fee, but will instead charge customers $15 to $50 per month depending on the device.
For example an AT&T customer buying the Samsung Electronics' (005930.KS) Galaxy S4 would pay $32 per month for the device along with a monthly service fee and have the option to trade in the phone after 12 payments.
In comparison, T-Mobile US does charge an upfront fee for the device on top of $10 per month to sign up for its Jump upgrade option, and installments of up to $20 per month as well as its monthly service fee.
AT&T said customers who prefer to stick with the old model of keeping a phone for two years could still do so.
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