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CNET Update: AT&T's Next plan doesn't add up

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CNET Update: AT&T's Next plan doesn't add up

2:51 /

Customers pay more for a phone with AT&T's no-contract option, abandoned Yahoo IDs are up for grabs, and Foursquare finds a new way to push advertisements.

AT&T has a new upgrade plan that you might want to avoid. I'm Bridget Carey and this is your CNET Update. AT&T is giving customers the option to ditch their two-year contract and pay about $30 more every month for the opportunity to upgrade to a new phone once a year. This option is called Next, but it makes no financial sense. Your monthly service plan has not changed at all. So, let's say, you currently pay about $100 a month for service instead of just paying $200 upfront for that shiny new iPhone and being done with it. You now are paying double that, almost $400 over the course of a year for that same iPhone and that's just so you could trade it in for a new model in 12 months and that phone better be in good condition because if it's cracked, you gotta pay more to trade it in. The only person this benefits is someone who pays a large termination fee to break their contract every year just to get a new phone. If you do the math, the difference between paying a termination fee for your contract and the Next plan is about $55. If you don't get a new phone every year with Next, you're losing money. The Next plan basically takes the full price of the phone and splits it up over 20 months. So, if you keep your phone for the whole 20 months, you just shelled out the full $650 for a new phone when you could have gotten it for $200 just with sticking with a contract. So, why is AT&T even offering this? Well, I guess they thought they needed to do something to compete with T-Mobile which has a better version of this concept. At T-Mobile, they don't have contracts. You just put a down payment on a phone, like about $100, and you pay a monthly fee to pay off the rest of the phone over time, but your monthly service charges are lowered to balance it out. That's what AT&T is missing and T-Mobile just launched the Jump plan. So, for another $10 a month, you could upgrade a phone twice a year if you want something new or if the phone is damaged. So, it's like an insurance plan. We expect Verizon to also jump in and offer some option for people to upgrade early, but we'll have to wait and see if Verizon can make it worthwhile. It's time to claim a new Yahoo username. Yahoo has been doing some housecleaning and deactivated old abandoned IDs that have not been used in over a year. Now, Yahoo is opening up those names to other people on a first-come, first-served basis. Just go to wishlist.yahoo.com to request your username and Foursquare is beginning to roll out advertisements that show up after you check into a place. So, for example, when mom checks into the neighborhood park or pool, she might see a Toys"R"Us ad to encourage her to pick up some Frisbees and pool noodles. That's your tech news update. You can find more details at CNET.com/Update. From our studios in New York, I'm Bridget Carey.
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