AT&T has once again followed Verizon Wireless’ lead by ending early upgrades for contract customers, making it impossible to upgrade a handset with a full device subsidy until 24 months have passed.

The changes took effect last Sunday. Customers that bought their current device after March 1, 2012 must now wait four more months before they can get a discounted upgrade. AT&T also will only allow upgrades within the same “device category,” meaning a customer with an expiring smartphone contract cannot use their upgrade discount on a tablet device.

Previously, both Verizon and AT&T offered customers loyalty discounts and early upgrades for customers not minding a two-year contract extension. Device subsidies — discounts extended to customers to cut prices on new smartphones or tablets, are anathema to many Wall Street analysts because they can drag down provider earnings. Cell companies quietly win back the subsidy discount within two years by charging artificially higher rates on service plans. But Wall Street does not like waiting for a two-year payback.

Verizon Wireless and AT&T both charge nearly the same rates and have almost identical policies and discounts. When one carrier raises prices, the other quickly follows. In the past three years, both companies have ended a number of discounts and plan features — notably loyalty upgrade credits and flat rate data plans — in moves to cut costs and increase profitability.

Both Verizon and AT&T have spoken positively about the idea of doing away with phone upgrade subsidies altogether, but neither would say current rates would be lowered in tandem with such a move. Wall Street wants carriers to consider maintaining current pricing and ending phone subsidies, which would dramatically stimulate company earnings. A device subsidy on a top of the line smartphone is worth $150 a year — money that would come from the customer’s pocket, not AT&T or Verizon.

Customers who don’t want to pay AT&T’s contract prices will not find a better deal from its prepaid division. AT&T has also announced it is discontinuing several  affordable data plan options effective June 20.

The most-affected plan is AT&T GoPhone’s $25 monthly plan, which includes unlimited texting and 250 minutes of calling. That plan allowed customers to choose between three data packages:

• 50MB for $5/month;
• 200MB for $15/month;
• 1GB for $25/month.

Effective June 20, the only available data add-on for this plan will be the 50MB option. Customers exceeding this will have to re-subscribe for an extra $5 for each renewal.

AT&T’s $50 monthly plan includes unlimited texting and calling. But customers will no longer be able to add data service. Instead, they will have to upgrade to AT&T’s premiere $65 plan, which includes the same features as the $50 plan but adds up to 1GB of data.

AT&T says it will have new options for consumers in the coming weeks, but until then, data customers will often pay an average of at least $15 more per month as the changes take effect.

Some of AT&T’s prepaid GoPhone customers are howling over the company’s “new and improved” data packages that now require customers to purchase a qualified voice package if they also want affordable wireless data.

AT&T’s press release:

AT&T today announced the following new data packages with double the data or more for the same price for GoPhone customers, available April 22.

• 1GB for $25
• 200MB for $15
• 50MB for $5

All data packages are available on the $50 Unlimited Talk & Text nationwide plan for GoPhone smartphones and the $25 Unlimited Text with 250 minutes nationwide GoPhone plan.

At first glance the new data plans seem to offer double the data allowance of AT&T’s older plans, which were available to any prepaid customer who wanted to avoid AT&T’s default data rate: 1 cent per 5KB.  While that amount seems tiny, in fact it’s not.  A gigabyte of usage without a data plan costs over $2,000. That is quite an incentive to enroll in one of AT&T’s data packages.

Only now AT&T’s most value-conscious customers can’t.

AT&T’s “new and improved” prepaid plans now require customers to first enroll in a $25 or $50 voice plan before they are allowed to purchase a data package.  That leaves AT&T’s “pay as you go” customers out in the cold.

A customer used to spending $15 a month on a data package with a 10c per voice minute plan with no daily access fee will now pay at least $50.  The required 250 minute voice plan with unlimited text runs $25 a month.  The data package costs an additional $25.

Rory Smith called that “rubbish.”

“Effectively this makes the service completely useless as I only need a small amount of data and rarely use my phone for voice calls or SMS messages,” Smith wrote.

“By doing this they are requiring you to enter a talk plan and pay for minutes you will never use, all just to force consumers into paying more,” another customer remarked. “It really seems like AT&T is trying to squeeze every penny they can out of their prepaid plans.”

AT&T's new prepaid pricing plans

Some analysts worry AT&T’s quest for data profits are pricing them out of the prepaid data-only market.

Current Analysis analyst Deepa Karthikeyan wrote in a report that AT&T will likely prompt customers to start shopping around and they are likely to encounter daily plan options that deliver somewhat better pricing at rival carriers.  Daily plan customers typically want the cheapest plan possible so they can pay a-la-carte for the specific features that interest them.  AT&T’s move forces customers to pay a $25 entry fee just to qualify for a data plan, which in some cases is the only reason the customer has the phone.

Some of AT&T’s competitors with comparable plans:

• T-Mobile: $3/day Pay As You Go – First 200MB at 3G speed -or- $30 up to 5GB at 4G speed plus 100 minutes, unlimited texting
• Virgin Mobile: $35 up to 2.5GB data, 300 minutes, unlimited texting
• Verizon: $50 unlimited talk, texting, minutes
• Straight Talk: $45 unlimited talk, texting, 2GB data with roaming on small GSM carriers
• Red Pocket: $60 unlimited talk, texting, 2GB data and 200 international minutes
• H20 Wireless: $60 unlimited talk, texting, 1GB data and $10 international calling

LG Optimus T

Some analysts would have you believe nobody wants to keep doing business with T-Mobile, but when the price is right, it can bring the company’s online ordering system to its knees.

T-Mobile’s prepaid division ran a sale this morning on a refurbished LG Optimus T, an entry-level Android v2.2 smartphone, for just $82.49.  In addition to free ground shipping, the phone also included $30 in airtime credit (as all of their $50+ prepaid phones currently include).

T-Mobile exhausted its supply within hours, but not without some frustration from customers who found completing the order difficult when the website began to fail from all of the traffic.

“This is an amazing deal, especially when combined with some “cashback” programs run by websites like Fatwallet, which knocked another $7.50 off the price,” writes Stop the Cap! reader Jenny Truro.  “T-Mobile’s prepaid service is actually a good deal when you top up once for $100, because all subsequent refills in any amount won’t expire for an entire year.”

Truro doesn’t use a cell phone enough to justify a standard two-year contract plan, and hated dealing with AT&T’s GoPhone prepaid plan because minutes were costly and expired quickly.

“AT&T lets you keep minutes up to a year when you spend $100, but you have to keep renewing at $100 every year if you want to hang on to last year’s minutes,” Truro says. “T-Mobile doesn’t stick you with that, and some of the other providers charge way too much per minute.”

Truro says the LG Optimus T she purchased this morning will be her introduction to smartphones.

“If I find I don’t use it enough to justify paying for prepaid data plans and other features, it was not an expensive experiment.”

The LG Optimus T can also be unlocked by T-Mobile by calling customer service 60 days after activating the phone on their network.  That allows the phone to be used on other providers’ networks with an appropriate SIM card.

Since AT&T announced its intention to merge with T-Mobile, analysts have declared T-Mobile a white elephant — one that postpaid customers are increasingly leaving.  But T-Mobile’s innovative, often-aggressive pricing proves that for the right price, customers will not only stick with the carrier, they’ll be joined by thousands of others willing to sign up.

For years, most prepaid cell phone providers charged a flat per-minute rate for calling, usually without a monthly service fee, for those who didn’t want or couldn’t afford a traditional postpaid calling plan that came with a large bucket of calling minutes.

But now prepaid cell phone providers are increasingly announcing new bundled service pricing for prepaid users that would be familiar to any cell phone user with a two-year contract.

AT&T today announced a new plan (available Sept. 18) for its prepaid GoPhone customers that bundles 250 voice minutes with unlimited texting for $25 a month.  It joins AT&T’s $50 unlimited talk, text, and web plan for GoPhone customers, without any contract commitment.

AT&T also announced a new International Long Distance add-on package for prepaid customers.  For $10 a month, customers get 250 minutes of calling to over 50 countries, good for 30 days.

GoPhone customers can also now roam with their prepaid phones in Canada at special roaming rates, according to AT&T:

• Voice – $.39 per minute (no surcharges)
• Text – $.25 per message sent, $.20 per message received

AT&T’s idea of “unlimited service” has its limits.  Five gigabytes to be exact, as some customers are now learning.

Weeks after promising AT&T customers enrolled in unlimited smartphone data plans that they could keep them, AT&T is now calling some subscribers of an earlier unlimited plan, telling them they need to limit their use of the “unlimited service.”

AT&T’s Data Connect Unlimited plan was discontinued by AT&T back in 2008, but the company promised current customers they could keep their unlimited plan.  But now, the company has started calling customers when they exceed 5GB of usage during a month.

The Washington Post reports AT&T has been sending mixed messages to customers, and is cracking down on those customers exceeding the company’s arbitrary limits.

“We’ve had a small group of customers on a DataConnect 5GB plan who were not being charged for overage when they went beyond that limit,” she wrote. “We’re now working to bring their accounts in line with the policy for the other DataConnect 5GB plan subscribers.”

Clark added that users who had signed up for AT&T’s earlier Data Connect Unlimited plans (which it stopped selling in 2008) could keep using them, but if they made “certain changes to their account” — for instance, transferring it to a new line — they would have to sign up for a new $60 plan with a 5-gigabyte usage cap.

That comes as news to several AT&T customers who have been in touch with the Post, who were switched, without permission, to limited service plans when they made minor changes to their account or were told AT&T was going to end unlimited service for all AT&T customers.

Rob Pegoraro, who writes the Fast Forward column for the Post, notes AT&T’s customer-care staff seems a little confused about these matters. He advises users with old, unlimited-data plans should be prepared for lengthy calls to customer service — and keep careful records of their interactions with the company.