On July 26, AT&T will launch the “AT&T Next” plan that lets you upgrade your phone every year with no upgrade fees. The program will also give you a new smartphone (or tablet) with no down payment, no activation fee, and no financing fees. Sound too good to be true? Let’s look closer. First you must qualify and agree to a 20 month payment plan on a new device. You’ll also need to pay the first month’s installment along with any sales tax at time of agreement. Once you’ve made 12 months of payments, and your account is in good standing, you’ll be able to upgrade to a new device. If you’re happy with your phone you can continue making the remaining 8 months of payments until the device is paid off. AT&T says monthly installments will range anywhere from $15 to $50 per month depending on the device.

AT&T provided an example of a “Next” arrangement. Someone who wants a brand new Samsung Galaxy S could agree to pay $32 per month for 20 months. The first payment would be due upon signup, along with any sales tax. No down payment would be required. After 12 months the S4 could be upgraded to a newer model. Customers who would like to just pay off the phone in can do so anytime without penalty.

When upgrading your device it must be in good working condition and you’ll need to sign a new phone or tablet agreement along with wireless service plan. AT&T says customers may also be able to upgrade every six months with a partial discount on the purchase price of the phone, as long as within a two-year contract.

Here’s the small print. If you cancel your wireless service you’ll need to pay the remaining balance on your phone or tablet. If you decide to return the device there may be a $35 restocking fee for phones, and up to 10% of sale price for tablets.

AT&T Next will be available for new customers and existing customers who are eligible to upgrade.

How does AT&T Next match up against rival T-Mobile? Consumer Reports did a nice little breakdown of the two programs. Per year T-Mobile costs $1,542 for unlimited data and AT&T Next will cost $1,830 with 3GB of data per month. That’s a difference of about $300 in T-Mobile’s favor. But while T-Mobile’s monthly rates turn out to be less (with the option to upgrade twice per year), AT&T doesn’t require a down payment for new phones. If you’re looking for the latest and greatest with T-Mobile, expect to fork over some cash whenever you want to upgrade.

In a preemptive strike against AT&T, T-Mobile called the Edge plan “calculating, sneaky, and underhanded,” claiming AT&T will be making more money by removing phone subsidies but not lowering monthly rates. However, what T-Mobile doesn’t mention are the upgrade costs for a new phone with Jump. The Jump plan also requires a $10 per month program fee.

Check back soon when we compare AT&T Next with Verizon’s upcoming Edge upgrade option.

Jeff Chabot

Jeff Chabot has a background in web development and design, as well as working in broadcast television as a studio engineer, lighting director and editor. He frequently writes about technology, broadcasting, digital entertainment, and the internet.