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AT&T to Stop Offering Two-Year Phone Contracts Starting January 8

Starting on January 8, 2016, AT&T plans to introduce a "pricing simplification effort" that will see the end of device subsidies and two-year contracts. According to an internal training document shared by Engadget, new and existing AT&T customers will only be able to purchase a smartphone at full price or with an AT&T Next payment plan going forward.

As outlined in the document, the new rules apply to all of the phones that AT&T sells, including smartphones and more basic devices, which will be paid for using new installment plans. More information on how AT&T will handle corporate accounts and non-smartphone devices like tablets and wearables will become available after an official announcement from AT&T, but it appears certain corporate users will be able to continue making two-year contract purchases.

The shift away from two-year contracts and iPhone subsidies began with T-Mobile in 2013, when the company introduced its Un-carrier payment plans uncoupling device costs from plan costs. Verizon followed suit in August of 2015, debuting new smartphone rate plans and eliminating its subsidized two-year contract option for new users.

Existing Verizon customers can still renew their two-year contracts, but AT&T's no-contract implementation is more extreme and will not offer existing customers the option to keep their contracts once they expire.

AT&T has already been working on shifting away from two-year contracts by pushing its Next plans. In June of 2015, AT&T forced Apple and other third-party retailers to remove the option to purchase AT&T phones with a two-year contract, leaving customers with AT&T Next or a full-priced smartphone as their only third-party purchase options.

Update: AT&T has confirmed its plans to stop offering two-year contracts in a statement given to Re/code.
"With $0 down for well-qualified customers, the ability to upgrade early and down-payment options available with even lower monthly installments, our customers are overwhelmingly choosing AT&T Next," AT&T told Re/code. "Starting January 8, AT&T Next will be the primary way to get a new smartphone at AT&T."

Top Rated Comments

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11 months ago
"Pricing simplification" just means "Pricing increase"
Rating: 56 Votes
11 months ago

I know full-priced phones aren't cheap, but contracts are so ****ing overpriced that they need to get removed eventually.

I've stayed on 2-yr contracts because they have been cheaper for me than buying the iPhone for full-price.

The iPhone costs $650 retail (plus tax).
I could always sell the iPhone for about $200 at the end of the 2 year contact.
Subsidy was $450.

So doing the math, I was always breaking even after 2 years. In other words I have been getting free iPhone upgrades for the last 6 years. Coupled with Unlimited data and it was a sweet deal.

If the 2 year contracts were soo overpriced, AT&T would be making a huge profit from it and would keep them. The fact that they are getting rid of them shows that they were actually too good a value for the consumer.
Rating: 44 Votes
11 months ago

I feel sorry for these people since they are way overpaying for their plan.

Huh? I'm on the unlimited plan and I'm NOT "way overpaying". How do you people come up with this stuff?
Rating: 24 Votes
11 months ago
I know a LOT of people that are still with AT&T on contract because they are still being grandfathered in to their unlimited data plans. I wonder if this is also going to result in the death of unlimited data.
Rating: 20 Votes
11 months ago

I feel sorry for these people since they are way overpaying for their plan.

Um no. You are wrong. I am on a grandfathered unlimited plan and I recently got a message from AT&T that I could save money by switching to AT&T NEXT. When I used their comparison tool I got the following:

So for $10 more per month I can have a data cap. No thank you.

Rating: 18 Votes
11 months ago
That's the last straw for me… I'm dropping AT&T after my current contract.
Rating: 17 Votes
11 months ago
It was only a matter of time. Good thing I took one last advantage of a subsidized phone after the iPhone 6S came out. I guess between paying full price, not getting the $25 Next discount, and raising the price of the unlimited data plans, that's how AT&T is going to try to get the rest of us off UDPs.

I feel sorry for these people since they are way overpaying for their plan.

Not if you use tons of data. I never have to worry about overages. Also, AT&T has been upgrading lots of these (even the 450 minute plans) to unlimited voice and text, so after all the discounts it winds up being slightly less than a 5GB shared data plan.
Rating: 15 Votes
11 months ago
Expect VZWs announcement any day now.
Rating: 14 Votes
11 months ago
I have contract phones, unlimited data with a FAN old plan.
No matter how I price it on the current shared data, my plan remains cheaper than any plan offered to date with them.
Rating: 13 Votes
11 months ago

I feel sorry for these people since they are way overpaying for their plan.

I pay $30/mo ($35 soon) for unlimited data and because of subsidies I haven't paid for an iPhone since the original. I have had every model on launch day. I've calculated the math over the years and compared it to all of AT&T's new plan options as they have rolled them out. With the amount of data I go through on average; roughly 15 GB/mo for the last few years, I have saved an incredible amount of money. Not to mention every other year when I received a subsidized phone I actually make a profit by selling my current one. Generally making enough to pay full price for next years model after again selling my current one...and still retaining a little profit.

TLDR; Unlimited plans and 2 year contracts=free phones and cheap date. I've done the math.
Rating: 12 Votes

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