AT&T has announced that two year contracts will not be offered starting January 8, in an effort to simplify billing plans for customers. AT&T has termed the step as ‘pricing simplification effort’. Starting January 8, AT&T Next and no-commitment will be the only option for new smartphone purchase.
In an internal memo sent to employees, the company said that both existing and new customers needing a new phone will have to either pay full amount upfront or they will have to choose from monthly installment options. The news was first reported by Engadget.
The new conditions will be applicable on all individual customers of AT&T, new and existing. Large corporate customers may still have access to two-year contract.
Many customers found it easy to change their smartphone with two-year contracts as they were paying up the cost of the phone over a longer period. With installment option in case of iPhone 6S, customers will have to pay a monthly installment of $22 and cost of their voice and data plan additionally.
AT&T informed that more than 30 percent of its users were enrolled in AT&T Next plan. Customers also have the option to pay upfront for the phone cost and then pay their monthly bills for data and voice usage.
T-Mobile and Verizon have already stopped offering two-year contract option to customers. Sprint could announce a similar move shortly. T-Mobile was the first U.S. carrier to ditch two-year contracts. Earlier this year, AT&T also stopped offering two-year contract via third-party retailers.
As all major carriers stop offering two-year contracts, the move could have a small impact on sale of new smartphones. When customers have to pay upfront for new phone purchase, they might think twice before shifting their smartphone too often.