Joining the league of other wireless operators like T-Mobile and Verizon, AT&T is also putting an end to its long-going two –year phone contract scheme. From January 8, people will not be able to get a cellphone using this scheme.
Instead, AT&T is starting two new schemes as per which a person can buy the phone by paying the full price upfront or in installments over time. The decision will be applicable on all the phones even flip phones and non-smartphones with keyboards. But the scheme will remain open for business contracts.
Though the phones will not be available in the scheme, it is not clear for now if it will also be the same thing or wearables like the Samsung Gear S2 and tablets that are currently being sold with two-year contracts.
AT&T said that the change has been made with customer and industry trends. In June 2015, the company has stopped offering contracts for smartphones to customers through local dealers and partner retailers like Best Buy and Apple. But people who bought basic phones or purchased phones through AT&T stores were able to have a contract, but no more from January 8.
Even, Verizon has stopped using two-year contracts. Those who had these contracts could still keep them and get subsidized phones if they want, but that would not be the case with AT&T customers.
AT&T said, “Our customers are overwhelmingly choosing AT&T Next. Starting January 8, AT&T Next will be the primary way to get a new smartphone at AT&T. This does not apply to business customers under a qualified wireless service agreement”.
The change reflects an increasing trend by the industry to adopt new business models. Currently, wireless carriers generate revenue by selling data and services that run atop of the mobile Internet connections. One of the negative things of the contracts is the customers will have to face the full cost of their devices.
In other news MacWorld reported, AT&T has been scaling back the availability of two-year contracts for a while now. Since the summer, you could only get a new contract in an actual AT&T store, not partner retailers like the Apple Store, Best Buy, or the dearly departed Radio Shack.
Engadget received an internal document, including a small FAQ that explains that this new policy covers new and existing AT&T customers and even employees, and it applies to “basic” phones and “quick messaging devices” as well as smartphones.
In a statement provided to CNN, AT&T has announced that it will stop offering new contracts to consumers next week. It had been the final holdout among the four national wireless carriers. Verizon (VZ, Tech30) and Sprint (S) did away with contracts a few months ago, and T-Mobile (TMUS) killed off contracts in 2013.
Instead of signing a contract, AT&T customers buying new smartphones will have to sign up for an "AT&T Next" device payment plan, in which they pay off the cost of their phone over the course of time. AT&T will officially stop offering contracts on January 8.
According to Engadget.com, an internal document was sent to employees stating that new and existing customers will only be able to get new phones if the pay in installments over time or pay the full price upfront.
“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 spokesman Fletcher Cook said in an emailed statement to CNBC. “Starting January 8, AT&T Next will be the primary way to get a new smartphone at AT&T.”