Become a MacRumors Supporter for $25/year with no ads, private forums, and more!

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

MacRumors

macrumors bot
Original poster
Apr 12, 2001
50,441
11,827



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."

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

macintologist

macrumors 6502
May 3, 2004
473
570
You're better off buying a used unlocked iPhone and getting service through a low-cost MVNO. I pay $27/mo including taxes for my iPhone plan through Consumer Cellular, and my iPhone is a gently used iPhone 5S which I paid half the price than getting a brand new one.
 
Comment

KPOM

macrumors P6
Oct 23, 2010
15,784
4,328
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.
 
Comment

jclo

Editor
Staff member
Dec 7, 2012
1,675
3,356
California
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.

I have an unlimited data plan but I've just bought my phone outright for the last two years. So unlimited data customers will still be able to keep their data plans even with two-year contracts ending.
 
Comment

Waxhead138

macrumors 6502
May 18, 2012
439
509
I know full-priced phones aren't cheap, but contracts are so ****ing overpriced that they need to get removed eventually.

Yeah....in general you're correct. Catch is for say a family of four to all have an Iphone as an example, that can get expensive on the monthly lease option, and god forbid you want more than 16gb. Single line? Sure, no brainer, lease it.

IMO its easier to deal with subsidies on multiple line accounts (3+) but to each their own on that. I know I'm pretty much in the minority on that way of thinking now.

*Edit - Easier to deal with due to having some flexibility.
 
Comment

ToroidalZeus

macrumors 68020
Dec 8, 2009
2,300
871
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.
 
Comment

H2SO4

Suspended
Nov 4, 2008
4,703
5,773
Personally I don’t see the difference. A two year contract is the same as an AT&T pricing plan if of a different length. This is just to confuse customers.
Whether I’m roped in for two years by the carriers, the banks or my next door neighbour - it’s the same. The only difference is that the ones that seemingly have more flexibilty are the ones that snare you for longer.
 
  • Like
Reactions: tooloud10
Comment

macintologist

macrumors 6502
May 3, 2004
473
570
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.



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.
Let me ask you something, how much do you pay for your unlimited data plan taxes included per month?
 
Comment

ToroidalZeus

macrumors 68020
Dec 8, 2009
2,300
871
Personally I don’t see the difference. A two year contract is the same as an AT&T pricing plan if of a different length. This is just to confuse customers.
Whether I’m roped in for two years by the carriers, the banks or my next door neighbour - it’s the same. The only difference is that the ones that seemingly have more flexibilty are the ones that snare you for longer.
They are not the same. The $400 subsidy offsets the value of deprecation on the iPhone. So you pay 200 (+ tax upfront) and can then sell it for 200 after 2 years to break even.

Since most people don't switch carriers day to day, being locked in a contract makes no practical different.
 
Comment

Popeye206

macrumors 68040
Sep 6, 2007
3,148
836
NE PA USA
Call it what you want, but it works out the same as before. This is just making the phone separate from the phone plan and probably reducing the subsidies for the Carriers.

If I understand this right, it actually may hurt the lower end phones as they won't be able to bury the true cost of the "free" phones.
 
Comment

Boatboy24

macrumors 65816
Nov 4, 2011
1,040
1,073
1 Infinite Loop
So this, on top of the unlimited data plan price increase. :cool: I'll have a 'get out of jail free' card for my ETF after the price increase. Looks like I may be taking advantage of it
 
  • Like
Reactions: taxiapple
Comment

ToroidalZeus

macrumors 68020
Dec 8, 2009
2,300
871
Let me ask you something, how much do you pay for your unlimited data plan taxes included per month?

I pay 260 a month for 5 lines. I get 2.5 free iPhones a year. (2 one year, 3 next year) So a value of value of 135 a month. Net cost is then $125.
 
Comment
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.