This will change your relationship with AT&T a bit.
Starting on January 8, 2016, AT&T will 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.
The leaked document states that the new rules apply to all of the phones AT&T sells, including smartphones, which will be paid for with new installment plans. Corporate users are said to be able to continue making two-year contract purchases, although it looks like this will change for the consumer market.
In an example of the changing marketplace, wireless carrier T-Mobile began shifting away from two-year contracts and iPhone subsidies 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 taken steps towards this business model. 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.
Stay tuned for additional details as they become available.