AT&T Drops Early Smartphone Upgrade Policy

AT&T iPhone and other smartphone owners who like to upgrade before their two-year contract expires won't be getting the discounts they've come to expect now that the carrier has decided to fall in line with other cell service providers and drop early upgrade options. Until now, AT&T would typically give smartphone owners full subsidized pricing at 20 months when signing a new two-year contract instead of making them wait a full 24 months.

AT&T: No early upgrade prices for you!AT&T: No early upgrade prices for you!

The new policy went into effect on Sunday, June 9, and applies to all AT&T subscribers with contracts that expire on or after March 1, 2014, and upgrades are restricted to the same product category, meaning if you buy a smartphone your next upgrade has to be a smartphone as well.
Verizon also requires customers to complete their two-year contract before qualifying for full subsidized pricing, and T-Mobile has done away with subsidy pricing in favor of financing device costs as a line item on subscriber's monthly bills.
AT&T isn't offering any details as to why the policy change was made, but it's a pretty safe bet to assume the company wants to maximize its profits on contracts. Carriers recoup the cost of subsidized cell phone contracts over their two-year contracts, and giving customers an early upgrade option cuts into that cash return.
With less incentive for users to upgrade early, it'll be interesting to see if Verizon and AT&T increase profits or see a long-term hit from customers that choose to skip new phone models while waiting to be eligible for subsidy pricing.
[Thanks to Engadget for the heads up]