AT&T Killing Off Two-year Phone Contracts Jan 8

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Just like the Emperor wiping away the last vestiges of the Republic, AT&T is doing away with its remaining two-year contract options for cell phones. The company has been making a push away from two-year contracts and subsidized device prices for smartphones, and come 2016 that'll apply to the rest of its phone lineup and text messaging devices, too.

AT&T dropping new two-year contracts for all phones in JanuaryAT&T dropping new two-year contracts for all phones in January

The big change is supposed to go into effect on January 8, according to internal documents obtained by Engadget. Along with the end of two-year lock-in contracts, customers won't have an option for subsidized phone prices and will instead have to pay full price up front, or spread out their device payments as installments.

AT&T's internal FAQ says existing customers with a current two-year contract won't be able to upgrade to a new two-year agreement after January 8, which means the next pretty much every customer wants a new mobile phone they'll be moving to the AT&T Next plan.

Killing off two-year plans may make phone purchases seem more expensive up front, but can actually reduce the overall price customers pay to get their new smartphone. Two-year plans took into account the price of the phone, which was typically paid off after about 16 or so months. Cell services providers didn't lower monthly bills after subscribers paid off their phones, which meant they were making monthly payments when they didn't need to.

Spreading out the full price of a new phone as installment payments works out better because subscribers are essentially getting an interest-free loan. Once they pay off the full phone's cost, their monthly bill goes down.

AT&T hasn't officially announced the contract policy change, but it's a safe bet we'll see that in the next few days. If, for some reason, you really want a two-year phone contract from AT&T, hop to it. You have only a few days before that option is gone forever.

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AT&T has been phasing out two-year contracts for some time, so this new change doesn't come as a big surprise. Overall, it's a good thing because customers won't be overpaying for their mobile phones any more.

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I’ve done the math several times and my 2006 AT&T phone plan with 2 yr iPhone contracts still works out to be about $10/mo cheaper. I get less data and I’ve disabled texting entirely, but otherwise the plan is essentially the same. In fact, last month they took away my rollover minutes and just gave me unlimited talk, which makes no difference to me because I haven’t run out of minutes ever. Even considering that my wife keeps an iPhone for 4 years, and even calculating 3 years for me (though I go 2 years), the contract plan is still cheaper. It doesn’t make sense given everything that TMO keeps saying, but I’ve done the math multiple times and its true.

Part of the issue is that I have a $15/mo data plan for 200 MB/mo and my wife has $20/mo for 300 MB/mo. The newer plans all have 2 GB data. Another part of the issue is that the AT&T Next plans have a lower base price, but the 15% discount (or is it 18%?) I get through my employer only applies to this base price, so I get a bigger discount with my supposedly more expensive plan. The AT&T Next plans moves the bulk of the price over to the data surcharge.

So if they’ve completely changed everything, leaving me no option of keeping my current plan when I upgrade my phone come this fall, there’s no reason for me to stick with AT&T either. Everyone gives unlimited minutes these days, so the AT&T-to-AT&T “mobile to mobile” free calls that were a sticking point in 2006 no longer apply. Good job AT&T, you finally let me leave you after all these years of suffering bad service.

(OTOH, I already know where I get good coverage and were it is bad with AT&T. Switching to something else I’d have to learn new dead zones and hope none of them are in less convenient places. So there’s the evil I know versus the evil I don’t know.)

Paul Goodwin

My wife checked the pricing, and for the 4 phones we have on their service, to get the same plans we had, it’s $25/phone more than the two year plans. I’ve really never had any problems with their service, but $100/month more? c’Mon Man. I saw an ad that said verizon will pay $650 for you to switch over. I haven’t checked their plans yet though.

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