AT&T to Eliminate Two-Year Smartphone Contracts

AT&T (T) will soon eliminate two-year contracts for its smartphone subscribers. 

The wireless giant last week notified employees that new and existing customers will only be able to get new smartphones by paying the full price upfront or in installments over time, according to Engadget.

AT&T’s move to eliminate two-year smartphone contracts will take place Friday. 

“Our customers are overwhelmingly choosing AT&T Next,” AT&T told The Washington Post. “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.”

So what does the news mean for AT&T and its customers?

For AT&T, the move could help the wireless provider compete with T-Mobile (TMOB), Verizon (VZ) and other wireless companies that have already done away with two-year agreements. 

And for subscribers, AT&T is eliminating cell phone subsidies and enabling customers to pay for their devices either outright in full or on a monthly installment plan under its AT&T Next program.

AT&T announced AT&T Next in July 2013, noting the program would enable consumers to “get a new AT&T smartphone or tablet every year with no down payment, no activation fee, no upgrade fee and no financing fees.”

In addition, AT&T stopped offering contracts for smartphones to customers through its local dealers and partner retailers last June. 

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