Say sayonara to AT&T's two-year phone plan
It was the cornerstone of phone plans for decades. Now AT&T is pushing a new type of plan, where you either pay off or rent your phone. Or you can pay the full price up front.
Out with the old, in with the new -- phone plan, that is.
Over. Finito. Terminado. However you say it, AT&T's two-year plan will be gone next year.
Starting January 8, the nation's second-largest wireless carrier is calling it quits on the standard contract plan, which charged customers a set price for the cost of a phone and two years of wireless service.
In its place will be Next, a program that requires customers to rent their smartphones by way of a monthly fee. After a minimum number of payments, customers trade in the phone for a new one. Or they can pay off the phone in 18 months to 24 months. Only business customers will be able to choose the old-style two-year plan.
The result is that the typical price tag for an entry-level new phone, like $199 for the iPhone 6S, disappears. In its place is a monthly charge -- nearly $22 in the iPhone's case. In addition, customers also pay for the cost of voice and data wireless service.
"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," said a spokesman for the Dallas-based company. Earlier this year, AT&T said more than 30 percent of its users were on the Next program.
Engadget was the first to report AT&T's plans.
The move marks a significant shift in how consumers pay for phone service. For decades, phone companies have obscured the cost of phones by charging a subsidized fee for the device. But as competitors like T-Mobile have moved to monthly installment plans while eliminating contracts and subsidies, others like AT&T have responded with their own takes. Verizon began ditching subsidized contracts in August. Even Apple started its own upgrade program in September.
The shift has raised people's awareness of what a phone actually costs, and it's also changed the dynamic of how we buy phones. If a customer wants to own a phone, they have to buy it outright. Otherwise, they rent it and ultimately turn it in.
Those who prefer not to use AT&T Next can still pay the full price of a phone and then pay a separate fee for wireless service. And those still on an old plan can stick with it until they choose to upgrade their device.