Sayonara, subsidies: AT&T ends two-year phone contracts

It's another nail in the coffin of subsidized phone prices.

AT&T logo on Boston store
Nick Barber

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Subsidies are over at AT&T. Starting January 8, the carrier will stop offering two-year contracts on new phones, reports Engadget. That gives you just over a week to sign a new plan, if you are adamantly opposed to paying for a device up front or signing a monthly AT&T Next installment plan instead—which is still technically a contract, just a lease-to-own agreement for the phone instead of a commitment to two years of service.

AT&T has been scaling back the availability of two-year contracts for a while now. Since the summer, you could only get a new contract in an actual AT&T store, not partner retailers like the Apple Store, Best Buy, or the dearly departed Radio Shack.

Engadget received an internal document, including a small FAQ that explains that this new policy covers new and existing AT&T customers and even employees, and it applies to “basic” phones and “quick messaging devices” as well as smartphones.

Service contracts are an endangered species in the mobile world, with T-Mobile and Verizon having ditched two-year agreements that came with subsidized phones, instead requiring customers to pay outright for devices or lease them, and pay for an individual or family service plan separately.

Sprint still lets customers sign two-year agreements in exchange for subsidized phones, but who knows how long that will last. For example, if you were buying a new 16GB iPhone 6s Plus directly from Sprint today, you could choose the 22-month “iPhone Forever” lease for $19/month, the 24-month “Easy Pay” installment of $31.25 (after which you own the phone), sign a 2-year service contract and get the phone for $300, or just pay $750 for the phone.

The impact on you. The slow death of cell phone contracts is certainly convenient in some situations. If you have a family plan, for example, you don’t have to wait for everyone to be out of contract before moving the whole gang to a new carrier. But it also adds a layer of complexity to shopping for phones and service—subsidized prices were almost always the same from carrier to carrier, and now you have to compare both the monthly installment for the phone(s) as well as the amount and price of data, texts, and talk minutes. And the best deals come and go quickly, making when you buy your new phone more important than ever, at least if you’re searching for a deal.

This story, "Sayonara, subsidies: AT&T ends two-year phone contracts" was originally published by Macworld.

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