AT&T is terminating its two-year plan beginning from January 8. The country’s second-biggest wireless carrier is stopping its standard contract plan in which customers had to pay a fixed price for obtaining a phone as wells as couple of years of wireless service.
Substituting the earlier plan is a program known as Next in which users rent their smartphones by paying a monthly fee. After a certain number of monthly payments, users can trade in the smartphone for a new one. Alternatively they can own the phone by making monthly payments in 18-24 months. The old type two-year plan will be restricted to business customers.
Hence AT&T customers cannot purchase an entry-level new smartphone outright. They have to pay a monthly charge now. Also they have to shell out fees for voice as well as data wireless service.
The change has both advantages and disadvantages. Customers need not enter into contracts. They exercise more control on the service as they have the option to get the devices faster if they want. They can switch from AT&T to another company if they are not satisfied by AT&T’s services. The change is not good for users who obtained new phones at a onetime price rather than having a monthly payment program.
AT&T first terminated 2-year contracts with its 3rd party stores last sense. So it is only logical that its official stores implement the same.
An AT&T spokesman said that many of its customers were opting for its Next program. Reasons for such a step were no charges applicable for qualified users, opportunity to upgrade earlier and down payment choices existing, with low monthly installments. Previously in this year, AT&T reported that 30% of its customers had adopted the Next program.
The 2-year contracts will remain applicable for tablets, Internet of Things (IoT) devices, mobile hotspots and devices. They will still be applicable for customer IRU accounts as well as CRU accounts which are classified as business/corporate accounts.
AT&T’s move to get rid of two-year contracts really isn’t unexpected, given that the rest of the wireless industry has done so, shifting on to installment plans, where the total price of the smartphone is split into monthly fees on top of a smartphone plan.
T-Mobile Us Inc (NYSE:PCS) was the first carrier in the wireless industry to ditch contracts over two years ago. Verizon Communications Inc. (NYSE:VZ) and Sprint Corp (NYSE:S) did the same this year, and now AT&T is finally doing it.