Farewell, phone subsidies. AT&T is killing off two-year contracts beginning Jan. 8.
Engadget, which first reported the news, got its hands on an internal memo sent to employees this morning outlining the change. After the first week of January, new and existing customers in need of a new phone will either have to pay the full price of the device upfront, or in monthly installments with an AT&T Next plan.
In its memo, AT&T calls the move a "pricing simplification effort." In a statement to PCMag, the carrier said most of its customers already opt for Next plans, which divide the price of a smartphone into monthly installment payments.
"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," the company said. "Starting January 8, AT&T Next will be the primary way to get a new smartphone at AT&T."
The change does not apply to business customers under a qualified wireless service agreement, AT&T added. According to Engadget, it will affect all AT&T phones—even flip phones and smartphones with keyboards—but it's unclear at this time whether it will apply to wearables and tablets.
The move isn't all that surprising, given that AT&T in June stopped offering contracts for smartphones sold through third parties like Best Buy and Apple. In addition, the nation's top wireless carrier—Verizon—ditched two-year contracts in August. T-Mobile got things started in 2013, while Sprint reportedly has plans to do the same soon.
With AT&T Next, you can opt to pay for your device in 30, 24, or 20 monthly installments and upgrade after you pay 24, 18, or 12 installments, respectively. Or, if you pay 30 percent of the device upfront, the remainder is divided into 28 installments and you can upgrade after 12.
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