AT&T will stop offering 2-year contract subsidies for new smartphone purchases on Jan. 8

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in iPhone
U.S. carrier AT&T has made repeated efforts to eradicate two-year contract subsidies for new smartphone purchases, and that plan will become absolute in just a few weeks, a leak from the company has revealed.


AT&T leaked memo, via Engadget.


In an internal document obtained by Engadget, AT&T revealed that as of Jan. 8, it will only offer smartphone purchases through its AT&T Next installment plans, or no-commitment full retail pricing. The carrier has dubbed the changes a "pricing simplification effort."

The change is set to apply to all phones sold by AT&T, including iPhones, Android handsets, Windows Phone devices, and even barebones "feature" phones.

The change has been in the works for some time. As of last June, Apple's own online store ceased offering sales of AT&T iPhones with two-year service contracts.

Two-year iPhone contracts have typically required carriers to pay high subsidies, sometimes to the point of losing money on the hardware in the hope of recouping the cost through service fees. That's why carriers like AT&T have pushed consumers to upgrade programs that spread out the cost of a new device over a two-year period.

While customers who agree to a new two-year subsidized contract can obtain an iPhone 6s starting at $199, the full price of the handset is actually $649.

AT&T will also affect legacy plan customers in February, when grandfathered unlimited data plans will be increased by $5 per month. Unlimited data plans were initially used to lure in early smartphone buyers, but the popularity of data-hungry devices like the iPhone inspired carriers to transition to capped data plans and data sharing options.
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Comments

  • Reply 1 of 23
    U.S. carrier AT&T has made repeated efforts to eradicate two-year contract subsidies for new smartphone purchases, and that plan will become absolute in just a few weeks, a leak from the company has revealed.

    The bolded word should be "obsolete".

    pscooter63
  • Reply 2 of 23
    U.S. carrier AT&T has made repeated efforts to eradicate two-year contract subsidies for new smartphone purchases, and that plan will become absolute in just a few weeks, a leak from the company has revealed.

    The bolded word should be "obsolete".


    No, it makes sense as is.
    eriamjhnolamacguy
  • Reply 3 of 23
    My wife and I are both on our second "Next 12" plans with her iPhone 6S and my iPhone 6S+. We started last year when we bought our iPhone 6 and 6+ on Next 12. This year, AT&T simply sent us prepaid shipping labels and we returned the 6 and 6+ after 12 months of payments.

    The only thing better than this would seemingly be Apple's own deferred payment plan which includes Apple Care+. So we'll probably fully pay off our current phones come September or whenever the iPhone 7 comes out next year.

    This is the best possible arrangement: leasing great Apple phones and having access to the latest features of both hardware and software.

    My iPhone 6S+ is the best phone I've ever had!
  • Reply 4 of 23
    My wife and I are both on our second "Next 12" plans with her iPhone 6S and my iPhone 6S+. We started last year when we bought our iPhone 6 and 6+ on Next 12. This year, AT&T simply sent us prepaid shipping labels and we returned the 6 and 6+ after 12 months of payments.

    The only thing better than this would seemingly be Apple's own deferred payment plan which includes Apple Care+. So we'll probably fully pay off our current phones come September or whenever the iPhone 7 comes out next year.

    This is the best possible arrangement: leasing great Apple phones and having access to the latest features of both hardware and software.

    My iPhone 6S+ is the best phone I've ever had!
    Does AT&T or Apple run a credit check each time you upgrade?
    edited December 2015
  • Reply 5 of 23
    icoco3icoco3 Posts: 1,467member
    Blaster said:
    My wife and I are both on our second "Next 12" plans with her iPhone 6S and my iPhone 6S+. We started last year when we bought our iPhone 6 and 6+ on Next 12. This year, AT&T simply sent us prepaid shipping labels and we returned the 6 and 6+ after 12 months of payments.

    The only thing better than this would seemingly be Apple's own deferred payment plan which includes Apple Care+. So we'll probably fully pay off our current phones come September or whenever the iPhone 7 comes out next year.

    This is the best possible arrangement: leasing great Apple phones and having access to the latest features of both hardware and software.

    My iPhone 6S+ is the best phone I've ever had!
    Does AT&T or Apple run a credit check each time you upgrade?
    I was only credit checked when I first got on a regular plan years ago.  Now, as long as your bill is paid up to date, it is in and out for us at the ATT store.  Apple may be different.
  • Reply 6 of 23
    zoetmbzoetmb Posts: 2,580member
    This would be fine if they'd lower their rates to make up for the fact that you're not getting a subsidized phone.   But as far as I can tell, rates are trending up, not down.   I don't know how much AT&T pays Apple for the phones, but it's not the "full price".   If it were, then AT&T should be lowering the bills by up to $19 per month.    So I suppose based on their real wholesale cost, bills should come down at least $10 a month.   But I don't see that happening.   
    snova
  • Reply 7 of 23
    If that's true it's time for SPRINT to rack in as many accounts from AT&T by offering 2yr service contract phones for $1. I think Sprint will not do that, they are not in competition with AT&T.
  • Reply 8 of 23
    icoco3icoco3 Posts: 1,467member
    zoetmb said:
    This would be fine if they'd lower their rates to make up for the fact that you're not getting a subsidized phone.   But as far as I can tell, rates are trending up, not down.   I don't know how much AT&T pays Apple for the phones, but it's not the "full price".   If it were, then AT&T should be lowering the bills by up to $19 per month.    So I suppose based on their real wholesale cost, bills should come down at least $10 a month.   But I don't see that happening.   
    They did that nearly 2 years ago.  I speak from having a family share plan.  I pay $15/month for each of 5 phones. The data/unlimited calling/unlimited texting is a separate fee and I pay $120 for 30 gig of data for that part (got a special deal). If I get a new phone I have to add the subsidy fee to the bill for that phone, whatever the Next plan calls for.  Currently I do not pay any subsidy fees.

    If I went to a 2 year contract, I pay the $199/$299/etc and my fee from the month phone part goes from $15/month to $45/month.  It works out a bit more that the Next plan would be overall.

    For those not on a family plan, someone else will have to speak to that.
    edited December 2015
  • Reply 9 of 23
    zoetmb said:
    This would be fine if they'd lower their rates to make up for the fact that you're not getting a subsidized phone.   But as far as I can tell, rates are trending up, not down.   I don't know how much AT&T pays Apple for the phones, but it's not the "full price".   If it were, then AT&T should be lowering the bills by up to $19 per month.    So I suppose based on their real wholesale cost, bills should come down at least $10 a month.   But I don't see that happening.   
    That's exactly what AT&T does. They lower the cost of the service when you are on the installment plan. I went from 2 year plans to installment plan and my monthly charge is the same.
  • Reply 10 of 23
    So, will I get to keep my unlimited data plan, even if I have to switch to AT&T Next?   It's still worth the $5 a month increase, but I'm unclear as to whether I can do both, or if I have to buy the phone outright to keep my unlimited plan.   Anybody read the fine print yet?
  • Reply 11 of 23
    My Verizon bill went way down after my 2 year contract ran out.
    I'd prefer to buy my own unlocked iPhones outright and get better data plan deal. After a year or two just sell the old phone on Gazelle or Craigslist 
  • Reply 12 of 23
    icoco3icoco3 Posts: 1,467member
    So, will I get to keep my unlimited data plan, even if I have to switch to AT&T Next?   It's still worth the $5 a month increase, but I'm unclear as to whether I can do both, or if I have to buy the phone outright to keep my unlimited plan.   Anybody read the fine print yet?
    Family share or the Next plan as an individual will cancel your unlimited.  All you can do now is buy them outright if you want to keep your unlimited plan.
    edited December 2015
  • Reply 13 of 23
    icoco3 said:
    So, will I get to keep my unlimited data plan, even if I have to switch to AT&T Next?   It's still worth the $5 a month increase, but I'm unclear as to whether I can do both, or if I have to buy the phone outright to keep my unlimited plan.   Anybody read the fine print yet?
    Family share or the Next plan as an individual will cancel your unlimited.  All you can do now is buy them outright if you want to keep your unlimited plan

    Or he can keep his unlimited plan and finance/ lease the phone directly from apple and have the benefit of having AppleCare included.
    edited December 2015
  • Reply 14 of 23
    mike1mike1 Posts: 2,599member
    Bummer. 2-year plan worked best for us. I upgraded every other year and my monthly payments didn't rise.
  • Reply 15 of 23
    Personally I think this move may hurt them a little bit.  When the new phones like Samsung comes out, Samsung usually gives you a $200 insentive off the price that will be honored at Best Buy and then Best Buy offers a $200-$250 gift card which can be applied to the cost of the phone.  That alone means I will buy my phone cheaper at Best Buy and never pay another activation fee again..  I will end up paying $300-$400 for the phone anyway....works for me.  Besides, I heard the prices will be going down due to al the high feature Chinese phones that have same features for less money.  Too much competition.
    newtonrj
  • Reply 16 of 23
    foggyhillfoggyhill Posts: 4,767member
    Rangela66 said:
    Personally I think this move may hurt them a little bit.  When the new phones like Samsung comes out, Samsung usually gives you a $200 insentive off the price that will be honored at Best Buy and then Best Buy offers a $200-$250 gift card which can be applied to the cost of the phone.  That alone means I will buy my phone cheaper at Best Buy and never pay another activation fee again..  I will end up paying $300-$400 for the phone anyway....works for me.  Besides, I heard the prices will be going down due to al the high feature Chinese phones that have same features for less money.  Too much competition.
    Huh? Where have you "heard" this. Samsung's phone go down because they are a POS phone...
    Their profit on each phone is now in a total freefall, if you count marketing/promotion, I wouldn't be surprised if they're barely scrapping by.
  • Reply 17 of 23
    Rangela66 said:
    Personally I think this move may hurt them a little bit.  When the new phones like Samsung comes out, Samsung usually gives you a $200 insentive off the price that will be honored at Best Buy and then Best Buy offers a $200-$250 gift card which can be applied to the cost of the phone.  That alone means I will buy my phone cheaper at Best Buy and never pay another activation fee again..  I will end up paying $300-$400 for the phone anyway....works for me.  Besides, I heard the prices will be going down due to al the high feature Chinese phones that have same features for less money.  Too much competition.
    Although I'm not confident folks will move from iOS ecosystem to Android based on price, I do feel confident this will backfire for the carriers.  When they stop subsidising handsets, people go shopping for that handset.  Apple keeps the price pretty consistent across the retail spectrum but there will be price leakage as in full-price with a gift card, Apple's leasing, Gazelle brand-used, etc.  These retailers will gain the direct customer relationship and the carriers will fall victim to dumb-pipe syndrome where the only differences are price and coverage.
  • Reply 18 of 23
    focherfocher Posts: 677member
    Yet, the phone AT&T will sell you is still locked to their network. It's now obvious you should only buy an iPhone direct;y from Apple. 
  • Reply 19 of 23
    Let me tell you where they can place their installment plan, I'm not buying a full priced phone through them, time to explore other options.
  • Reply 20 of 23
    Just wondering the price comparison. My wife and I have a 5s with 15gb shared data and with nj state discount its 145 a month with insurance my two years ran up yesterday. We both want 64gb 6s models. 
    edited January 2016
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