AT&T will stop offering 2-year contract subsidies for new smartphone purchases on Jan. 8
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.
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.
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.
Comments
The bolded word should be "obsolete".
No, it makes sense as is.
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!
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.
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
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.