AT&T is planning to wipe out its two-year contract option, offering a pricing simplification effort to its valued customers and lure another batch of clients.
Beginning on Jan. 8, AT&T will end the device subsidies and two-year contracts, according to MacRumors. This plan applies to all of AT&T's phones. Once 2016 rolls around, even flip phones and non-smartphones with keyboards must be bought outright or with an installment plan.
The American telecommunications company will allow new and existing AT&T customers will only be able to purchase a smartphone at full price or with an AT&T Next payment plan going forward.
In addition, detailed information on how AT&T will handle corporate accounts and non-smartphone devices like tablets and wearables will become available after an official announcement from AT&T, but it appears certain corporate users will be able to continue making two-year contract purchases.
Spreading out the full price of a new phone as installment payments works out better because subscribers are essentially getting an interest-free loan. Once they pay off the full phone's cost, their monthly bill goes down.
The shift away from two-year contracts and iPhone subsidies began with T-Mobile in 2013, when the company introduced its Un-carrier payment plans uncoupling device costs from plan costs. Verizon followed suit in August of 2015, debuting new smartphone rate plans and eliminating its subsidized two-year contract option for new users.
While the shift changes the way consumers buy their phones and cellphone service, overall pricing has remained roughly similar, Re/code reported. The most interesting thing will be how the move affects the length of time consumers keep their phones.