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December 30, 2015

AT&T to phase out two-year subsidies for smartphone customers

Carrier follows shift adopted by competitors T-Mobile, Verizon and Sprint

Smartphone customers will soon be out of options to subsidize the purchase of their new phone through a two-year contract with after AT&T announced it will follow a trend started by T-Mobile in 2013 and later replicated by Sprint and Verizon.

According to Re/Code, AT&T will start offering a new plan January 8, called AT&T next, that will require the purchase of smartphones either upfront or in monthly installments.

“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,” AT&T told Re/code. “Starting January 8, AT&T Next will be the primary way to get a new smartphone at AT&T.”

Moving forward, two-year contracts will only be available to certain business customers will be able to get discounted pricing as part of their agreement.

AT&T had shown signs of moving in this direction earlier this year when it stopped offering contracts through third-party vendors and only allowed customers to receive subsidies through its own stores and website.

Under the new plan, customers are implicitly encouraged to keep their phones for longer periods of time, as their monthly bills decrease after the phone has been fully paid off.