Rumor: AT&T will end two-year contracts at the end of May

For years, carriers in the United States have functioned under the same business model – offer consumers a subsidized smartphone when they sign up for a two-year contract. In fact, ever since mobile handsets have been around, this model has gone largely unchanged. T-Mobile announced a few years ago that the company was getting rid of the two-year contract standard, and it’s definitely shaken up the wireless industry ever since. Up until now T-Mobile has been the only major carrier to axe two-year contracts and exclusively offer mobile payment plans, but according to sources familiar with the matter, that may change sometime soon.

AT&T, the second largest carrier in the U.S., will end two-year contracts at the end of May, our sources tell us. AT&T is using this new business model under the codename “Project Alice”, and when the end of May rolls around, only the carrier’s Next program will be available to consumers.

Though we have confidence in this information, there’s always a chance that unforeseen issues will change the plan, so be sure not to treat this rumor as official.

As of right now, credit checks are run for any current customer who wants to switch from the standard two-year contract to the Next program. If the customer’s credit check gets declined, they’re reverted back to a two-year contract. So given that signing up for Next is somewhat difficult for consumers already, we still have no details as to how credit checks will be altered when Project Alice comes into fruition.

Our sources also tell us that AT&T still has no plans to offer unlimited data packages to its customers.

Since T-Mobile stopped offering two-year contracts, multiple other carriers have introduced alternatives to help get more consumers on board. First, T-Mobile unveiled the JUMP! program, allowing folks to upgrade their devices early as long as they pay a few extra dollars monthly for a certain amount of time. Since then, Verizon has introduced it’s Edge program and even Sprint has begun offering more leasing options. Most of these early upgrade programs generally offer up the same benefits, and apparently AT&T has confidence that the Next program will bring the company as much profit as two-year contracts.

Recently, T-Mobile’s John Legere unofficially announced that the Un-carrier has surpassed Sprint in terms of overall customers, making them the third largest carrier in the United States. While there’s still a huge gap between AT&T and T-Mobile, it’s interesting to see AT&T adopting a similar business model to one of it’s competitors.

We’ll be sure to update you when we hear more about AT&T’s Project Alice. If this new plan turns out to be similar in pricing and benefits to T-Mobile’s no-contract offerings, would you be interested? Be sure to let us know your thoughts in the comments below.