AT&T saying goodbye to subsidized phones and 2-year contracts

In an internal document distributed to AT&T employees this morning, the carrier revealed that it would be ending 2-year contracts beginning January 8th. That means that if you want a new phone on an AT&T plan, you’re going to have to pay for the device up front or set up a financing arrangement.

The memo reads as follows:

Effective January 8, 2016, AT&T will launch a pricing simplification effort for device purchase options and pricing plans across all channels.
Simplify Device Purchase Options
– AT&T Next and no-commitment (full-retail price) will become the only smartphone purchase options available for new and existing Consumer, standard Individual Responsibility Users (IRU).
– AT&T will introduce installment plans for Quick Messaging devices (QMD) and Basic devices. Installment plans and no-commitment (full-retail price) will become the only purchase option for new and existing Consumer, standard Individual Responsibility Users (IRU).

It looks like the carrier will be applying these changes across the board, affecting not only smartphones, but also traditional flip phones and “Quick Messaging Devices,” which are non-smartphones with full keyboards.

Seems like the age of the two year contract really is coming to a close. T-Mobile was the first to jump ship in a move that appealed to major carrier subscribers who felt like they had been locked into lackluster service. Verizon also began to back off two year contracts earlier this year, and AT&T has been leaning ever harder on their “Next” payment plan.

Engadget’s AT&T tipster also released an internally distributed FAQ if you’re curious for more details:

FAQs
Can existing customer upgrade from a two-year agreement upgrade to a new two-year agreement after January 8, 2016?
No. Existing customers can choose to purchase a new smartphone on AT&T Next or pay no-commitment price. Existing customers who want to purchase a new QMD or Basic phone can choose to purchase on an installment plan or pay no-commitment.

Will two-year agreements still be available for employees on EMO accounts?
No. Employees on EMO accounts wishing to add or upgrade their Smartphone, QMD, or Basic device can choose to purchase a new device on AT&T Next/installment plan or pay the no-commitment price.

Can a new customer purchase a smartphone, QMD, or Basic phone on a two year agreement after January 8, 2016?
No. New customers can choose to purchase a smartphone on AT&T Next or pay no-commitment. New customers who want to purchase a QMD or Basic phone can choose an installment plan or pay no commitment.

Can Custom IRU and CRU (with FAN) customers purchase a new smartphone/QMD/Basic device on a two year agreement?
Yes. CRU accounts on a FAN agreement may purchase a smartphone on a new two-year agreement from AT&T Retail and Authorized Retail.

What do you think of AT&T’s transition away from 2-year contracts? A savvy (if late to the game) business maneuver or a betrayal to users who rely on the subsidized device prices that contracts provide? Let us know in the comments below!

Next: Best AT&T Android phones (December 2015)