Published reports indicate AT&T is set to ditch 2-year contracts beginning Jan. 8
AT&T Mobility looks set to join rivals Verizon Wireless and T-Mobile US in doing away with device subsidies tied to service contracts beginning Jan. 8.
Published reports indicate AT&T Mobility is set to launch new rate plans that will no longer provide new or existing customers with the ability to purchase a device upfront at a reduced price in exchange for signing a contract. The move looks set to impact all traditional device types.
Instead, AT&T Mobility will rely exclusively on its Next payment plans or customers will be able to pay full retail price for the device of choice. In exchange, customers will have access to lower monthly access fees to the carrier’s rate plans.
Verizon Wireless in August announced plans to ditch contracts as part of a revamping of its rate plans that included lower monthly service fees in exchange for customers paying full price for their mobile devices. The carrier continues to allow legacy customers that were previously on contract deals to maintain access to the option, but requires new lines of service to pay full price either up front or via monthly payments for their device.
Analysts had said they expect device-financing activity to provide at least a $2 billion boost to Verizon’s earnings before interest, taxes, depreciation and amortization in 2016, though some also note the carrier will still be on the hook for more than $400 million in device subsidies that will dilute the overall EBITDA benefit.
T-Mobile US was the first nationwide operator to move down the road of ditching device subsidies, launching full-price requirements with its Simple Choice rate plans in 2013. AT&T Mobility followed the move later that year with its Next program that allowed customers the option to make monthly payments on their device in exchange for lower access charges for service. However, AT&T Mobility maintained its two-year contract option as well.
Sprint continues to offer the broadest range of options, allowing customers to make monthly payments towards owning a device, leasing a device or continuing to offer two-year contracts. The carrier is rumored to be looking at doing away with the contract offer at some point this year.
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