AT&T to stop offering two-year phone contracts on January 8, moving to up-front purchase of new phones or AT&T Next financing plans
AT&T to ditch most two-year phone contracts on January 8th — AT&T's long affair with the two-year contract seems to be coming to a close, Engadget has learned.
Context & Ripple Effects
The subsidized two-year contract has been collapsing across the US market all year: Verizon eliminated subsidized phones and contracts back in August, and Sprint committed to abandoning two-year contracts while pivoting to iPhone Forever leasing. Apple had already pulled its weight too — since mid-2015 the Apple Store sells AT&T iPhones exclusively through AT&T Next financing, cutting the carrier's own retail channel out of contract sales.
With this move AT&T becomes the last of the big carriers to formally end the model on January 8, leaving AT&T Next installments and up-front purchase as the only paths to a new phone. The significance is less the headline than the sequencing: every major US carrier has now converged on device-financing-plus-service-plan economics within roughly six months.
First-order effects
- Customers buying an AT&T phone from January 8 must either pay full price up front or enter an AT&T Next installment plan — the $199-on-contract flagship price disappears for new activations.
Second-order effects
- Sprint's leaked internal document shows it joining the other majors in killing contracts the same week, removing contract pricing as a competitive differentiator and shifting rivalry toward lease terms, installment pricing, and data-plan bundles like Verizon's tiered 1-12GB plans.
Third-order effects
- If the pattern holds, the phone itself becomes a separately financed purchase decoupled from service, making monthly service fees the primary comparison point across carriers and pushing device upgrades into a continuous leasing cycle rather than a two-year renewal event.
The trend: US wireless is completing its shift from bundled handset subsidies and two-year lock-ins to unbundled device financing, with all four major carriers converging on that structure within a single year.