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AT&T Phases Out Two-Year Phone Contracts In January

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January 8th marks the end of an era for AT&T as the company has decided to stop offering 2-year contracts for its wireless phone service to regular customers.

America’s number two phone company, which has been slowly phasing out contracts, will officially stop offering them to regular customers starting at the beginning of 2016. While businesses will still be able to use the service, individual customers only have two options: either buy their smartphone outright or rent their smartphone until they can trade it in for a new one in 1.5 to 2 years.

This rental plan, dubbed “Next” by AT&T, requires users to pay a fee for their phone, in addition to the monthly voice and data charges. For example, an iPhone S6, which costs $199 on the old two-year contract plan, has a fee of $22 per month plus phone usage charges. As The Verge reports, Next is now the best option for getting a smartphone on AT&T.

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.

Next, which AT&T says 30 percent of its customers use, not only affects smartphones. This seems to be the latest in a series of moves by U.S. cell phone service carriers to change how people use their cellular devices. T-Mobile stopped using contracts altogether, and Verizon has slowly moved away from subsidized contracts in the past few months, although the company still offers contracts. Earlier this year, AT&T stopped offering contracts through its partners and other third-party retailers.

The true cost of smartphones is being revealed by these changes. While smartphones originally hit the market heavily subsidized by contracts, as companies get rid of these incentives, customers are realizing the high price of smartphones.

Customers still on their 2 year contract will be able to continue on the plan until their next upgrade. Business customers will not be affected.

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