AT&T is doing away with 2-year contracts

AT&T is doing away with 2-year contracts

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NEW YORK (CNNMoney) — Two-year contracts appear to have finally met their demise.

AT&T has announced that it will stop offering new contracts to consumers next week. It had been the final holdout among the four national wireless carriers. Verizon and Sprint did away with contracts a few months ago, and T-Mobile killed off contracts in 2013.

Instead of signing a contract, AT&T customers buying new smartphones will have to sign up for an "AT&T Next" device payment plan, in which they pay off the cost of their phone over the course of time. AT&T will officially stop offering contracts on January 8.

AT&T customers currently under contract will be grandfathered in — until they want to buy a new phone from the company. Business customers will still be able to sign up for contracts.

The company said in a statement that the vast majority of its customers were signing up for AT&T Next plans, so ending contracts was a logical step.

The Next plans tend to be cheaper than the two-year contracts, and they offer customers perks such as no down payment and the ability to upgrade early.

Two-year contracts have become virtually extinct, as cell phone companies look to end expensive phone subsidies.

That's not just a good deal for the carriers — it's good news for consumers too. Ending the two-year deals adds transparency to what used to be an opaque process. It was unclear how much you were paying each month for your phone and how much you were paying for your service.

The new no-contract plans let you comparison-shop more easily, and you're no longer locked into a long-term deal.

As a result, carriers have recently tried to outdo one another on deals.

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Science & Tech
David Goldman


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