Officials of AT&T Mobility confirmed that the company will join national market rivals Verizon Wireless and T-Mobile today in moving exclusively to a no-contract subscribership model in which new residential customers would pay the full retail price of their devices in one lump sum or in installments in exchange for lower monthly rates for mobile broadband, voice and text services.
The announcement advances an industry trend which began three years ago when T-Mobile became the first major U.S. wireless carrier to abandon traditional contract rate plans, through which subsidized handsets would be marketed to subscribers at low or no cost in exchange for two-year contract commitments that carry hefty fees for early termination. Last August, Verizon Wireless followed that trend in scrapping its two-year contract plans for new customers. While AT&T has marketed a no-contract option, known as “AT&T Next,” alongside its traditional contract plans since mid-2013, an AT&T spokesman told reporters this week that, “starting January 8, AT&T Next will be the primary way to get a new smart phone at AT&T.” Among the top four U.S. wireless service providers, Sprint now stands alone in offering a two-year contract option alongside no-contract choices that include monthly installment payments on device ownership or wireless device leasing.
Noting that his company’s decision was driven, in part, by positive consumer response to no-contract plans, the AT&T spokesman explained that, “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.” AT&T further specified that its new no-contract policy “does not apply to business customers under a qualified wireless service agreement,” and that the company will continue to market two-year contracts for tablet PCs, mobile hotspots, devices connected to the “Internet of Things,” and other products that do not function as cell phones.