The way you're paying for your cellphone is changing. With Apple rolling out a new iPhone every year now, and its competitors like Samsung doing the same, the days of locking yourself into two-contracts with cellphone providers seem archaic.
Over the past year or so, T-Mobile, Sprint and Verizon ditched their two-year requirements. In those old deals, the cost of your phone was essentially subsidized when you committed to sticking with that one company for two years.
Now, T-Mobile, Sprint, Verizon and other cellphone providers charge you for your smartphone and, in theory, lower your monthly bill. That certainly seems to be the case with T-Mobile, which is offering loads of free stuff these days.
Now, AT&T, which acquired DirecTV for nearly $49 billion earlier this year, is dropping its two-year contracts, according to an internal memo that's been spreading around the Internet. (See photo on the next page.)
In that letter, AT&T explains it's Simplify Device Purchase Options in two ways: First, "AT&T Next and no-commitment (full-retail price) will become the only smartphone purchase options available for new and existing Consumer, standard Individual Responsibility Users (IRU)."
Second, AT&T says: "AT&T will introduce installment plans for Quick-Messaging devices (QMD) and Basic devices." In other words, you'll either pay outright for your new phone, or you can pay for it in monthly installments.
The changes take place next week, on January 8. AT&T's move isn't a complete shock.
In addition to its competitors dropping two-year contracts, AT&T stopped offering them over the summer at retail stores like Best Buy. These days, to get a two-year contract with AT&T, you have to go to an AT&T store.
Here's AT&T's internal memo: