AT&T To End Two-Year Contracts Starting 2016 As Carriers Abandon Subsidies

Wave goodbye to two-year mobile contracts with AT&T. The wireless carrier will soon phase out offers under which consumers can purchase, or upgrade to, a new smartphone under a subsidized agreement, according to internal company memos obtained by Engadget.

This policy is set to take effect Jan. 8.

That leaves customers with two options when purchasing a phone from AT&T — buying it at full price or jumping onto one of the AT&T Next device installment plans. This isn’t just for smartphones but for all phones sold by the wireless carrier. This also applies to AT&T employees with a plan with the company. However, the carrier may keep the contract option from some corporate accounts.

It’s unknown if this policy change will apply to connected smartwatches sold by AT&T, such as the Samsung Gear S2 and Gear S, which require a two-year contract to purchase from the carrier. AT&T in June started its move away from two-year contracts by limiting the subsidized payment option to customers who purchased their device from AT&T directly.

The move away from the subsidized contract model has been a trend in the U.S. wireless industry, with T-Mobile eliminating them in 2013. In August, Verizon phased out the contracts for new customers. Sprint also planned to ditch the contract model by the end of 2015, but so far the service option is still available to customers, according to Fierce Wireless.

It’s not only wireless carriers that have moved to an installment model. With the launch of the iPhone 6S in September, Apple unveiled its iPhone upgrade program, which allows customers to pay monthly installments for their device and upgrade to the latest iPhone on a yearly basis.

AT&T did not respond to a request for comment at time of publication.