AT&T Finally Ending Two-Year Contracts – Here’s Why Existing Customers And Businesses Won’t Be Happy

AT&T has confirmed that it will end the two-year contracts for cellular connections starting 2016. However, the company has added a few conditions that are sure to disappoint the company’s existing customers, both individual and corporate.

One of America’s leading telecom companies, AT&T confirmed that starting January 8, the company will no longer mandate a two-year contract when availing a cellular connection from the company, reported Engadget. AT&T is the last major carrier that was still insisting on the contracts. However, the company’s spokesman Fletcher Cook was quick to note that the move only applies to individual customers and not businesses, reported Fortune. Additionally, existing customers may have to shell out extra money to buy their phones outright or via installments over time.

While being free from the shackles of a two-year contract is certainly liberating, the way AT&T is doing it has concerned some of their customers. AT&T isn’t just doing away with two-year contracts for those who want to ditch them; they’re completely cutting them out of their sales model, reported iDigital Times. This basically means any existing customer will have to buy their phones from the company at retail price. Till date, these customers have been paying a very nominal charge to procure a phone from the company and then paying it off over the two-year contract period in small installments. When Verizon decided to pull the plug on two-year contracts, it did offer its existing customers a choice to keep the contracts if they so preferred.

Surprisingly, AT&T seems to have given a very short notice period of just over a week for all its customers. However, there is a breather for existing customers, who can opt for a monthly AT&T Next installment plan instead — which is still technically a contract, just a lease-to-own agreement for the phone instead of a commitment to two years of service, reports Macworld. For new customers interested in procuring a smartphone from AT&T, instead of signing a contract, they 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.

Current AT&T customers who are in the midst of their two-year contract will be “grandfathered” in until they are ready to receive a new a phone from the company. While business customers aren’t being extended the privilege of going contract free, they will still be able to sign up for contracts. The company confirmed that almost all its new customers were opting for AT&T Next plans. Hence, ending the requirement of two-year contracts was a “logical step”.

According to CNN, the “Next” plans tend to be cheaper than the pesky two-year contracts. Moreover, as an incentive to stick with AT&T, the company is extending additional perks like zero down payment and the ability to upgrade early, without having to wait for the contract period to end, which was cited as one of the core annoyances during the previous regime, added Cook,

“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. Starting January 8, AT&T Next will be the primary way to get a new smartphone at AT&T.”

T-Mobile, which has fashioned itself the “Un-Carrier,” was the first American telecom carrier to ditch the two-year contracts in 2013. Thereafter, Sprint and Verizon followed suit in August. While earlier, customers could pick up an expensive smartphone by paying a small token amount, companies now offer them the option to pay for smartphones in installments or in a single purchase, without the need to be shackled by the two-year contracts.

[Photo by Spencer Platt / Getty Images]