AT&T goes no-contract on cell phones

AT&T has joined the rest of the cell carriers according to our friends at Engadget. They were the last major carrier to rely on the old model of free equipment with a two-year contract, and even though they started phasing that out about 18 months ago, it looks like the final nail is in the coffin now. AT&T will no longer be accepting new two-year contracts.

While the allure of the free phone was always popular, two-year contracts really stopped suiting many users years ago. The free phone was always subsidized by higher prices and for people who just wanted the most basic model available, it was actually a bad deal. Those contracts were based on mid-priced models and if you were still rocking that flip phone, you were overpaying.

Low-end customers were certainly getting ripped off by contracts but high-end customers were the ones who really complained. Whether it was driven by a desire to have the latest and greatest or just the fact that you dropped your last phone one too many times, many people started changing phones every year or even faster. Being stuck into a two-year contract became a real problem for these folks

Just like other carriers, AT&T now offers two simple options for phones. All contracts will be month-to-month but if you don’t want to pay upfront for a phone you can enter into an installment plan. In most cases you can trade up to a new installment plan in as little as 12 months, but in that case you give the old phone back to AT&T. Your other option is to ride the plan out for the full 24 months and own the phone outright. Either way you can change out your phone easily and you’ll often get a discount on your bill.

The other thing you can do much more easily now is activate a phone you already own. More and more people are selling old phones through sources like eBay and Gazelle and this is a good way for people to get almost-new features without paying full price. AT&T now makes it easier to come in with a used phone and activate it so that you can change phones as often as you like.

This move will also help AT&T from raising its rates uncontrollably as newer phones become more and more expensive. There was a time when most people were happy with a generically-sourced phone but today it’s likely that even average folks will walk in wanting that top-of-the-line Apple or Samsung device. Unlike more generic phones which can be found for under $50 in quantities, iPhones and Galaxies fetch high price premiums and it’s hard to pass those costs along.

If you’re a dumbphone user or just not that picky, there are plenty of places to get a refurbished slightly older device (including AT&T itself.) Your out-of-pocket expenditure will be higher since the phone won’t be free, but if you don’t like it, you can probably sell the phone for about what you paid for it. That’s a real benefit.

One last thing: it’s worth noting that the rest of the world has been conducting cell phone business like this for years. It’s just been in the highly-competitive US market where we saw this “free phone” approach. Of course, in other countries, there is only one cell technology so that it’s possible to bring a phone to any provider and activate it. With the next-generation of LTE technology hopefully we’ll see that here in the US as well.