AT&T Letting Customers Out Of Contract If They Switch To AT&T Next

AT&T continues its push to move customers away from standard two-year plans (that include subsidized device prices) and toward plans where the customer owns pays full price for her phone, but gets a discount on her monthly data rate. Yesterday, the company announced that it would allow certain contract subscribers to ditch their contracts without penalty — if they switch over to the AT&T Next plan.

AT&T Next was launched in the summer of 2013 as just another early upgrade plan that wasn’t a very good idea because it required members to pay full price for their phones (albeit in monthly installments) while also asking them to pay for the same data plan that people with less-expensive, subsidized phones had.

Then the company smartly decided in December to sweeten the deal by giving $15 monthly discounts to AT&T Next customers and others who own their phones outright.

With T-Mobile now offering to buy out AT&T subscribers’ contracts if they switch providers, AT&T has decided to give subscribers who are at least six months into their current contracts the option of canceling that agreement if they switch to Next.

Of course, you can’t just take your existing, subsidized phone over to Next; you’ll need to get a new device and pay the full price over the course of two years (though there is no down payment required). AT&T is also offering up to $300 in trade-in for that phone you received with your last contract.

This is just the latest move in the inevitable wireless industry transition from subsidized phones — where the carrier picks up a good chunk of a device’s up front cost and then builds that into everyone’s monthly plan rate — toward a model where the customer pays full price for his phone but that cost is separate from (or provides a discount to) the data plan.

Wireless carriers subsidized phones in order to attract new customers. The practice was critical, some argue, in getting consumers to switch from simple feature phones to smartphones. But now that most consumers have made that switch, the subsidies are not providing the return on investment they once did.

The ultimate hope is that manufacturers will ultimately drop device sticker prices to the point where most consumers don’t need to rely on installment plans to purchase a new phone. If a consumer owns his phone outright, he can take it from carrier to carrier without having to deal with contracts, payment plans, or early termination fees.

This offer is good to anyone who agreed to a 2-year contract with AT&T before Jan. 18, 2014. People who sign up for a contract after that date will be held to the terms of their contract. However, there is a bit of good news for them — AT&T is returning to the 20-month early upgrade schedule that it recently abandoned.

If you’re an AT&T contract customer and want to see if you’re eligible for contract cancellation, you can go to ATT.com or dial *NEW# from your wireless device.