Last month, network carrier AT&T announced that it will stop offering two-year contracts to customers.
Instead, the service will be replaced by a new program that doesn't involve down payments.
According to CNN Money, the company's two-year contract service will officially end on January 8. Those who still have contracts with AT&T will be integrated into the AT&T Next program.
Unlike the two-year contracts, the Next service doesn't require customers to settle a down payment fee for a new device. Instead, they will only have to pay for the monthly fees depending on their plan. In addition, under this program, they will be given the option to upgrade to a new device at an earlier timeframe.
A spokesperson from the company explained that AT&T decision to drop the two-year contracts was partly influenced by the fact that more and more subscribers are switching to Next.
"With $0 down for well-qualified customers, the ability to upgrade early, and down payment options available with even lower monthly payments, our customers are overwhelmingly choosing AT&T Next," the company's representative said according to CNET.
As noted by the Chicago Sun Times, two-year contracts are starting to become obsolete. T-Mobile dropped this service a couple of months ago followed by Verizon in August of 2015. According to the site, AT&T even admitted that this type of program is just like a gimmick offered by companies.
It is used to lure people in by offering them the opportunity to get their hands on a high-end handset for only a low price. However, some users fail to realize that they are actually paying for the full price of the device over the course of two years through monthly payments and other associated fees.
For instance, under a two-year contract, the iPhone 6S, which retails at $650, can be purchased for only $200. But, for two years, plan subscribers will have to pay $18.75 a month. This monthly payment amounts to $450.
But, without a contract, the monthly payments can be reduced to $15 each. In addition, consumers will be given the option to get a new device or use an old smartphone. Either way, they'll be able to save more due relatively cheaper rates of non-contract plans.
Aside from the savings that users will get in the long run, details of non-contract plans are very transparent. In other words, users will be able to monitor every factor that they're paying for in their plans.