AT&T Moving Farther Away from Subsidized Phones, Two-Year Contracts

As more and more customers begin to shy away from subsidized phones and two-year contracts, an AT&T exec said the payment models will slowly keep fading away.

Ralph de la Vega, AT&T CEO of mobile and business solutions, said this new approach isn't solely AT&T's call, but also a trend in customer payment solutions. Instead of paying $200 for an iPhone with a two-year contract attached, an increasing number of customers are opting to finance the devices, without subsidies, over a period of months.

“I think it is one of those options that is going to go away slowly,” de la Vega told Re/code. He said the shift will gradually happen “not because we insist on it but because customers will choose it less often.”

The CEO said the new trend will benefit consumers and carriers alike, allowing device replacement more often, and also giving some customers a break on their monthly bills. Just this week, according to Re/code, AT&T got rid of two-year contracts at third-party retail stores such as Best Buy and Apple Store.

In May, AT&T updated its support page in regards to unlimited data customers who may experience speed reductions in "areas that are experiencing network congestion." Prior to this, any AT&T customers on a 3G or 4G smartphone who exceeded 3GB of data in a billing period experienced throttled speeds.

Mike Mahardy is a journalist based in New York. You can follow him on Twitter at @mmahardy, where he rants about Kurt Vonnegut, the NY Yankees and sweet potato-based foods.