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AT&T Chief Sees Device Subsidies Fading Away

June 4, 2015 - Written By Tom Dawson

AT&T, along with Verizon and T-Mobile have moved away from the traditional smartphone contract over the last few years, and while these contracts still exist, AT&T Chief, Ralph de La Vega sees them coming to an end. Speaking to Re/Code, De La Vega sees the traditional smartphone contract coming to an end. The days of purchasing a Galaxy S6 for $199 upfront with a pricey contract for 24 months are numbered, and AT&T is welcoming the change. It’s been reported that almost two thirds of smartphones sold by AT&T recently were on the AT&T Next plans. These plans essentially allow users to pay for their service each month, and they pay a portion of their device off in two, separate payments. While at first this system seems messy, it is fact a lot clearer, and De La Vega sees the move in this direction a good one for the market.

When someone signs up to an AT&T Next contract, they agree to repay AT&T’s price on a smartphone, and then pays a set portion back each month, and pays for their service separately. You don’t put any money down, and instead spread the retail value across 24 months, and you can upgrade whenever you like, provided you can pay off the remaining amount for the device. It makes things a lot clearer, and at the end of it, the customer owns their device. De La Vega says that “hand-me-downs are a big deal” as AT&T often gets a customer that brings this device back to their network.

Just recently, the network made a big move to further reduce the amount of traditional contracts by preventing 24 month contracts from being started at Best Buy stores. While De La Vega thinks that “we need to give it a little more time” it’s clear that the traditional two-year, $199 contract is slowly, yet steadily, dying a death. As more and more of us look to phones like the OnePlus One which can be bought for very little and taken to T-Mobile or AT&T, saving lots in device repayments it seems only right that the industry as a whole is starting to change their attitude to device leasing and service charges combined.