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AT&T Dropping Contracts Through Most Outlets

Dallas – AT&T confirmed that it is phasing out sales of subsidized phones with two-year contracts through all channels but its own 2,000 company-owned stores and

AT&T began rolling out the new policy across its base of national retailers and local dealers on June 1, but the company didn’t provide a timeline for each retailer.

The carrier explained its reasoning this way: “Our customers increasingly choose AT&T Next, so we’re responding by featuring Next as the most prominent way to get a new smartphone at our national retailers and local dealers. Customers who would rather have a two-year contract still have that option.”

Next is AT&T’s program for buying unsubsidized phones on installment-payment plans.

In its first-quarter financial report, AT&T said 65 percent of all postpaid smartphones activated in the quarter were purchased on a Next installment-payment plan, up from 58 percent in last year’s fourth quarter and 40 percent in last year’s first quarter.

Combined with 313,000 bring-your-own-device smartphones activated, 70 percent of postpaid smartphones activated in the quarter were not subsidized by AT&T, the company said.

AT&T’s move is the latest effort by carriers to wean themselves off subsidized phones to cut costs. T-Mobile started the trend in March 2013 when the carrier eliminated contracts and phone subsidies through T-Mobile stores and began phasing them out through retailers. Since then, T-Mobile’s rivals have launched no-subsidy plans with installment-payment options. Though those carriers still give consumers an option for a two-year contract with subsidized phone, their marketing efforts have focused on their no-contract options.