NEW YORK - AT&T will no longer offer discounted phones with two-year contracts starting Jan. 8. Before you rush out to beat the deadline, consider that you might be better off paying full price for the phone.
That's because phone companies also reduce the monthly bill for voice, text and data services when you buy your own phone or bring a used one. Some may pay a bit more, some a bit less, but the overall bill is roughly the same. What you get in return is more flexibility in which phone you buy and how long you stay with the carrier.
AT&T's decision comes as no surprise. In the third quarter, only 1 in 5 customers chose a contract plan when they signed up with AT&T or upgraded their phones. T-Mobile broke away from contracts completely nearly two years ago, and Verizon stopped offering contracts to new customers in August. Sprint also has been weighing dropping contracts completely.
Sprint CEO Marcelo Claure told The Associated Press in September that discounted, contract phones -- including his company's -- amount to "a gimmick, a trick. You tell people I'm going to give you a free phone, but really the customer pays in a more expensive service plan."
Indeed, phone discounts mask the true costs of phones and phone services.
Here's an explanation of the changes.