AT&T dropping 2-year contracts

Photo: MGN

(CNN) – Telecom giant AT&T, the last major U.S. mobile phone carrier offering contracts to subsidize the cost of new smartphones, is finally dropping two-year agreements.

The change becomes official Jan. 7. After that, customers will only be able to buy new phones through two options. They can pay the full price up-front or pay installments over time under its “AT&T Next” plan.

Two-year contracts used to be industry norm, but they’ve been phased out. They are being replaced by requirements to pay full price for devices, usually in monthly installments over two years, or by offering cheaper monthly plans with no contract.

In August, Sprint and Verizon announced they would no longer offer contracts. T-Mobile ditched contracts more than two years ago.

Copyright 2015 CNN. All rights reserved.

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