Report: Apple transitioning away from AT&T, Verizon subsidized iPhone contracts


Mark Gurman for 9 to 5 Mac:

Apple has indicated that iPhones sold via AT&T at both physical Apple Retail Stores and on the Apple Online Store will move exclusively to Next financing plans this month, in June. This means that a customer who wants to buy a new iPhone on AT&T will no longer be able to do so on a subsidy...

Same deal is reportedly in the works for Verizon. Essentially this is the end of the 2-year subsidized contract in favor of two year interest-free financing. If you want to upgrade early, you'll have to pay the balance owed, which can be offset by selling that device, if you choose. If you choose to keep your phone through the end of the financing term, you own the phone outright and your monthly rate is reduced as the financing drops off your bill.

I think this is a positive development. Carriers don't have to fight with customers who want to upgrade more frequently than every two years and consumers aren't locked into a contract with draconian early termination frees, but still don't have to purchase the device outright up front. Your service is simply separate from device purchase and that purchase is spread out over a 24 month term.