Phone subsidies and two-year contracts are on their way out the door, according to Ralph de la Vega, AT&T's CEO of mobile and business solutions. "I think it is one of those options that is going to go away slowly," said de la Vega to Recode, "not because we insist on it but because customers will choose it less often." AT&T has made changes recently to limit the availability of subsidies and contracts. AT&T partners Best Buy and Apple, for example, no longer offer customers AT&T contracts. Instead, they push AT&T Next plans, which break down the payment for phones over time. AT&T says two-thirds of new smartphone sales during the most recent quarter were via its AT&T Next plans, which clearly indicates consumers' preference when it comes to purchasing new hardware. T-Mobile was the first major carrier to break from the subsidy model with its Simple Choice plans, and now most carriers offer lower-cost service plans that are paired with monthly device payments.


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