AT&T Confirmed End of Two Year Plan

AT&T recently confirmed that it will end the two-year contract to the consumer on January 8. The carrier said at the beginning of this week both new as well as the existing customers should either buy a new phone at retail price or through AT&T Next, its equipment installed plan (EIP). This move had already been disclosed last week in an internal document which was sent to employees and accessed by Engadget.

 

AT&T’s decision comes as no surprise. Only one of five customers chose a contract plan when they signed up with AT&T and upgraded their phones. T-Mobile completely broke away from the contracts nearly three years ago, and Verizon suddenly stopped offering contracts to its new customers in August. Sprint has also constantly been weighing the option to drop contracts completely.

Sprint CEO Marcelo Claure stated in the Associated Press in September that discounted, contract phones- including his company’s - amount to a gimmick, a trick. You make people happy by saying I’m going to give you a free cell phone, but the customer is actually paying for a more expensive service plan. 

Moreover, AT&T’s statement confirmed the move and notes that its customers are overwhelmingly choosing AT&T Next rather than signing the contract for other subsidized phones. AT&T’s new contract policy not only applies to cell phones but also to various feature phones. However, it doesn’t apply to business customers under a qualified wireless service agreement, the carrier confirmed in a prepared statement. In addition, AT&T will continue to sell tablets, IoT devices and some other devices on contract. 

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FCC Entice AT&T, T-Mobile on Mobile Data Policies

The FCC recently questioned AT&T and T-Mobile regarding their data policies. FCC chairman Tom Wheeler reported that the commission decided to send letters to both the mobile carriers and also to Comcast. According to The Wall Street Journal, these two carriers are among a handful of broadband providers that have drawn scrutiny for mobile data offerings. T-Mobile zero-rates content from specific cellphone providers for its Binge On video streaming service and AT&T is experimenting with sponsored data in which it pays the data charges rather than the user.

Last week Verizon has planned to launch sponsored data service next year. Comcast’s Stream TV doesn’t count against usage caps for Comcast users. Most people believe such models enable telecom companies to boost favored content that is bound to run afoul on FCC’s net neutrality guidelines. These models favor reputed media organizations, but net neutrality backers argued that this makes it even more difficult for smaller players to compete. The cellphone service provider might get affected due to this case. 

The FCC didn’t react to the situation that might appear to skirt net neutrality principles, but the commission is focused on keeping tabs on mobile and cable industries to make changes in the data policies of cellphone service providers. 

TIA once again took issue with the FCC's stance following Wheeler's remarks. "Consumers benefit when mobile operators provide new services and offerings. U.S. mobile consumers are in the driver's seat, free to pick the service that's right for them, thanks to the robust competitive marketplace," said CTIA EVP Brad Gillen. "We need to promote and facilitate new offerings and innovations for consumers if we are to lead the world in mobile services going forward."

Finally, the U.S. appeals court heard the complete argument earlier this month over the issue of the FCC’s net neutrality rules which may eventually decide the issue.

AOL Confirms Layoffs as Verizon Looks to Cut Overlap

                      

AOL has laid off 100 employees while it integrates with the new corporate parent, Verizon. However, the latest round of layoffs was not an unexpected one. Verizon earlier purchased AOL for $4.4 billion and most of the AOL units also overlap with the Verizon divisions. Nearly two-thirds of the cuts are in AOL’s membership division that specifically handles dial-up service, AOL Mail, and AIM. A report stated that some marketing staffers and social media roles have been drastically affected, but the major focus is on the operation layer. The layoffs are under 2% of AOL’s 6000 workers. 

Initially, Verizon had bought AOL solely for advertising and video operations and not for the dial-up business. However, it manages to generate a substantial amount of revenue due to the fact that 2.1 million people still use AOL dial-up, paying a $20 per month charge, on an average. Previously, AOL reportedly earned $186 million in a single quarter as an independent company. Moreover, Verizon has its own Internet subscription products and consumer service departments so the overlap should be reduced as much as possible. 

“The market changes and we at AOL change ahead of the market. As we have continued to do over the last six years, we have re-aligned a handful of key customer functions to put our consumers and customers more squarely at the center. We have done 3 years of deals in the last 6 months,” an AOL spokesperson said in a statement provided to TechCrunch.

AOL has previously held a round of layoffs before Verizon purchased it, cropping 150 employees, especially in the sales department, although most of AOL’s underperforming web publications were also shuttered.