AT&T to stop offering two-year contracts in January

AT&T plans to ditch two-year contracts starting in January, according to a leaked internal memo obtained by Engadget. Beginning on January 8, 2016 all new and existing customers will only have two options when buying a new mobile phone from AT&T. Customers can choose to either pay in full or make monthly payments. The new payment options will apply to all mobile phones including smartphones and flip-phones.

The memo, sent to employees on Wednesday, notes that existing customers will not be able to "upgrade to a new two-year agreement after January 8."

"Existing customers can choose to purchase a new smartphone on AT&T's NEXT or no-commitment price," explains the memo. "Existing customers a new QMD or Basic phone can choose to purchase on an installment plan or pay no-commitment."

"QMD" stands for Quick Messaging Devices, which are basic mobile phones that are not considered smartphones.

AT&T started phasing out two-year contracts in June. New customers were encouraged to sign up for AT&T Next, and existing customers had to specifically ask for a contract extension at AT&T retail locations.

You can see a list of current AT&T Next iPhone 6s prices here or visit att.com for more information.