AT&T will stop offering phone subsidies with two-year contracts this Friday, requiring customers to purchase phones at full price or on device installment plans.

AT&T has offered the option to buy devices under monthly installment plans since mid-2013. This newer model adopted by all major carriers lets customers trade in their devices for new ones every year or so or eventually pay off the full price and keep the phone. Installment plans let customers avoid signing contracts that have early termination fees, although a customer generally must pay off the full price of the phone in order to switch carriers.

Device subsidies—in which a $650 phone might cost just $200 upfront—are still offered on AT&T's website today. But that option will go away on January 8, Engadget reported last week, citing an internal document sent to AT&T employees. AT&T confirmed the change to Ars, saying that both new and existing customers will have to either pay full price for phones up-front, bring their own, or opt for "AT&T Next" installment plans. There is an exception for business customers.

AT&T was already steering customers toward AT&T Next and full-price purchases, offering lower monthly service prices for customers who choose that option.

“With $0 down for well-qualified customers, the ability to upgrade early and down payment options available with even lower monthly installments, our customers are overwhelmingly choosing AT&T Next," the company said. "Starting January 8, AT&T Next will be the primary way to get a new smartphone at AT&T. This does not apply to business customers under a qualified wireless service agreement.”

AT&T will also continue offering two-year contracts for numerous devices that aren't mobile phones, including tablets, Wireless Home Phone, mobile hotspots, wearables, and other "Internet of Things" products.

T-Mobile was the first major US carrier to move away from contracts and subsidies. Verizon Wireless seemingly shifted entirely away from contracts and device subsidies last year, but later said that existing customers can continue signing two-year contracts in exchange for phone subsidies.

Sprint is also phasing out the old model, but it still offers phone contracts and subsidies on its website as of today.

UPDATE: We also asked AT&T whether this change has any impact on customers with grandfathered unlimited data plans. The company told us that there is no change, and that customers who still have unlimited data plans can buy a phone through AT&T Next and keep their existing unlimited package.