I have been a faithful member of AT&T (formerly Pac Bell) for over 30 years. I had intended to purchase a new cell phone with a different OS after the first of the year and was told I would be penalized unless I waited until my current contract expired in May 2014. I am being penalized for being a long time customer? So answer this please. What are you going to do in May 2014 when I leave AT&T because of your lousy, uncaring treatment of a long term customer, when I take my business to Verizon?
Assuming you got your last phone as an upgrade, you got your phone at a greatly discounted price in exchange for a two year contract with AT&T before you would be eligible for another subsidized upgrade. Holding you to the terms of a contract that you freely agreed to isn't a penalty.
Upgrading used to be simple. You either were able to or you weren't.
Contract ends in May, and I would expect you to get all the full discounts at the point.
AT&T introduced partial discounts. Instead of simply saying you can't, they'd get some of the discounts for doing it before you're ready.
Sure there's flexible options, including add-a-line(getting an extra dummy line w/ a contract), cross-upgrades (using an upgrade from another one of your lines), trade in (between that and the partial discounts I've seen people pay less than the 2 year price before).
Ultimately, there's always been a limit to how often you've been able to upgrade. What's different? Are the extra options making you unhapy? They're optional of course.
The contract is basically the point when you've finished paying AT&T off for the discount for your phone,
*I am an AT&T employee and the postings on this site are my own and don't necessarily represent AT&T's position, strategies or opinions.
What would be the advantage of going to Verizon Wireless? Verizon Wireless pushed the upgrade date to 24 months before AT&T did.
You are free to get a new phone at any time. The price that you pay will vary by the offer that is extended to you at the time. AT&T has chosen not to offer a full upgrade discount on a device until your current contract is completed. That is their right to do so.