The company said starting July 26 it will offer its line of smartphones and tablets with "no down payment, no activation fee, no upgrade fee and no financing fees."
Consumers would be offered a contract that would have them pay off the cost of the smartphone or tablet over 20 months, but would also allow them to upgrade after 12 months.
The program, called AT&T Next, is radically different from the standard subsidized smartphone deals service companies have been using to tie consumers down to contracts for phone service.
Phone companies have been selling smartphones for under cost if consumers sign service contracts, usually a two-year commitment. AT&T Next allows consumers to buy a phone at full cost over 20 months without any connection to a service contract.
The program is available to new AT&T customers or existing customers who are "upgrade eligible," the company said in a statement.
Standard contracts in the past have forced consumers to wait until they were "upgrade eligible," which helped carriers spread out the cost of subsidizing phones.
AT&T said a Samsung Galaxy S4 would be available with no down payment at a price of $32 per month, which would be, in effect, an interest-free loan.