Sprint ending 2-year contracts and subsidized smartphones at the end of this year

Sprint ending 2-year contracts and subsidized smartphones at the end of this year
Sprint has joined Verizon as the latest major U.S. carriers to end the two-year contract game that consumers had been playing for years. T-Mobile was the first of the four majors to put an end to contracts over two years ago. Both Verizon and Sprint will end the practice at the end of the year. With the contracts came subsidized pricing for phones. A new phone priced at $600 would cost only one third of that price if the consumer signed a two-year pact.

For the carrier, the subsidy shelled out for the phone was more than made back over the two years. But now, T-Mobile, AT&T, Sprint and Verizon each have equipment installment plans that allow well qualified customers to pay $0 down and pay off the balance of the phone with monthly payments, usually lasting about 24 months.

Ironically, this leaves AT&T as the only major carrier that will be offering two-year contracts as the new year starts. This is ironic because back in June, it was AT&T CEO Ralph de la Vega who came out and said that the days of subsidized phones were over. AT&T could still decide to join the other three.

In March 2013, T-Mobile stopped selling subsidized phones at corporate owned locations. At first, the upstart mobile operator still offered subsidies at national retailers like Best Buy. But eventually, T-Mobile ended the practice at those stores as well.

Sprint relies heavily on leasing new phones,which is an option that will continue. Last quarter, 51% of new phones acquired by Sprint customers were taken home as part of a leasing deal. Starting next year, Sprint customers will have own two choices. They can buy or lease a new phone. The leasing option allows Sprint to offer deals like the one announced today that guarantees that customers always have the current-generation iPhone in their pocket, for $22 a month.

source: WSJ via AndroidCentral

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13 Comments

1. SirYar

Posts: 351; Member since: Jul 02, 2014

These American carriers commit daylight robbery.

2. manojmcn

Posts: 634; Member since: Jul 16, 2015

Carriers and big smartphone makers are partners in crime.

3. Landon

Posts: 1248; Member since: May 07, 2015

Being someone who lives in the US, I'm clueless about what other carriers offer around the world. Does anyone have insight on other countries rates?

4. legiloca

Posts: 1676; Member since: Nov 11, 2014

For me in the Philippines, we have a choice, either we want it Prepaid or Postpaid (that's where commitment plans get in), by Prepaid, we buy the phone without a SIM card, so it's our freedom to choose a network we want to use, 2nd we have the freedom of how much or what kind of credit we want to recharge on our phones and some networks have flexible promos too like unlimited texts, a couple of call duration and free MB's of data, something like that..

11. TheMan

Posts: 494; Member since: Sep 21, 2012

The last few surveys I've read over the past decade (but none in the last three years) consistently show that charges here in the U.S. are the highest on the planet. Number Two is Canada. The P&L of Verizon (and, presumably, Sprint) will improve once this move is taken. VZW has been whining about subsidies since about a year into the iPhone launch, which changed consumers behaviors. Previously, people held onto their phones for years to avoid another contract, but without realizing they still paid excess subsidies -- easy money for the Big Two plus Two. I should add that grandfathered plans can still get two-year contracts on VZW. They confirmed this last week. So do the math before you switch plans.

5. promise7

Posts: 894; Member since: Jul 03, 2013

Do carriers outside of the US have installment plans for smartphones like they do here or do customers have to pay the full retail price all up front? Curious because I believe customers pay less for service outside the US, but aren't the smartphones more expensive than in the US? By more expensive, I mean from Apple, Samsung, LG, HTC, Sony, etc.

6. legiloca

Posts: 1676; Member since: Nov 11, 2014

in my country yeah :) Postpaid plans work like that, I mean in a network of your choosing, you choose your Data, Call&Text plan, choose your phone, and choose how much you would want to pay every month for the phone..

9. Tizo101

Posts: 644; Member since: Jun 05, 2015

where I live, you can only buy an unlocked phone but every time you buy a new phone you have to buy a sim card from a carrier (about $20 in your currency). phones cost more because of inflation (so we buy cheap). you can either have a contract phone that is basically the same as the model used in America except you don't pay anything upfront but you will pay a lot more. the better option (the one I use) I only buy prepaid airtime load it on my sim and then buy data (again our carriers are greedy so they inflate the costs of data).

7. WakaFlakaD

Posts: 576; Member since: Apr 30, 2011

That mean T-Mobile got two more quarters to steal customers from Sprint. Actually, it might still happens afterward. Oh, T-Mobile charges $15 a month for leasing an iPhone. Just saying

8. Doakie

Posts: 2478; Member since: May 06, 2009

I wonder if leasing iPhones to people who are stupid with money makes the crappy Sprint network any better??? God I wouldn't pay for that crap. Funny because I have a FreedomPop phone which rides on the Sprint LTE network for free every month... $25 ZTE Force FTW!!!

10. Jyakotu

Posts: 868; Member since: Dec 12, 2008

Doesn't matter, because once my contract is up, I am leaving Sprint. Their LTE is spotty at best, even though I live in a major city in my state's largest metropolitan area. Plus, I have an LG G4 waiting to be used and I don't see myself upgrading from it anytime soon. But for now, I'll keep my LG G2 and my Sprint contract until it's up May 2016.

12. gersont1000

Posts: 473; Member since: Mar 13, 2012

John Legere should get a salary from Verizon, Sprint and soon AT&T. He always innovates and they basically copy his plans but with higher costs.

13. makaveli3004

Posts: 4; Member since: Dec 19, 2013

I hope they will allow exist customers to sign 2 year contracts with out phone subsidies I am canceling all 8 of my lines. Good Bye Sprint Big Mistake

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