Sprint Drops Two-Year Contracts

An anonymous reader writes: Following the recent news that Verizon has ended smartphone subsidies, now Sprint has announced it is ending two-year contracts as well. This leaves AT&T as the last of the major carriers to offer such a plan. Most consumers will now have to get used to paying full price for their phones, though Sprint is also running a phone-leasing plan that lets people pay an additional $22/month for an 16GB iPhone, with yearly upgrades.

Comments

Re:Why do this?

[TsuruchiBrian]

The free market. Even in a market with only 4 vendors, it still kind of albeit vary slowly.

Once one carrier (T-mobile) caved and did it as a way to attract customers, the others eventually felt enough market pressure to follow. It was enough to get me to switch to T-mobile and become a loyal enough customer to convince about 12 other people to switch. I do still feel loyalty to T-mobile, but I am certainly now more willing to switch to anyone but AT&T if the deal is good enough.

Re:Why do this?

[cbhacking]

This, and the whole "unlimited talk, text, data" (where the data slows down after a certain level but never gets cut entirely), plus free tethering, were T-Mobile's first big pushes in their "Un-carrier" initiative, and I'm glad as hell to see that they've had their effect and brought the rest of the industry around (to some degree or another so far, at least).

However, there's still more tricks up TMo's sleeve that, at least for now, mean I'd be crazy to switch. The big one for me is the free international roaming; I go overseas a couple times a year, and being able to continue using my same number is fantastic. SMS, MMS, and data are free and unlimited (the data is throttled, but it's usable for email, navigation, and even streaming music) to US numbers no matter where they're located. Calls cost $0.20/min (unless using WiFi calling, another feature that they've had for years but that others are slow to adopt) but you can get (visual) voicemail for free, and the data rate is fast enough for Skype too. They just announced that in Canada and Mexico you'll actually get full service - no charge on calls, no throttling on data beyond what your plan normally includes - which is also a strong incentive.

It's a price rise

[tkrotchko]

This effectively raises prices. Before, you could get your $700 iPhone for $200, and over the course of 2 years, you'd pay the subsidy off.

So without considering the cost of money, and to keep this simple, it's effectively $500 subsidy/ 24 months or about $21/month.

But here's where people stop thinking. You weren't actually paying for the phone, the phone company was. Because at the end of 24 months, you're still paying the same monthly rate, and you now own the phone. In the case of an iPhone, the value has historically worked about to be about $150-200 which you can sell yourself and get a new phone for $200.

Now think of this way. Now you get no subsidy on the phone, and they didn't lower their monthly bill by $21. So what Verizon, Spring, and T-Mobile did was effectively raise their monthly rates because you get no more subsidy, and the monthly cost of the plan is the same as it was before.