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Sprint Drops Two-Year Contracts

Posted by Soulskill on from the promises-to-find-other-ways-to-fool-you-into-thinking-they're-cheap dept.

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.

15 of 112 comments (clear)

  1. Why do this? by Harlequin80 · · Score: 5, Interesting

    I must be missing something, but why do this? Offer monthly BYO plans and offer 2 year subsidised phone plans. These are two different market segments and I would have thought locking someone in on a 2 year contract would have been a good thing.

    1. Re:Why do this? by JeffOwl · · Score: 2

      Because people aren't good at math and normalizing data for comparisons. Verizon offers a tack on plan that lets you essentially do the same thing as before, it is just that you can now see the actual impact on your bill. Back in the olden days, if you didn't upgrade your phone at the end of two years, you were getting ripped off because your monthly bill didn't drop. Now it does.

    2. Re:Why do this? by Harlequin80 · · Score: 3, Interesting

      I get that if you are the customer you would want this, but why are Sprint doing it?

    3. Re:Why do this? by gl4ss · · Score: 2

      two reasons, to compete and to not get forced to do it.

      the government is under constant pressure to put pressure on the american operators to stop ripping people off and make them see what they're paying for.

      why? so you could get out of the stone age of mobiles.. calling 2gbyte limit unlimited and paying 40 bucks for it and all that kind of stupid shit.

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    4. Re:Why do this? by TsuruchiBrian · · Score: 4, Insightful

      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.

    5. Re:Why do this? by cbhacking · · Score: 3, Insightful

      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.

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    6. Re:Why do this? by jellomizer · · Score: 4, Interesting

      There has been too many competitors offering to pay out the contract in order to switch to their plan.
      So what happened is that they lose customers in the long run. As people switch plans to adjust to what they want.

      Getting rid of the contract will allow people to change their plans in the same company, vs losing a customer.

      --
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    7. Re: Why do this? by Anonymous Coward · · Score: 2, Interesting

      The biggest change is that there's no ETF fees. They'll charge for the remaining part of the phone when you cancel, but no further charges. Which is actually pretty fair.

    8. Re:Why do this? by aaarrrgggh · · Score: 2

      Seems to come down to accounting. There is no value to the carrier to subsidize a phone, but it does have a drain on their balance sheet/profits, especially in quarters where a new iPhone is released. This lets them avoid that issue, at the cost of profits for people who upgrade more slowly than every 24 months. When the percentage of people that keep the phone for 30-36 months drops below some critical point it isn't worth the hassle or risk of regulatory issues.

  2. Back to the old SprintPCS model with a tweak... by mishehu · · Score: 2

    Back around 2000 Sprint (then SprintPCS) had no contracts at all, but indeed the costs of the phones were higher than their competitors at the time iirc. It was one of the things that I liked the best about SprintPCS at that time, and though I've mostly stuck with them over the years (all the companies rip you off, it's just a matter of how they pluck your goose), I'm glad to see that we'll be getting back to having the option of a higher capital expense with lower monthlies as a result.

  3. Re:Boost Mobile by dosius · · Score: 2

    Pretty sure Boost Mobile IS Sprint.

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    What you hear in the ear, preach from the rooftop Matthew 10.27b
  4. It's a price rise by tkrotchko · · Score: 4, Insightful

    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.

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  5. In particular it was enough to screw Sprint by Sycraft-fu · · Score: 2

    Sprint was the #3 carrier in the nation, T-Mobile was #4. Now T-Mobile is #3. Not all the new customers came from Sprint, of course, but it shows that it was effective. Sprint lost enough and T-Mobile gained enough to change their positions in terms of market share rank.

  6. No, not at all by Sycraft-fu · · Score: 3, Interesting

    T-Mobile's plan is $50/month to get unlimited talk, text, 1GB of high speed data, and the ability to have 1 phone. Back when Verizon was doing contracts it was about $90/month from them for the same. Now, if you get an expensive phone from T-Mobile and take the 24 month finance, the plan ends up being around $90/month with the payment and taxes.

    Here they thing though: You pay off the phone, your rate drops down to $55ish/month (base plus taxes). It'll then stay at that rate as long as you keep your phone. Also, the rate is less if you get a less expensive phone. Get a cheaper phone, either used or less features, and you pay less because it cost less.

    You save money so long as you are willing to keep older hardware, or buy cheaper hardware. It costs about the same only if you buy expensive hardware. Even then it is cheaper, because whereas T-Mobile wants about $90/month with an expensive phone, Verizon wanted that plus $200 up front.

    Looking at Verizon now, it looks the same. $50/month (they divide it as $30/month for the plan, $20/month for the phone) gets you unlimited/unlimited/1GB. If you buy a phone up front, that's your rate. Finance it, and it depends on the phone price. That's much lower than when it was subsidized.

  7. BYO Prices by chill · · Score: 2

    Now, hopefully the prices of decent smartphones will come down to a reasonable level. Why the hell pay $600-$700 got the latest from Samsung or LG when there are things like Ubik?

    https://www.kickstarter.com/projects/ubik1/ubik-uno-solid-performance-smartphone-at-unbeatabl

    --
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