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Sprint Drops Two-Year Contracts 112

Posted by Soulskill 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.
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Sprint Drops Two-Year Contracts More

Sprint Drops Two-Year Contracts

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  • Why do this? (Score:5, Interesting)

    by Harlequin80 ( 1671040 ) on Wednesday August 19, 2015 @01:26AM (#50344777)

    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.

    • 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.

      • Re:Why do this? (Score:4, Interesting)

        by Harlequin80 ( 1671040 ) on Wednesday August 19, 2015 @01:35AM (#50344823)

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

        • Re: (Score:3)

          by gl4ss ( 559668 )

          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.

          • Fair enough. I'm just used to seeing all the options of BYO plans, monthly plans, pre-paid plans, 24 month contracts with a subsidised phone and phone add-on packages so it seemed strange to ditch one of those options and I was wondering why.

        • Re:Why do this? (Score:5, Insightful)

          by TsuruchiBrian ( 2731979 ) on Wednesday August 19, 2015 @01:54AM (#50344899)

          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.

          • But why stop offering it?

            Offer your BYO $40 / month no contract plan, offer your $40 /month + $22/month for an iphone plan, offer your $60 month get your phone "free" plan 24 month contract. Having a customer signed up for a guaranteed 24 months has to have a value to a carrier, it may only be $2 a month but it's still there.

            I agree with the pressure of making them offer the no contract options, but why have the dropped the contract options? Were they now so unattractive that nobody wanted them?

            • At a guess, so they can say "See, we've ditched contract plans! Come to us and go contract-free!"

              If they still have the contract plan, then they can advertise their non-contract plan but they can't say that they've ditched contracts entirely.

            • I agree with the pressure of making them offer the no contract options, but why have the dropped the contract options?

              I don't know what Sprint has or has not done exactly.

              I know T-mobile still offers financing options for phones, but it is separate from the phone service contract (which no longer exists).

              So if sprint still offers financing for phones, that becomes the "contract", but it is different sort of contract (e.g. the kind where you promise to pay for the phone they gave you, or else).

              • Re: Why do this? (Score:2, Interesting)

                by Anonymous Coward

                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.

            • Re: (Score:2)

              by Kjella ( 173770 )

              I guess because the only people who'd sign up for a 24 month contract are those who'd almost certainly stay with you anyway. And what would they do after those 24 months are up, automatically bump them down to the BYO plan or blatantly overcharge them? They want the lazy option to be the profitable one, a lease plan means they can keep on charging until the customer makes an effort to change it. If they can charge a few "extra" months that's probably way more profitable.

            • 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.

            • Contracts would have been attractive to customers if the service the telco provided didn't change in the middle of the term. The way it stood, the telco could revise terms such as service levels and coverage areas, but the customer couldn't until the contract was up.
              • They could also change the price, as Verizon did by raising one of their junk fees ("Regulatory Recovery Fee) during my contract. I called them and told them I wanted out, they claimed that only the basic monthly rate was locked in, they could freely raise the other fees sky high and force you to pay the fee or pay the ETF.

                That's when I switched to Virgin, then to T-Mo. Signing a contract just isn't worth it if the phone company thinks they can legally raise your monthly bill from $75 to $750.

          • Re:Why do this? (Score:4, Insightful)

            by cbhacking ( 979169 ) <been_out_cruisin ... nospAM.yahoo.com> on Wednesday August 19, 2015 @02:11AM (#50344935) Homepage Journal

            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.

            • Don't they also allow voice calls through wifi for free when roaming? I saw this as a huge benefit for anyone who travels.

              • Yup, T-Mobile supports WiFi calling, but you have to have a device that can do it. From what I've read, they're working with Google to make it a built-in feature of Android.

              • From my post, self-quoting:

                Calls cost $0.20/min (unless using WiFi calling, another feature that they've had for years but that others are slow to adopt)

                However, as Dragonslicer points out, you need to have a compatible device. Skype or Google Voice are possible over the throttled data connection and cheaper than the international calls, though.

          • 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.

            • Whoa, I hadn't heard about that. Not a huge surprise to me, though, I guess; I hardly ever see Sprint users anymore.

              Would be interesting to know how the market share has changed. Has Sprint actually lost customers, or has TMo just gained a bunch?

              • T-Mobile has gained a lot, and those customers have largely come from the other three carriers. There's not a lot of room for pure growth, everyone has a cellphone these days, so they mostly steal customers from each other.

                T-Mobile's marketing was effective. Also their voice over WiFi proved to be a winner since it is a way to extend coverage without needing to buy a pico cell.

          • they wouldn't charge 80 bucks for the service.

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

          Because they will make additional money. Sprint and other companies aren't doing this so they make less money.

        • Probably because it is not profitable. In a sense they are subsidizing Apple's phone market(and Apple gets paid up front) while the carrier is the one taking the risk of someone breaking the contract.

          I believe this move is going to hurt Apples sales when people see what the phone is really costing them....

    • Re:Why do this? (Score:5, Interesting)

      by jellomizer ( 103300 ) on Wednesday August 19, 2015 @04:23AM (#50345247)

      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.

    • Re: (Score:2)

      by Monoman ( 8745 )

      Subsidies that never end. One of the issues with these contracts is that the prices do not go down after the phone is paid off. The carriers love people that stay on plan after the initial contract expires. Some customers were catching on and looking to get a new phone as soon their contact expired and often switched carriers while shopping.

      One of the next hurdles US customers need to face is the differing phones by carriers. They may not have a contract but having a phone that is pretty much tied to a c

    • just like the t-mobile $15 a month iphone 6 thing, it's a lease. you have to give the phone back after 20-24 months. and sprint and t-mobile signed ridiculous minimum purchase contracts with apple a few years back. especially sprint. they agreed to purchase millions of iphones and now they need gimmicks to get people to buy phones on their network.

    • To put pressure on Apple to lower prices, and on other manufacturers as well.

      Consumers did not see the cost of their phones directly, but demanded the best from carriers. Thus they wanted an iPhone first, and their preference in carriers, if any, second. Carriers paid Apple for customers. Apple had a monopoly on the oligopoly.

  • Back to the old SprintPCS model with a tweak... (Score:3)

    by mishehu ( 712452 ) on Wednesday August 19, 2015 @01:36AM (#50344831)
    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.

  • Good. (Score:2)

    by kuzb ( 724081 )

    Contracts are a ripoff. Show some responsibility and restraint, save money if you want a new phone every 2 years.

  • It's a price rise (Score:5, Insightful)

    by tkrotchko ( 124118 ) on Wednesday August 19, 2015 @02:49AM (#50345037) Homepage

    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.

    • No, not at all (Score:4, Interesting)

      by Sycraft-fu ( 314770 ) on Wednesday August 19, 2015 @04:14AM (#50345229)

      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.

      • T-Mobile has the highest frequencies in the USA and the worst building penetration. I have AT&T and Verizon phones and the Verizon phone will work in almost any elevator, unlike my AT&T phone. and I keep reading about T-mobile's spotty coverage around the US. most people are on family plans and in my case of a 6 line plan the T-mobile savings are only like $10 or $20 a month over AT&T. not worth it to risk being stuck in the middle of no where with no cell service to call for help

      • The price would be an increase for some people.

        Take my plan for instance. Right now I buy my iPhone from AT&T on a subsidy for $200. The normal full price is $650, so the subsidy is $450 less.

        Now my monthly cost of the contract is $50/mo. It's a 5-line FamilyTalk plan which costs $60 + 10 per additional line ($100 for 5 lines so $20 per user) and then plus whatever your data plan is. My data plan is $30/mo for unlimited data. Adding both together makes my monthly share of the bill $50.

        If we take th

    • Yep, I think it is time to switch to prepay service once my contract ends.

    • Re: (Score:1)

      by Anonymous Coward

      I went to my local Verizon office to see when I will qualify for the new rates (I already knew, but was hoping I was close enough to maybe sneak into it). The price I was paying for my basic plan (4 gig with 3 smartphones and one basic phone - we never exceed 4, but sometimes pass 3) was the same as the new 6 gig plan, so the tech upgraded my plan with no change in cost to me. Once my contract phones are paid off my bill will drop by $60 per month.
      After that I get to take advantage of either keeping my ph

    • 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.

      And that's why about 2 years ago, AT&T changed their plans and offered a "bring your own phone" discount. Your smart phone rate dropped about $30 /mo. if you had or own phone, or bought it on their "next" plan (basically paying for the phone in installments). So under Next, your rate does drop after 24 months (or whatever your schedule was - some phones go to 30 months, some pay off in 18).

    • I know with T-Mobile, my monthly payment most certainly did drop after the big switch. The phone payment is clearly defined, separate from the monthly service payment, and when your phone is paid off, the phone payment goes away.

      Also, it widens the selection of phones, especially "value" priced phones, meaning I can save even more. Before ditching contracts, I could buy a phone outright and put my T-Mobile SIM in it... but since I was paying the "subsidy tax" no matter what, I might as well pick out a che

    • " the monthly cost of the plan is the same as it was before."

      -1, factually incorrect

    • 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.

      Actually, T-Mobile does charge you $20/mo less if your contract period is expired or you BYO device. I haven't been following the other carriers, but I presume their new plans work the same.

      Under the old subsidized phon

    • Nah man, by now there are enough comments to dispute that and I'm surprised the post is still at +5 Insightful. Third sentence "you're still paying the same monthly rate" - yes, the higher monthly rate that took the cost of the phone into consideration yet never drops even if your don't upgrade your phone (or bring your own) for eternity. The entire time you were overpaying. When I see a Verizon or AT&T phone bill I cringe. Trust us and our replies - the subsidy was being shared by everyone, at all

  • If you compare the rates on the consumer plans to the business plans you can see how much fat is in the consumer price tag.

    This is why I hate business pricing. Its basically prices for idiots versus prices for people without their heads up their asses.

    If I needed a bunch of phones, I'd say I was a business if I needed the business pricing.

    Watching the cellphone industry draw down prices quarter after quarter is hilarious. No sale.

  • BYO Prices (Score:3)

    by chill ( 34294 ) on Wednesday August 19, 2015 @04:28AM (#50345251) Journal

    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 [kickstarter.com]

    • Re: (Score:2)

      by Kjella ( 173770 )

      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?

      I just took a look at my local pricewatch, 344 cell phone models from 35 different manufacturers now granted a few of them aren't smartphones but still it's very far from a duopoly... what's Ubik but a noname chinese phone with a marketing campaign? They got no track record of component quality, build quality, support or anything, if the phone flops or has any critical flaws the company is likely to disappear without a trace.

      They won't get the same kind of volume discounts as those who order millions, if th

    • Re: (Score:1)

      by Anonymous Coward

      Because there are not things like Ubik. That is just a kickstarter campaign at the moment...meaning it's vaporware.

  • While there is a place for $700-80 "flagship" phones, I hope this will force most smartphones to be sold at more realistic prices.

    • No kidding. I want a Samsung Note 4, even with the Note 5 released its price hasn't changed at $624 (Verizon). My fairly loaded desktop didn't even cost that much.

      • But, then again, your desktop doesn't carry a GPS and GSM/LTE radio set, it doesn't have a QuadHD monitor, it's ops/watt is much, much higher, and it doesn't fit in your pocket. All of those cost money.

        Besides, the Note 4 is not going to drop in price. A lot of those users are pretty wedded to expandable memory (uSD) and the Note 5 scraps that. It's not really a fair choice for price purposes. If you're looking for something other than a note, an unlocked LG G4 goes for $460 and the Samsung S6 is $550, bot

    • My GF bought a Motorola G 2nd gen for $179 and I bought an Asus Zenfone 2 for $199, both are great phones and unlocked too!
      This is a realistic price, but $700?!? wow...

      • I have the LTE version of the Moto G (as does my wife). Great phone, great price. I'm under no delusion that it is an iPhone (or other high-end phone), however. I make my wife take pictures with her work iPhone because the camera is so much better. I just can't justify shelling out $600 for a stupid toy that I'll break in a year or two.

    • Re: (Score:2)

      by mark-t ( 151149 )

      No, what it is going to do is cause these cell phone companies to also sell "phone loans" to customers who want one of the newer or more expensive phones so that the monthly payments are more affordable.

      The period of the phone loan will be of the same duration (or longer) than the contracts for subsidized phones were, so the monthly payments on them will be miniscule. If you want to switch providers before you've paid your phone off, you can.... but you will still need to finish paying the loan.

    • I think it will drive down the average phone price considerably. Once the prices are all transparent, and people realize they can get 90% of a $700 phone for $300, the target price point for manufactures will drop.

  • If I'm paying full price for something I would expect it to be an unlocked phone that I could use with any network as and how I see fit. If it's tied to the network, filled with their crapware, or crippled to prevent certain features from interfering with their profits, then screw them.

  • Sprint is also running a phone-leasing plan that lets people pay an additional $22/month for an 16GB iPhone, with yearly upgrades.

    T-mobile doesn't carry contracts anymore, and gives monthly payment plans for phones. The one I have (an Android one), I pay an extra $5-10 a month (can't remember the actual number) which will get paid fully in a year. Should I decide to quit t-mobile, I have to pay the remainder of the phone upfront.

    I like the way things are going. No contracts and no subsidies, with monthly payments as a low barrier of entry.

  • They give you deals until you are addicted and then they start charging you for it.

  • OMG, people will have to PAY FULL PRICE for their new shiny, how will humanity survive this apocalyptic disaster??

    • Re: (Score:2)

      by mark-t ( 151149 )
      Of course, most people won't even be able to *afford* to get a "new shiny", and many will generally have to settle for a phone model that is at least 4 years old. Cell phone providers will realize that many people aren't getting the newer and more expensive phones and will come out with a "phone loan" plan for people to bring down the monthly payments on those phones to more affordable levels. The phone loan will not be tied to the cell phone service plan, so once the loan is paid off, a person's monthly
  • ... so people who want the latest and greatest phone but don't happen to have that kind of money burning a hole in their pocket to spend all at once can still get what they want. Oh, and these loans will be 3 to 5 years long.

    • "Next"? Did you even read the *SUMMARY*, much less TFA? It's already possible to finance the phone, and the term is two years, not three to five.

      Some people...

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