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Sprint raises smartphone termination fee to $350 weeks before iPhone 5 launch

post #1 of 30
Thread Starter 
Sprint has announced plans to follow AT&T and Verizon Wireless in charging a hefty $350 early termination fee for all "advanced" devices starting September 9, ensuring that customers won't be able to obtain new subsidized hardware and then ditch their service plan.

The policy change, noted by blog SprintFeed, goes into effect just weeks before Apple is expected to launch iPhone 5. Sprint is rumored to be among the US carriers that will carry the new phone.

Sprint previously charged its subscribers $200 to escape their subsidized service contract early, an amount prorated over the term of the contract. By boosting the fee to $350, Sprint will now be in the same ballpark as AT&T and Verizon, both of which hiked their fees to accommodate the shift from subsidizing cheap feature phones to subsidizing much more expensive smartphones.

AT&T's early termination fee was originally $175 for Apple's iPhone, the first widely popular phone costing around $650. The fee was intended to prevent customers from buying an iPhone as part of a contract and then abandoning the contract. Previously, expensive smartphones in the price range of iPhone were carried only by a minority of US customers.

At the end of 2009, Verizon raised its own smartphone early termination fee to $350 as it began to market Droid-branded phones running Android to replace flagging sales of Blackberry devices. The next spring, Google and T-Mobile launched the Nexus One with a $550 early termination fee, sparking scrutiny from the U.S. Federal Communications Commission.

Last summer, AT&T also raised its early termination fee on advanced devices like the iPhone to $325. AT&T's smartphone mix is now predominantly made up of iPhones, and Verizon's iPhone subscribers are growing fast enough to substantially knock down the carrier's share of Android phones within the US.

Sprint's own early termination fee hike suggests that it too will be focusing on moving its subscribers from feature phones to advanced smartphones, setting a date the coincides with the iPhone 5 release. Sprint already sells high end Android phones and operates an expensive 4G network, but those devices make up a relatively small share of its subscriber base.

Picking up Apple's iPhone would likely dramatically change Sprint's subscriber mix. This summer, Verizon revealed that it sold more than twice as many iPhones as it did 4G phones, despite an advertising blitz promoting its new 4G service.

Sprint appears similarly inclined to leverage the popularity of the iPhone to upgrade its subscribers to more sophisticated smartphones. The company has also announced an event on October 7 to provide a "Strategy Update," and Apple has posted jobs throughout 2011 apparently related to supporting a Sprint iPhone.

The company itself has told employees simply not to offer any comment on its plans to support iPhone 5. but the Wall Street Journal was confident enough about its sources to report that the next iPhone would in fact be carried by the company in tandem with Verizon and AT&T at its launch.


Analyst Gene Munster of Piper Jaffray has stated that Sprint could sell 6 million additional iPhones for Apple in 2012, based on a comparison with the shift to iPhone that Verizon experienced.
post #2 of 30
Makes complete sense. They're all colluding anyway; might as well make all of their prices equal across the board.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #3 of 30
What's more telling is that T-Mobile hasn't done this yet. Seems less likely they'll get the iPhone this go around with the oddball 3G frequency.
post #4 of 30
Quote:
Originally Posted by shadash View Post

What's more telling is that T-Mobile hasn't done this yet. Seems less likely they'll get the iPhone this go around with the oddball 3G frequency.

Except their 3G is AT&T's 4G (their REAL 4G. LTE, not the whoring they're doing now), so it will eventually get 1700MHz.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #5 of 30
Quote:
Originally Posted by Tallest Skil View Post

Makes complete sense. They're all colluding anyway; might as well make all of their prices equal across the board.

Now THAT would be something the FTC and DOJ would be all in their schiz about...
post #6 of 30
Jeeze...

Let's see if we can find a new way to piss off/screw our customers...

... what's next... the prison "visitors room" setup they have at some CableCo stores -- where you are separated from the "guards" by 3"-thick "bullet-proof" glass and exchange things through a slide-out drawer.

The customer is always wrong... No Exceptions!
"Swift generally gets you to the right way much quicker." - auxio -

"The perfect [birth]day -- A little playtime, a good poop, and a long nap." - Tomato Greeting Cards -
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"Swift generally gets you to the right way much quicker." - auxio -

"The perfect [birth]day -- A little playtime, a good poop, and a long nap." - Tomato Greeting Cards -
Reply
post #7 of 30
Quote:
Originally Posted by gwmac View Post

Although I have no doubt that the iPhone coming to Sprint is a huge factor in this decision, let's not forget that the timing of this ETF rate hike comes one day before the introduction of the Samsung Galaxy SII Epic 4G touch which is also a very expensive phone. Sprint already has the Evo 3D and Motorola Photon, both dual core and expensive phones, so I think this was to be expected. With a $200 ETF, you could actually make money by selling a new smart phone on Ebay.

I haven't read any statistics to suggest that the ratio of smart vs. feature phones on Sprint is radically different than AT&T or Verizon though. The Evo 4G set the standard and the bar for Android phones when it was released.

I haven't seen data from this year broken out, but a year ago AT&T was selling ~15 million iPhones while Verizon was selling about 7 million Blackberries and 7 million Android smartphones, while Tmobile and Sprint were each only selling less than 4 million smartphones of any flavor.

So despite being about half the size of Vz and ATT, TMob and Sprint had a much lower smartphone mix than AT&T. Like Verizon, they want to grow their smartphone subscriber ratio and keep subscribers from churning. AT&T has largely been protected by the iPhone's attraction.

post #8 of 30
I'll just add this to the list of reasons I'd never do business with Sprint.
Thank god they own the number of towers they do or they would have been gone
long ago. Sprint is the epitome of a company who's CEO has zero understanding of a productive business model or understanding on how to implement one.
I really wish that Google would get into the Broadband / Internet game. Google has the ability to put a good product to market using a fair pricing structure. I'm so sick of the weekly changes in terms, conditions & pricing that the big 3 constantly bombard us with, all of which just add money to their pockets while making us suffer.
post #9 of 30
Can someone tell and confirm that when Verizon goes full LTE -- LTE provides multi-tasking as AT&T has? And right now AT&T and T-mobile are the only phones that can be used outside of the United States? True or false?

Thank you.
post #10 of 30
Sprint just can't seem to keep the iPhone 5 release date a secret.

Please update the AppleInsider app to function in landscape mode.

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Please update the AppleInsider app to function in landscape mode.

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post #11 of 30
Dearest Telcos,

Go F**K yourself.

That is all.
post #12 of 30
It sure would be nice if Apple stepped up and bought either T-mobile or Sprint (or both, for that matter)...

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

Reply
post #13 of 30
Steve said that Apple wasn't doing Blu-Ray because it was a bag of hurt. Running a telco is way worse.
post #14 of 30
Quote:
Originally Posted by SpamSandwich View Post

It sure would be nice if Apple stepped up and bought either T-mobile or Sprint (or both, for that matter)...

But they're both worthless And don't serve any purpose for Apple to own.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #15 of 30
If Apple is adding Spring and T-Mobile -- it is time they really open up availability and allow the next tier providers such as U.S. Cellular (that dominates markets in the Midwest -- and who will have 4G coverage in their markets before AT&T will) to sell the iPhone as well.

While the "Big 4" provide coverage over a large part of the urban parts of the country, in certain parts only the next tier providers actually provide the full coverage in the rural areas. Apple should not abandon these consumers to Google, RIM or Microsoft -- open up the carrier pool to these next tier quality providers!
post #16 of 30
Quote:
Originally Posted by mac1972 View Post

If Apple is adding Spring and T-Mobile -- it is time they really open up availability and allow the next tier providers such as U.S. Cellular (that dominates markets in the Midwest -- and who will have 4G coverage in their markets before AT&T will) to sell the iPhone as well.

Apple already sells an unlocked GSM iPhone to cover all GSM smallies.

All they have to do is sell the iPhone 5 unlocked to cover everything.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #17 of 30
The smartphone mania is fueling these exorbitant early termination fees. No more for me...

My AT&T contract for my iPhone 3GS ended on August 29th so I am a free man. From now on I will no longer buy a subsidized phone. I will either keep the phone I have or sell my used phone and simply buy a new, out of contract phone. Maybe others should do this too ... it keeps you more honest and there would be no need for contracts. I realize this will keep me from having the latest and greatest phones, but I don't care. As of today I replaced my iPhone 4 with a Sony Ericsson C905 cybershot camera...on a GoPhone account nonetheless.

Extra green in the pocket and no more contracts. My bill is about $8.33 a month for a few minutes of talk time and $5.00 for 200 texts. Sure, many folks could never live with such a skimpy plan, but hey I am saving about $66.00 a month now.

If more people would simply walk away from these big data plans and outrageous texting plans (go iMessage, Google Voice and GoChat to name a few) then these telcos would feel the pinch, but too many people have blinders on and think they NEED a smartphone.
post #18 of 30
Quote:
Originally Posted by mac1972 View Post

If Apple is adding Spring and T-Mobile -- it is time they really open up availability and allow the next tier providers such as U.S. Cellular (that dominates markets in the Midwest -- and who will have 4G coverage in their markets before AT&T will) to sell the iPhone as well.

While the "Big 4" provide coverage over a large part of the urban parts of the country, in certain parts only the next tier providers actually provide the full coverage in the rural areas. Apple should not abandon these consumers to Google, RIM or Microsoft -- open up the carrier pool to these next tier quality providers!

Can't disagree. Cricket, etc., si! iPhones for anyone who can generate useful signal.....

An iPhone, a Leatherman and thou...  ...life is complete.

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An iPhone, a Leatherman and thou...  ...life is complete.

Reply
post #19 of 30
Quote:
Originally Posted by Lancelot9201 View Post

I'll just add this to the list of reasons I'd never do business with Sprint.
Thank god they own the number of towers they do or they would have been gone
long ago. Sprint is the epitome of a company who's CEO has zero understanding of a productive business model or understanding on how to implement one.
I really wish that Google would get into the Broadband / Internet game. Google has the ability to put a good product to market using a fair pricing structure. I'm so sick of the weekly changes in terms, conditions & pricing that the big 3 constantly bombard us with, all of which just add money to their pockets while making us suffer.

Ironic perhaps that once upon a time, it was Sprint PCS that didn't have the towers or build-out, and they were the outsiders putting the squeeze on established companies operating analog cell networks (this in the early 90s). Sprint had advanced (at the time) CDMA phones that ran rings around clunky analog cell phones, and since it was all digital, they could price things lower and throw in long distance for one low price. There wasn't even a termination fee because you didn't sign a contract with Sprint: all plans were no-contract plans. WTF happened in the last 15 years? Sprint became the very thing they were once upon a time the antithesis of.

I don't regret leaving Sprint for one second. The iPhone ain't gonna get me back there.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
Reply
post #20 of 30
Quote:
Originally Posted by gwmac View Post

I think you meant using voice and data at the same time instead of multitasking. Yes, you can do that now with any LTE phone on Verizon or WiMax phone on Sprint, and any phone on WiFi for data. Sprint is upgrading their CDMA to 1X advanced and I believe so is Verizon. That would allow voice and data simultaneously over CDMA.

There are plenty of world phones on all carriers. So that is false. My old HTC Touch Pro 2 on Sprint even had a SIM slot and could be used in GSM countries abroad.

Thank you, I appreciate the answers.
post #21 of 30
No, the reason they raised their ETF is that they saw Verizon and AT&T do it without it having a serious impact on Churn (or people signing up without contracts). The only other major player is T-Mobile, but ETF's are proving to be not that big of a deal for carriers since most people might complain about it, but they sign anyway.

People canceling contracts is a very low % of overall customers, but it can add up really fast with subsidies. Let's say a carrier has 40 million customers and a churn rate of 1.5%. That's still 600,000 people cancelling. Modern smartphones are subsidized more than ever. An Iphone 4 is what? 199? Get that same phone off contract (on Verizon) it will cost you $649. That is subsidy of $450 PER PHONE.

Now, the amount of the subsidy will vary depending on the phone sold, but for smartphone's it's generally around the 300-400 mark. There is a little markup with the devices, but it's not as high as everyone things. For verizon, the markup online/corp stores is around $20, while some 3rd parties can have a higher markup, the fact remains that MOST of the markup is done by the manufacturer. This is why Apple, HTC, and Samsung are all making so much money with smart phones. Their revenue AND their profits are increasing.

How most carriers work subsidies is they amortize the cost over the term of the contract (most carriers do 20 months before upgrade). So while you might be paying them $100 a month in service costs, only a portion of that is going to pay for the phone. The rest is the services you use, paying the wages for customer service, support techs, etc. and investing in future tech (such as LTE). Yes, there is also profit figured in there, but companies need to make a profit, or they don't stay in business. Apple understands this better than anyone.

So let's take that 600,000 again. With the old ETF (175 for verizon), that would be a loss of 275 per churned customer, before amortization, or 165 Million dollars in additional lost revenue. After the change (350 etf) the loss drops to $100 per phone or $60 Million before amortization. But, the higher ETF also acts to inhibit churn so savings can be even greater.

I'm not defending Telecom's pricing for plans, I think that they're too high just like everyone else. But as long as customers demand cheap phones, we're giving up our best bargaining chips for $450 savings over 2 years. And no company will eat millions in potential revenue if they don't have to.

EDIT: I should also mention that (in part because of the price hike, in part because of Apple's Iphone pricing) most smartphones no longer have rebates with Verizon.
post #22 of 30
Quote:
Originally Posted by Lancelot9201 View Post

I'll just add this to the list of reasons I'd never do business with Sprint.
Thank god they own the number of towers they do or they would have been gone
long ago. Sprint is the epitome of a company who's CEO has zero understanding of a productive business model or understanding on how to implement one.
I really wish that Google would get into the Broadband / Internet game. Google has the ability to put a good product to market using a fair pricing structure. I'm so sick of the weekly changes in terms, conditions & pricing that the big 3 constantly bombard us with, all of which just add money to their pockets while making us suffer.

What are you even talking about - did you read the article, where it says the other major carriers already have this fee structure?

As for your silly comments about Google -- whatever. The "real name" debacle on Google+ -- deleting people's Gmail, Picasa, etc accounts just because they *think* (without even bothering to prove it) that someone's not using their real name on Google+ -- shows how Google's just another my-way-or-the-highway megacorp.
post #23 of 30
Quote:
Originally Posted by SpamSandwich View Post

It sure would be nice if Apple stepped up and bought either T-mobile or Sprint (or both, for that matter)...

Why would Apple want to buy a telco and suddenly have millions of people complaining about "my *Apple* service" and "my *Apple* coverage" every time they had a problem with their phone? What company (that already has a stellar, clean reputation) would want to take on that nightmare?
post #24 of 30
Quote:
Originally Posted by Sierrajeff View Post

What are you even talking about - did you read the article, where it says the other major carriers already have this fee structure?

As for your silly comments about Google -- whatever. The "real name" debacle on Google+ -- deleting people's Gmail, Picasa, etc accounts just because they *think* (without even bothering to prove it) that someone's not using their real name on Google+ -- shows how Google's just another my-way-or-the-highway megacorp.

People's Gmail and Picasa are NOT deleted over the naming policy. this was explained what? 3 weeks ago? Longer? The only way this stuff is suspended is if the account is suspected of SPAMMING, or if the user is violating the TOS (such as being under 18. Which is illegal in the US because of data laws)

Nice try.
post #25 of 30
Quote:
Originally Posted by Tallest Skil View Post

Apple already sells an unlocked GSM iPhone to cover all GSM smallies.

All they have to do is sell the iPhone 5 unlocked to cover everything.

That is great for GSM phones -- but CDMA carriers typically don't work that way. And all carriers in the US other than AT&T & T-Mobile are CDMA carriers. (Not that I like that, but it is the way it is).
post #26 of 30
Quote:
Originally Posted by mac1972 View Post

That is great for GSM phones -- but CDMA carriers typically don't work that way. And all carriers in the US other than AT&T & T-Mobile are CDMA carriers. (Not that I like that, but it is the way it is).

Doesn't matter. LTE is SIM-based and Verizon, et. al. are moving to LTE. CDMA doesn't matter anymore.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #27 of 30
Quote:
Originally Posted by Tallest Skil View Post

But they're both worthless… And don't serve any purpose for Apple to own.

They have millions of customers and cell networks in place.

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #28 of 30
Quote:
Originally Posted by SpamSandwich View Post

They have millions of customers and cell networks in place.

That's meaningless in light of everything else Apple would be taking on by buying a telecom.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #29 of 30
Quote:
Originally Posted by Tallest Skil View Post

That's meaningless in light of everything else Apple would be taking on by buying a telecom.

Proud AAPL stock owner.

 

GOA

Reply

Proud AAPL stock owner.

 

GOA

Reply
post #30 of 30
Quote:
Originally Posted by SpamSandwich View Post


You're acting as though it's as simple as signing a few sheets of paper and replacing a few storefront signs.

First, that's exactly what it is. Signing papers. But there won't be any storefront signs replaced, the stores would close down. No more T-Mobile stores. Apple would handle iPhone sales from Apple Stores, meaning all those salesmen? Fired. Gone. Unneeded.

Second, it's canceling all contracts and whatever else T-Mobile had with every other cell hardware manufacturer. Bunch of legal crap there, plenty of payoffs, and maybe some lawsuits.

Third, it's building out T-Mobile's network to be something that's actually worth anything. Ever seen T-Mobile's coverage map? Plenty of places that don't even have voice that should. They don't differentiate between their data speeds on their data map (just one blob of pink), but I can't imagine them having their "4G" (note: HA HA HA HA HA HA HA) everywhere there IS pink.

That's much of Apple's existing cash right there.

On top of all this, then you have every other telecom on the planet that Apple DOESN'T own but with whom they have agreements BEING FRICKING TERRIFIED that Apple will stop letting them have the iPhone. They'll be hurt, betrayed, and afraid that they're next for the purchase.

Apple having one carrier in one country is a whole mess of trouble.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
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