Sprint reportedly ends two-year smartphone contract subsidies

Posted:
in iPhone edited January 2016
According to a purportedly leaked internal document, U.S. wireless carrier Sprint is no longer offering device subsidies on two-year contracts to customers opening new accounts, instead pushing activations toward leasing and installment plans.




The sales sheet, obtained by Android Central, notes smartphone subsidies are now restricted to upgraders and those customers looking to add a line onto existing accounts. The new policy does not apply to new tablet purchases, which are still eligible for two-year contracts.

Sprint's decision is in line with a broader industry move away from smartphone incentives. Verizon and T-Mobile have already done away with contract pricing as part of a move to monthly installments, upgrade plans and device leases. America's second-largest carrier, AT&T, will join the pack and end contract subsidies on Friday.

In August, Sprint launched a new "iPhone Forever" plan designed to give Apple fans a clear upgrade path to the latest and greatest hardware. Under Sprint's terms, customers pay a monthly premium on top of wireless and data service fees, and in return are made immediately eligible for a new iPhone each year when trading in a previous model. Actual pricing depends on level of service, handset capacity and other variables.

For carriers, the move away from two-year contracts seems like an easy decision. Subsidies were initially created to lure customers into purchasing a smartphone by offsetting the often high price of entry, with carriers hoping to recoup money lost on hardware through service fees. Now that handsets like iPhone are the norm, network operators are transitioning to installment schemes, placing the burden of hardware costs back onto consumers.

Comments

  • Reply 1 of 5
    bsimpsenbsimpsen Posts: 281member
    Now that handsets like iPhone are the norm, network operators are transitioning to installment schemes, placing the burden of hardware costs back onto consumers.
    The burden has always been on the consumers. Who else pays the carriers? This reminds me of "let the government pay for it".
    redgeminipanetmage
  • Reply 2 of 5
    I don't really understand these changes. if I want a new 16GB iPhone 6s today, how much do I have to pay upfront? I never had the illusion that the $500 discount was "free". It's that I will pay it over the next 24 months. So with the new plan, how much do I pay upfront and monthly?
  • Reply 3 of 5
    scottw2 said:
    I don't really understand these changes. if I want a new 16GB iPhone 6s today, how much do I have to pay upfront? I never had the illusion that the $500 discount was "free". It's that I will pay it over the next 24 months. So with the new plan, how much do I pay upfront and monthly?
    I don't know about Sprint, but with AT&T's Next plan you simply pay the sales tax upfront on the full retail price of the phone (in my case $949 x 7%=$66.43), then the monthly charge for your particular plan which varies with the term.
  • Reply 4 of 5
    scottw2 said:
    I don't really understand these changes. if I want a new 16GB iPhone 6s today, how much do I have to pay upfront? I never had the illusion that the $500 discount was "free". It's that I will pay it over the next 24 months. So with the new plan, how much do I pay upfront and monthly?
    Sprint offers a couple different ways to do it. Device Installment Plan: With good credit, you pay the sales tax on the MSRP up front (i.e. $649.99 x 6% = $39), then the remaining balance is divided over 24 monthly installments at 0%. If you put extra money down up front, it will lower your monthly payments, similar to any other type of financing. Depending on the plan, you may be able to upgrade (turning in your phone) every 12 months. Sprint now offers iPhone Forever leasing, which is $0 down (not even sales tax), and you pay a lower monthly payment versus financing. You can upgrade at any time as soon as a new iPhone is released (turn in the current iPhone in good condition). That means if you get a new iPhone in July (for example), you can upgrade to the newest iPhone on release day at the end of September. You also have the option to keep the iPhone, pay until the end of the 24-month lease term, then pay the residual value at the end of the lease and keep the iPhone. It's similar to vehicle leasing. You can also just keep paying the lease payment until the term is fulfilled for the residual value. 

    Sprint makes it pretty flexible to own new devices. 
  • Reply 5 of 5
    "Subsidies were initially created to lure customers into purchasing a smartphone by offsetting the often high price of entry, with carriers hoping to recoup money lost on hardware through service fees."

    That's an interesting theory. I paid a penny for my first entry into cellular telephony, predating feature phones.
    netmage
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