Sprint Stops Offering Two-Year Phone Contracts

[RedCroissant]

now all apple needs to do is start up 1 and 2 year contracts in replace of the cell phone companies to keep subsidies and people happy.

Wasn't this the original goal of the iPhone anyway; to bypass the carriers and use these awesome devices to make calls over WiFi using existing wireless technology and the then city-wide wireless networks like WiMax and Clearwire?

I don't know where I'm getting this information but I think I remember reading that Steve Jobs didn't want to use carriers and then settled for AT&T until the technology caught up with the idea.

 

[Rogifan]

One more carrier about to expose the true premium prices that Apple charges. No more concealing the truth.

Here's what you see when you go to Sprint's site:

Remind me again what they're exposing? I don't see the actual price of the phone listed anywhere. All I see is $0 down and a monthly installment fee. Also an iPhone 6S Plus is listed at $31/mo. For comparison, a Galaxy S6 Edge + is $30/mo and an HTC One M9 is $29.50/mo. So where again are these premium prices you speak of?

Apple was surely seeing this trend begin and became nervous. The next iPhone they will probably advertise their payment plan price rather the outright price.

Apple never advertised the full price of the phone; not in the US at least. And if you go to the website of the four major carriers in the United States, NONE of them are advertising the full price of the phone. AT&T shows the monthly installment fee whereas Verizon, Sprint and T-Mobile all show $0 down with the monthly fee in smaller print. I know some are so eager to jump on this being bad for Apple but I don't see it. Instead of seeing $199 you're now seeing $0. And is someone not going to get an iPhone because it's maybe $3-$5/mo more than a competitors device? I doubt it.

 

[Michael Scrip]

Why does everyone read "Carriers stop offering contracts" and assumes it means "people will see $649 and run like hell out of the store" ?

This article, in particular, says "New Sprint customers will be able to purchase their phones through Sprint programs like Easy Pay and iPhone Forever."

And other carriers offer similar payment programs.

You never had to pay full retail price for a smartphone! And you don't have to now either! Nothing has really changed.

Contracts are gone... but the ability to pay for a smartphone over time is still there. The end result is the same.

So I don't envision people abandoning "expensive" smartphones. If anything... it might make it easier to handle.

 

[Michael CM1]

How does it work in the US? Here in the UK you go to a Network's website, you see a contract, you agree to it, you get the phone and pay monthly. I got my iPhone 6s 64GB with no upfront payment, I get 20GB of Data, unlimited everything else and I pay £45 a month for it, that's £1080 over 24 months of a contract.

I thought it was a good deal considering and I'm happy.

That's basically what is being used now by most carriers. I'm on AT&T, and they have a variety of plans if you don't want to pay the full price upfront. I do the one broken down into either 20 or 24 payments. There's another one broken down into 12 if you want to do that and buy a new phone each year. When AT&T started doing this, they added a $15 per line discount to your monthly plan for each phone not under a contract. So if you buy a phone now and keep it past two years, you're really benefitting from this plan. Same with people who buy a used phone.

I personally think it'll help people respect their phones more (all smartphones) when they see the full $650+ price at least on a bill. Sometimes it's like half the kids I see anywhere from 10 to maybe 22 have broken phone screens. It took me until last year for that to happen, and it was because I dropped my phone using it as a flashlight in my car (minor crack) then dropped it using it as a level in the bathroom (all the cracks in the world). After that $120 lesson, I went and bought some $3 flashlights and a couple of levels.

 

[x-evil-x]

Why does everyone read "Carriers stop offering contracts" and assumes it means "people will see $649 and run like hell out of the store" ?

This article, in particular, says "New Sprint customers will be able to purchase their phones through Sprint programs like Easy Pay and iPhone Forever."

And other carriers offer similar payment programs.

You never had to pay full retail price for a smartphone! And you don't have to now either! Nothing has really changed.

Contracts are gone... but the ability to pay for a smartphone over time is still there. The end result is the same.

So I don't envision people abandoning "expensive" smartphones. If anything... it might make it easier to handle.

what about the people that have upgraded every 2 years by selling their old phone to cover the cost of the subsidy? I haven't paid for an iPhone since 3g. How can we upgrade without paying out of pocket now...
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Wasn't this the original goal of the iPhone anyway; to bypass the carriers and use these awesome devices to make calls over WiFi using existing wireless technology and the then city-wide wireless networks like WiMax and Clearwire?

I don't know where I'm getting this information but I think I remember reading that Steve Jobs didn't want to use carriers and then settled for AT&T until the technology caught up with the idea.

Yea i read that a long time ago also. not sure how they are going to handle the 7 launch

 

[Ghost31]

Can someone explain to me like i'm 5 why american phone companies just decided to do this all of a sudden?genuinely curious.

 

[appledefenceforce]

The "Top Flight" Android device costs $550 with a screen larger than the iPhone 6S+

Soon, the only manufacturers that will dare make their base models so expensive will be Apple and Samsung.

And your point being?

I'd rather pay extra to get an iPhone and also a piece of mind with their post sales support, than cheap out and buy an Android phone whereby I have to send the phone in just for basic warranty.

 

[Rogifan]

what about the people that have upgraded every 2 years by selling their old phone to cover the cost of the subsidy? I haven't paid for an iPhone since 3g. How can we upgrade without paying out of pocket now...
[doublepost=1452246961][/doublepost]
Yea i read that a long time ago also. not sure how they are going to handle the 7 launch

The only difference is instead of selling your phone on eBay or craigslist or wherever you're trading it in to Apple or the carrier when you get a new one. Unless you choose to completely pay it off at which point you would own the phone outright. When I was on the AT&T next program the only thing I paid out of pocket was the tax on the new phone. I'm assuming it will work the same way with Apple's upgrade program.

Why does everyone read "Carriers stop offering contracts" and assumes it means "people will see $649 and run like hell out of the store" ?

This article, in particular, says "New Sprint customers will be able to purchase their phones through Sprint programs like Easy Pay and iPhone Forever."

And other carriers offer similar payment programs.

You never had to pay full retail price for a smartphone! And you don't have to now either! Nothing has really changed.

Contracts are gone... but the ability to pay for a smartphone over time is still there. The end result is the same.

So I don't envision people abandoning "expensive" smartphones. If anything... it might make it easier to handle.

You never had to pay full retail price upfront. Nobody was getting a $649 phone for $199. The D&G crowd and Apple haters desperately want to believe this is going to be bad for Apple because it's going to "expose the true price of the phone". Dream on. Now instead of seeing $199 next to the phone you're seeing $0. If the haters believe people were stupid enough to think the phone was only $199 how can they not believe seeing $0 next to the phone will make these same people think they're getting the phone for free?

 

[x-evil-x]

The only difference is instead of selling your phone on eBay or craigslist or wherever you're trading it in to Apple or the carrier when you get a new one. Unless you choose to completely pay it off at which point you would own the phone outright. When I was on the AT&T next program the only thing I paid out of pocket was the tax on the new phone. I'm assuming it will work the same way with Apple's upgrade program.

but aren't you paying the 20-40$ a month extra to "lease" the phone? I didn't care about being in a contract and owning my phone after 2 years and being able to sell it to cover cost of a new phone. no 20-40 dollar fee a month for the phone.

 

[dannys1]

How does it work in the US? Here in the UK you go to a Network's website, you see a contract, you agree to it, you get the phone and pay monthly. I got my iPhone 6s 64GB with no upfront payment, I get 20GB of Data, unlimited everything else and I pay £45 a month for it, that's £1080 over 24 months of a contract.

I thought it was a good deal considering and I'm happy.

Here in the UK I bought my phone for £619 with about £50 cashback. I spend £11 a month on Three for unlimited data that i'm allowed to tether and 600 minutes. I'm not in any contract and I can leave or sell the phone at anytime, and when the iPhone 7 comes out i'll flog it for about £400 and buy that one, costing me about £300 a year net for phone and mobile bill usage.

 

[Michael Scrip]

what about the people that have upgraded every 2 years by selling their old phone to cover the cost of the subsidy? I haven't paid for an iPhone since 3g. How can we upgrade without paying out of pocket now...

I'm assuming you paid $199 for your iPhone 3G. Then after 2 years... you sold that iPhone 3G to pay for the iPhone 4.

But guess what... that iPhone 3G didn't cost $199... it really cost $649.

You were actually making additional monthly payments for your 3G all along... you just didn't realize it. The carrier hid those payment insides your bill.

Not much is changing now... except you don't have to make a down payment anymore. You just start making a monthly payment for the phone. You still get to keep it at the end of 24 months. And you can sell it if you want.

But your bill clearly says you're paying $27 a month for the phone... and whatever else for the service.

After 2 years when it's time to get a new iPhone... you sell the old iPhone for cash... and start making the $27 a month payment on the next iPhone.

From Sprint's website, for instance:

Here's the difference:

Old way: $199 down. Hidden payments for the other $450. After 24 months... sell your old phone and use that profit to pay for the next $199 down payment.

New way: $0 down. $27 a month for the phone. After 24 months... sell your old phone. Start new $27 payments for the new phone. But you get to keep the profit from selling the old phone

 

[Rogifan]

but aren't you paying the 20-40$ a month extra to "lease" the phone? I didn't care about being in a contract and owning my phone after 2 years and being able to sell it to cover cost of a new phone. no 20-40 dollar fee a month for the phone.

When you paid $199 up front you were still paying off the phone as part of your monthly bill. Its the same thing now except that the installment fee for the device is separate from the voice/data fee and once the phone is paid off you no longer pay that monthly installment fee. And you have options that make it easier to upgrade every year if you so choose.

 

[kdarling]

Wasn't this the original goal of the iPhone anyway; to bypass the carriers and use these awesome devices to make calls over WiFi using existing wireless technology and the then city-wide wireless networks like WiMax and Clearwire?

No, not calls.

I don't know where I'm getting this information but I think I remember reading that Steve Jobs didn't want to use carriers and then settled for AT&T until the technology caught up with the idea.

Closer, but it was only about data.

Originally (as in early 2005) Jobs checked into the idea of Apple becoming an MVNO, but soon figured out that it would be a pain to manage.

So then he approached Verizon in mid 2005 with his idea of a phone where Apple took away the support role from the carrier, and also wanted a cut of the monthly revenue. Verizon thought this was a bad deal for the customer partly because Apple basically wanted the customer's subsidy. AT&T (Cingular) was okay with it, yet still were in no rush to sign up for an unknown device, and waited over a year before finally signing an agreement with Apple in mid 2006.

Anyway, the problem was that AT&T at the time did not have anywhere near the 3G network that Verizon had, and the first iPhone only used 2G EDGE. While publicly claiming it was okay, privately Jobs thought that the data speed sucked.

His clever idea for a data solution at the time, was to promote the introduction of guest networks built into every WiFi router in the world. In other words, every hotspot would have an extra open free connection that could not reach your home network, but only went straight to the internet. Thus iPhones could roam their data connections to many more hotspots.

 

[Someyoungguy]

I agree. The new way is easier to understand. But that's where I think some people are going to be weary of spending 649+ on a phone. They'll think "it used to only be 199!" Even though you and I know and understand differently. But I guess it won't have a whole lot of affect on Apple, they'll still sell more than enough at whatever price.

In doing cost analysis when my carrier, AT&T, announced this, I discovered that I am truly losing $400/line because I have a rather old plan that is $2 cheaper per month than the equivalent Family Share plan using BYOD. This is partially because of the corporate discount I receive and its application to more of the charges in the old plan than in the new. So, for me, comparing what exists now, the phone cost truly becomes $199 (before today) and $649 (today and after), with my monthly payment unchanged.

 

[rdlink]

For me and many others, the "premium" price is worth it.

And besides... for those who continue to use carrier financing to purchase or lease phones, the game hasn't changed that much. Instead of the subsidization costs vaguely being applied to the bills of all postpaid customers, you're simply subsidizing the cost of your own device on a monthly basis.

I would say it a little differently. You were always financing your phone with "subsidies." Now it's just transparent. This is actually empowering to the user, because they have the option of whether they want to upgrade. With the old model it made no sense not to upgrade every two years, because you were paying for the "subsidy" whether you had the new phone or not. At least now you won't be paying for the phone anymore.

I also predict that carriers will now try to muddy the waters even more by offering deals at upgrade time to switch carriers. It's already going on, but they will see the opportunity to cause churn by saying, "Switch carriers and we'll buy your old phone" and things like that.

 

[jlc1978]

In Germany you have had the choice for a long time: Expensive contract with subsidy or cheap contract / prepaid without subsidy.
The cheap contract was usally the cheaper option, because you can get out quickly if someone else offers cheaper prices or more minutes / texts / data volume for the same price. In a highly competive market with many low cost MVNOs this saved lots of money for me.

It's just getting that way in the US. Unfortunately most of the cheap MVNO's are not yet nationwide but are good values if you are in their service area. My first phone was unsubsidized but I paid 25/cents a minute for airtime after 30 minutes a month. Then again, that was when mobiles first came out; so in the US subsidized phones helped drive adoption.

My comment was not so much aimed at contract pricing but how not subsidizing the phone lets providers change plan terms and ensuring they still get paid for the phone if the subscribers declines to accept the new terms.

Remember: A phone is just a consumer good. If someone cannot afford it upfront, they should go for something less expensive. Its not a car or a house.

Christian

I would think that logic would apply to anything, including a car or house.

[doublepost=1452258452][/doublepost]

I have AT&T and grandfathered Unlimited Data have we found out yet if eliminating the contracts is how they will elminate us last remaining unlimited data folks?

Price you out of it. I understanding they are upping the price by $10 already; with no contracts they can continue to raise it until everyone has left.

 

[rdlink]

Originally (as in early 2005) Jobs checked into the idea of Apple becoming an MVNO, but soon figured out that it would be a pain to manage.

So then he approached Verizon and AT&T (Cingular) with his idea of a phone where Apple took away the support role from the carrier, and also wanted a cut of the monthly revenue. Verizon thought this was a bad deal for the customer partly since Apple basically wanted the customer's subsidy. AT&T was okay with it.

Now, what happened was that AT&T at the time did not have anywhere near the 3G network that Verizon had, and the first iPhone only used 2G EDGE. While publicly claiming this was okay, privately Jobs thought the data speed sucked.

His idea for a data solution at the time, was to promote the introduction of guest networks built into every router in the world. In other words, every hotspot would have an extra open free connection that could not reach your home network, but only go straight to the internet. Thus iPhones could roam their data connections to many more hotspots.

Much of what you wrote is fairly accurate, but your anti-Apple bias is showing a little bit there.

Verizon has NEVER shied away from anything because it was "bad for the customer." Verizon's main reason for walking away from the iPhone deal with Apple originally was for the same reason why Verizon, and all of the other carriers hate the iPhone to this day: Their lack of ability to control the device, and use it to push their own services and "back room deals" onto it.

Every carrier in America wishes more than anything that the iPhone would just go away tomorrow like it never happened. They would be more than happy to have everyone in the world carrying an Android device, so that they could continue to conspire against the average consumer to disable and fork the technology built into the phone for their own purposes. Just like the good old days before the iPhone showed up.

 

[jlc1978]

His clever idea for a data solution at the time, was to promote the introduction of guest networks built into every WiFi router in the world. In other words, every hotspot would have an extra open free connection that could not reach your home network, but only went straight to the internet. Thus iPhones could roam their data connections to many more hotspots.

While that is a good idea, the ISPs would probably kill that. Comcast and ATT lets you roam on their hotspots but only if you are a customer or the location , such as McD's pays.

I doubt ISPs would be willing to carry wifi traffic for non-customers for free.

 

[thermodynamic]

One more carrier about to expose the true premium prices that Apple charges. No more concealing the truth.

They're not too much higher than the better Android models and there are certain advantages - though not necessarily on a hardware level, but before I digress: Is it not true that Apple iOS, when released or updated, goes to all carriers and models at the same time, without the delays that Android users wait for? Especially for security updates (though anyone who thinks any one platform is magically bulletproof is naive), this is one factor in Apple's favor.

A lot of posters screamed from the mountaintops they were leaving AT&T when they announced this same things.

Where do they intend on going, exactly?

The same place the "We don't want serial numbers embedded in CPUs" sheep from the 1990s went, I suppose. People enjoy enslaving themselves, I suppose. But if they didn't, these companies would lose profit. Who gets the blame, then? Why not customers, we're blamed and scapegoated for everything else...

I'm glad carriers in the US finally caught up with the rest of the world.

Caught up? Or driven down? I'm glad you feel glad, though - so many people in this sad world are depressed and for even no reason. Good to see happiness from people at times...

The end of an era.

For better or for worse. It's like marriage. Only divorce still won't be as easy.

 

[joueboy]

Is there really any difference or is it really a subsidized. Because with AT&T when I decided not to upgrade my phone they gave me a discount. Which is significant discount because none in my family got a newer phone after the 2 year commitment. But if I decided to get a new phone I'm not eligible for the discount anymore. When I decided to calculate that discount it adds up close to the total price of the phone itself, including the initial payment which is sort of purchase price when you're in contract. So after all these years we are not actually getting a discounted price of the phone. I know these are all BS anyway all the carriers including T-Mo just happen that they're cheaper. Other than that majority of the consumers including me at one point are being fooled after all these years. SMH!

 

[thermodynamic]

Good! Apple can still say 199 etc as long as someone can get an agreement, even if only reactive
[doublepost=1452219230][/doublepost]
People know and love it anyway

Most people I know of say they don't care. Which is sad, since we're always told people prefer lower prices but when doing the math, in most cases, these no-contract situations that are ending the subsidized contract situations end up costing more for the customer. Didn't know people loved spending more, but now ask how people love "spending above their means" or, even better, "what the market will bear" that can justify all sorts of interesting things...

 

[kdarling]

Can someone explain to me like i'm 5 why american phone companies just decided to do this all of a sudden?genuinely curious.

Timing wise, they each had to make sure that the others were going to do the same thing, from a competition standpoint.

From the financial standpoint, they had long wanted to do this, especially AT&T which usually became burdened with billions in subsidized devices when a new iPhone came out. Here's why they prefer loans instead:

Subsidy

Under GAAP the combination of handset and service contract is considered profitable, so the FULL non-contract price of the handset must be listed as an immediate expense when the contract is signed.

The carriers don't even get to write-down lower value over time, like regular device inventory.

Especially after each new iPhone debut, all this extra accounting cost has had some pretty big impacts on carrier profit reports and thus their stock value.

Loan

By financing the phones instead, the loan becomes an accounts receivable, an asset offset by the phone as collateral. Meaning it doesn't affect profit reports as much.

Disclosure: I am not an accountant. I'm sure this can all be better explained by someone who is.

 

[thermodynamic]

Is there really any difference or is it really a subsidized. Because with AT&T when I decided not to upgrade my phone they gave me a discount. Which is significant discount because none in my family got a newer phone after the 2 year commitment. But if I decided to get a new phone I'm not eligible for the discount anymore. When I decided to calculate that discount it adds up close to the total price of the phone itself, including the initial payment which is sort of purchase price when you're in contract. So after all these years we are not actually getting a discounted price of the phone. I know these are all BS anyway all the carriers including T-Mo just happen that they're cheaper. Other than that majority of the consumers including me at one point are being fooled after all these years. SMH!

Verizon lets people renew contracts and getting the subsidized price... or at least until they end the 2-year contracts entirely, and it's obvious. The moment the Edge and other plans came in it was obvious what the "vi$ion" was.

And if pay phones made a return and were ubiquitous, I wonder if the people screaming over things as others indicated would ditch the more expensive phones and go back to the basics... I remember whining over an atypically high $100 phone bill. Now we all pay nearly that or much more per month and think all is great... weird.

 

[LIVEFRMNYC]

Go with Sprint if you wanna see what the late 90s was like.

 

[Aston441]

Comparing 64 GB models, the 6s+ is $300 more expensive than the 6p. That's quite a difference for a phone that really isn't better (IMO) than the 6p.

I willingly paid $950 for my iP6s+128, instead of "saving" $300 to get the 6P because:

1. 128Gb>64GB
2. iOS style>Android style (somewhat subjective, but I use both iOS and Android and material design is just awful.
3. iMessage still doesn't have a good Android counterpart
4. Most of my friends have iPhones so it makes life easier
5. Apple doesn't abandon their phones as quickly as Android manufacturers do.
6. Ease of repair - just to go Apple store, and I will walk out with a working phone, one way or another.
7. Superior microphone on the 6s+, callers on the other end can hear me more clearly, makes phone conversations nicer
8. OLED is the devil, and God help us if Apple ever goes that route. I can leave LCD on forever without burnin.
9. The wallet case I use is only available for iPhone. Tons of accessories are only available for iPhone.


Reasons Android/Nexus better than iOS:
1. iOS notification bar SUCKS compared to android and always has.
2. No notification LED, which is why I have to leave my screen on 24/7 unless in my pocket and sound turned on.