Sprint Plans to Join Rivals in Dropping Mobile Contracts
Sprint's CEO says the company will no longer offer two-year contracts for new mobile accounts by the end of 2015 as it ends smartphone subsidies.
Sprint is the latest of the four major U.S. mobile carriers to announce that it is ditching two-year smartphone contracts and subsidized, discounted handsets as a way to retain customers. Instead, the company now vows to stop offering contracts by the end of 2015 and move entirely to leasing plans that will allow customers to switch phones more often. The company's new strategy, which Sprint CEO Marcelo Claure unveiled in an Aug. 17 interview with The Wall Street Journal, follows a similar move Verizon made earlier in August, when that company announced it was giving up on the contract wars. T-Mobile had given up on contracts as one of its "Un-carrier" moves more than two years ago. Sprint began offering a lease option last year and Claure said the carrier will move entirely to that model by the end of the year, The Journal reported. Under the leasing plans, customers pay the full price for their phones, usually in a monthly payment plan that charges no interest, or they can pay for the phone in full at the time of purchase. About 51 percent of Sprint's customers who purchased a new phone last quarter used the leasing option, the article reported.
In a related move, Sprint announced a new iPhone Forever lease for $22 a month for a 16GB iPhone 6 with an option to upgrade to the newest iPhone at any time, according to the company. Customers under the plan can bring their working iPhone in any time to upgrade on the spot to the latest model on any eligible Sprint rate plan.