Sprint Sounds The Death Knell For Two-Year Contracts, Will Rely On Leasing Exclusively

Sprint Sounds The Death Knell For Two-Year Contracts, Will Rely On Leasing Exclusively

Sprint will end two-year service contracts by the end of 2015. The carrier will exclusively rely on leasing mobile phones.
(Photo : Mike Mozart | Flickr)

T-Mobile was the first of the top four U.S. carriers to get rid of the lengthy two-year service contract. Earlier this month, Verizon also dropped the plan. Soon, Sprint will stop offering such contracts as well.

Mobile phone users have been signing up for the two-year service contracts for many years. By signing a two-year service agreement, customers get handsets at subsidized rates. However, things are changing now and carriers are offering cheaper monthly plans without the hassles of a lengthy contract. However, customers have to pay the full amount of the handset they are buying, normally in installments.

Sprint started offering a smartphone lease option in 2014 and now the company plans to entirely move to this model by the end of 2015.

According to a Wall Street Journal report, Marcelo Claure, CEO of Sprint, said that the only way to get a new handset from the carrier will be by leasing it or paying the full price of the phone. Sprint also suggests that more than 50 percent of new customers who purchased a handset in the last quarter took advantage of the lease option.

Sprint is fourth among the top four U.S. carriers, and the company is struggling to retain customers in the highly competitive wireless market.

To attract more customers, Sprint recently unveiled a leasing plan for the iPhone called iPhone Forever. Customers have to pay $22 per month as part of the plan and service fee to get an iPhone. Customers can also upgrade to a new iPhone every year. Following existing iPhone plans, however, iPhone customers can only upgrade to a new iPhone in two years.

The latest iPhone deal from Sprint has the potential to entice many customers since paying $22 per month means that a customer ends up paying around $264 a year for a 16GB iPhone 6 that has a retail price of $649.

Customers who want to upgrade to the latest iPhone offer should trade in their existing device, which must be in working condition. Customers will also have the option to purchase a new iPhone by paying the full amount to the carrier.

Photo: Mike Mozart | FlickrÂ