And then there was one.
Sprint(S) announced that it will phase out two-year contracts for its customers by the end of the year. That will leave AT&T(T, Tech30) as the only nationwide U.S. carrier to offer two-year contracts. Verizon(VZ, Tech30) abandoned its contract program this week. T-Mobile(TMUS) stopped more than two years ago.
Sprint customers will either have to pay full price for their smartphones upfront, pay off the phone over the course of two years, or lease their phone from Sprint.
Two-year contracts are going the way of the dinosaur, as cell phone companies look to end expensive phone subsidies. Ending the two-year deals adds transparency to what used to be an opaque process. It was unclear how much you were paying each month for your phone and how much you were paying for your service.
The new no-contract plans let you comparison-shop more easily, and you’re no longer locked into a long-term deal.
As a result, carriers are trying to out-do one another on deals.
Sprint has gone on a price-cutting tear recently, severely undercutting the competition by offering to cut Verizon and AT&T customers’ bills in half if they switch, and offering the cheapest iPhone plan among the biggest four cell phone carriers.
The company announced a new promotion this week giving customers a new iPhone 6 with unlimited data for $75 per month, after trading in an old smartphone. When the new iPhone 6S (or whatever it will be called) goes on sale, customers will be able to upgrade for free. (T-Mobile has a similar plan for $95 a month.)
Sprint’s tactics haven’t paid off so far — Sprint dropped to last place among the Big Four carriers last quarter. T-Mobile leapfrogged Sprint, growing its customer base to nearly 59 million; Sprint now serves fewer than 58 million customers.
Despite evidence that Sprint’s network is improving, Sprint still has a miserable reputation for network speeds and reliability. It ranked third in overall performance in the United States, according to a recent RootMetrics analysis.