The source website, PhoneArena, has received a tip that America's fourth largest carrier is set to remove traditional two year plans from retail stores on August 26. The traditional subsidized two year plan has been something of a dying breed from the American cellular 'phone industry over the last two years in a process that started when T-Mobile US introduced "equipment installation plans," that is, customers effectively pay for their smartphones (and other hardware) in regular installments rather than the cost be integrated into the plan. From a customer perspective, this provides much greater transparency and it also means after the hardware has been paid for, the monthly cost drops whereas before, the monthly rate continued at the same level. From a business perspective, the change caused by equipment installation plans necessitated a change in how the businesses finance devices. Since T-Mobile's first foray into this market, all of America's national carriers - AT&T, Verizon and Sprint plus of course T-Mobile - have moved the majority of customers across to the new style of plans. Sprint and Verizon are the last carriers to continue to offer traditional two year plans from stores although for a time, Sprint it removed the option. Furthermore, Verizon only offer the traditional two year plan as an upgrade and not for new customers.
For the change due August 26, the leaked memo highlights that customers will still be able to access a traditional plan but not via the retail stores. Retail representative agents are told to try to get customers to sign up for either a leasing or equipment installation plan, but if a customer wishes to leave because of a lack of regular plans, they need to contact Sprint's telephone sales or use the website for the upgrade. There is no store manager override. The leaked document highlights the cost differences between leasing and installation plans: for leasing, customers are entitled to an upgrade every year but do not own the device, whereas with installment plans, an annual upgrade costs $5 a month extra.
T-Mobile US' "Uncarrier" business plan is the catalyst for this change in the American industry, which has seen a rise of the mid-range devices. Traditional plan costs often priced a range of handsets at the same, so there was no saving to be had by the customer for going for the mid-range device. However, equipment installation plans provide a way of saving several hundred dollars over the life of the plan. It will be interesting to see if Sprint notices a change in sales in subsequent quarterly updates following this change.