It doesn’t seem like it was that many years ago where the industry only offered two ways to purchase a new smartphone: full price or 2-year contract. Since then, the industry has essentially been turned on its head, thanks in no small part to the early efforts of T-Mobile’s “Uncarrier” initiative. Now carriers offer two-year contracts, full price purchase, installment plans, or even the ability to lease a phone every year.
When T-Mobile took the stage in 2013 to announce their new way of selling smartphones – via installment plans rather than 2-year contracts – I was thrilled. Skeptical, but thrilled. I had never been a big fan of 2-year contracts, although when I was younger it was basically the only way I could afford a flagship smartphone, so they were my prime method of upgrading. It was fine because I would get the flagship I wanted, but the 2 years it took to receive an upgrade felt like it took forever. For most people this wasn’t an issue, but for me, and people like me, it just felt like it was too long – and back then, aside from waiting, there wasn’t much you could do about it.
But installment plans brought a new opportunity to the table. Instead of forcing you to wait for two years before upgrading, you could actually pay off your phone sooner, which in turn freed up your “upgrade” status. On the other hand, if you wanted to wait the full 2 years (or however long your installment plan lasts) you could still choose to do so. What’s cool here is that once you’ve fully paid off your phone, your monthly bill reflects that. With the old 2-year contract plans, you paid a smaller, subsidized price the day you picked up your new phone phone, but your bill would continue including hidden monthly subsidies that never ended, even after you’ve fully paid the phone off. In a way, “installment plans” are the same type of plans we’ve always used; they just offer more flexibility and are easier to understand. They are what the 2-year contract should have always been.
In addition to installment plans, carriers also started including options to lease a phone. Leasing a phone means you walk out with a phone and pay a monthly fee, like you would with an installment plan, except here you plan on coming back in a year or so (different carriers have different options for lease terms) to exchange your phone for a newer model. This option seems great for people who want to upgrade often, but might seem a little risky to those who wonder, “What happens if I like the phone I’m leasing?” It turns out that’s not really a problem, either. Most carriers are happy to allow you to pay off the device and let you keep it if you so choose. So even if you just think you might upgrade in a year, choosing to lease your phone from the get-go might not be such a bad investment after all.
Admittedly, I was a little put off about the idea of leasing a phone. Leasing in general has always made me feel like I was just throwing money away and not investing in anything (moneywise, I’m not). But just as I’ve been renting apartments for the past 8 years, sometimes it’s not such a bad gig when you’re not ready to settle down with something so permanently. When it comes to phones, I find that I ultimately don’t go back to an older phone once I’ve upgraded. However, my family also has a weird, unorganized method of dealing with old phones: somebody usually takes the newly disowned phone, and in turn we will sell that person’s old phone and apply it to the phone bill. We recycle, so leasing isn't an option for me. However, for the right person, who doesn’t have anybody to hand a phone down to and would rather not deal with the hassle of selling an old phone on their own, leasing isn’t as damning as it might seem.
I started thinking about all of these changes the industry has undergone while reading that Sprint silently pulled leasing options out from under most of their flagship lineup. However, while the changes to the industry may not be perfect (and Sprint's case consistent) I still think we have come a long way in just a few short years in the grand scheme of things when it comes to purchasing and upgrading our smartphones.
Readers, what’s your upgrade method these days? Do you still keep your daily driver chugging along for two years, or do you upgrade sooner now that other options are available?
