The two-year phone contract is almost dead, that’s for sure. Verizon, the #1 service provider in the US, said on Friday it would kill service contracts and the phone subsidies that came with them, winding down a decades-long pricing structure that tied consumers to their phone providers and determined how they paid for their smartphones. Sprint follows Big Red’s the steps as well. Here’ some bad news. Verizon customers will no longer receive a free phone as long as they sign up a two-year contract, or pay $200 up front for the much-coveted iPhone 6, Galaxy S5 or Galaxy Note 5, which retails between $650 - $750. Beginning Aug. 13, Verizon customers will have to buy their phones outright or pay Verizon a monthly installment fee to rent the device. Though the latter plan can eventually cost a customer even more than $649 for the iPhone 6, it lets users trade up to newer versions. The plans will run month to month. Sprint also plans to stop offering contract phone plans by the end of 2015, focusing instead on off-contract, monthly plans. New and existing customers using Sprint’s service will now pay full price up front for phones or lease the device, paying it month-by-month over the course of two years, which is the trick that the monthly plans tend to pull to make the phone more affordable, while still having some sort of long-term commitment even without the contract. Sprint is the last of the major four carriers to start making major moves in this direction. T-Mobile first stopped selling contract plans two years ago, and Verizon joined right now; AT&T still sells contract phone plans, but they're harder to get than they used to be — you have to buy them through AT&T itself. Removing the two-year restriction does provide for additional flexibility when upgrading smartphone. Anyone who wants the latest and greatest will be able to make the switch without the hassle, because they are not stuck with a plan that makes them miss a generation of new devices. But there is a downside, you will need to pay full retail price for the new device. So while the sticker shock of paying the full price for a smartphone upfront might catch consumers off guard—and might lead to a temporary sales slump for manufacturers like Apple, Samsung or LG —it’s unlikely to make that much of a difference to a household’s bottom line. There will be noticeable market growth of cheap phones that deliver expectable hardware and software set up, such as: Nexus 5, OnePlus One or Moto G series.
