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Sprint to join one-year phone upgrade trend, report says

Updated: 2013-09-16T19:38:21Z

By MARK DAVIS

The Kansas City Star

Sprint Corp. is ready to offer its own version of the one-year phone upgrade and installment purchase plans its rivals announced earlier this year, a published report said.

CNET said the Overland Park-based wireless company’s plan, to be called Sprint One Up, will be announced Friday. Sprint also plans to discount phone service with the new plan, according to the report.

Sprint officials declined to comment on the report or the company’s intentions.

“They’ve got to do it right away,” said Berge Ayvazian, an industry consultant at HeavyReading.com. “They need to get into the fray. It also has to be distinctive.”

Wireless customers who buy service under contract generally have gotten a subsidized price on their new phones. Carriers collected the subsidy through the monthly payments over the life of the contract. They also typically made customers wait nearly two years to qualify for a new upgraded phone at a discounted price.

T-Mobile was the first national carrier to offer an installment plan to buy phones and the first with a quicker upgrade plan, which it called Jump. AT&T and Verizon have followed suit with Next and Edge, respectively.

Sprint delayed making a similar deal with customers and instead announced its life-time unlimited data plans this summer. Its unlimited data for life plans were in contrast to those at Verizon and AT&T that sell charge customers based partly on how much they use wireless data, from downloading music to watching streaming videos.

Dan Hesse, Sprint CEO, previously called rivals’ new upgrade plans “a bit of a shell game.” Sprint, he had said, just folds the payment into the monthly phone bill.

Industry observers noted, however, that such plans appeared popular with consumers.

According to CNET, Sprint would require a One Up customer to trade in his old device in good condition to qualify for the upgrade. In its example, CNET said the customer could buy a $649.99 new device for $27 a month instead of making a partial payment of a $100 or more up front.

CNET said Sprint One Up will be available to customers who buy service under the company’s unlimited data for life contracts. The unlimited data service plan would come with a $15 discount for One Up customers, CNET said.

Sprint’s launch, if it comes Friday, would put it on better footing during the last few months of the year when many wireless customers’ contracts come up for renewal.

The move toward the new upgrade plans could benefit the wireless industry, equity analyst Jennifer Fritzsche of Wells Fargo wrote in a note to clients last Friday.

“If these plans – any of them – succeed, it is a huge positive for our carriers, as it lessons one of the biggest (maybe the biggest) pressure point of the wireless model – handset subsidies,” Fritzsche wrote.

The upfront costs that wireless companies bare when customers upgrade to new devices have cut deeply into the wireless companies’ profits at times. It has created the situation in which gaining a lot of new customers under contract meant paying a lot of new phone subsidies and posting a poor financial result.

To reach Mark Davis, call 816-234-4372 or send email to mdavis@kcstar.com.

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