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No-Subsidy Mobile Phone Plans Gaining Steam, With T-Mobile Leading the Way

An estimated 28 million customers chose to avoid a two-year contract.


In the last nine months, some 28 million U.S. customers opted to pay one of the major carriers full price for a smartphone rather than sign up for a two-year contract to get a discounted model, according to a new study.

Of those customers, an estimated eight million switched carriers to get one of the new-style plans, with the lion’s share of the switchers (5.1 million) of those going to T-Mobile, according to research being released later on Friday by Consumer Intelligence Research Partners.

Typically, such purchase options come with lower-cost monthly service, the option to upgrade sooner or both.

T-Mobile has shifted entirely to such plans, while AT&T offers no-subsidy options with its Next and Mobile Share Value programs and Verizon has its Edge program. Even where customers have a choice to get a subsidized phone, the financing programs appear to be gaining steam.

AT&T, for example, said that 40 percent of its new smartphone customers and upgrades took part in Next in the first quarter, up from 15 percent in the prior quarter.

Until the shift, no-contract plans had been largely the domain of prepaid brands and focused on the low end of the market.

One of the key questions for both the carriers and, in particular, for device makers is whether the shift away from subsidies and two-year contracts will shorten or lengthen the average time between consumer upgrades.

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