NEW YORK — T-Mobile USA, the struggling No. 4 cellphone company, is ditching plans centered on familiar two-year contracts in favor of selling phones on installment plans, according to the Associated Press.
T-Mobile is the first major U.S. carrier to break from the contract model. The company changed its website over the weekend to begin selling the new plans. It plans to lay out the rationale for the change on Tuesday at an event in New York, which could also reveal when T-Mobile will start selling the iPhone.
T-Mobile has been losing subscribers from its contract-based plans for more than two years, chiefly to bigger competitors Verizon Wireless and AT&T. T-Mobile has done better with contract-less, prepaid plans, but those aren’t as profitable for the company.
The new plan blurs the boundaries between the two types. Prepaid plans have lower monthly fees, but the buyer usually has to pay full or nearly full price for the phones. With T-Mobile’s new plans, the initial phone-buying experience won’t be much different from what it’s like for contract plans, but customers could save money in the long run.
Read more: Associated Press