[Sprint Samsung Galaxy Note 3] topherk:
I believe this is due to the transition between Subsidized to Un-Subsidized phone plans... I'll try to explain this in a way that makes sense, since I had to ask a lot of questions in order to fully understand it myself. In order to understand why there's even an ETF, we have to understand how subsidized phones worked and why Sprint (and soon all other carriers) will move away from them.

Subsidized Phones and Early Termination Fees (ETFs)

When you buy a subsidized phone (let's say a Note III) for $200, that doesn't mean that Sprint got the phone for $200 and is now passing the savings off to you. It means that they have factored in the cost of the phone in their plan pricing. If the phone cost them $500 (at wholesale), that's $300 that they have to recoup from you over the course of two years. If you get your phone and decide to leave after 6 months, they're not going to recoup $240 (assuming they split it evenly over the 24 months, which I doubt). That's the philosophy behind the ETF. If you leave early, they aren't going to recoup from their subsidized phones, and they lost out on a decent amount of cash.

That's also why the ETF decreases as you get closer to that magic 2-year mark. They've already recouped most of their "investment" into you as a customer, so they can't charge you as much for an ETF.

Now, the Subsidized phone scheme has always been a means to entice new customers and to keep existing customers. If you can offer a $700 smart phone for $250, it's great marketing! But, I bet they are making less money when they have to subsidize a smart phone than when they offer a "dumb" flip-phone for free. When smartphones (I'm thinking back to the days of the Treo) were relegated back to the nerds and businessmen, they could afford to make less money on the subsidized plan and still make a ton on the subsidized flip phones.

Verizon must have loved my in-laws, because they had the same "dumb" flip-phones for about 5 years, but were paying the same price as the High School senior who had a subsidized iPhone. In my opinion, the in-laws were paying the subsidy price of the iPhone.

After the iPhone and the mass-market flooding of smart phones, more and more people started getting smart phones. When looking at phones, the consumer can easily argue an extra $50 to get a top-end smartphone over a medium-level phone. Which should work out fine, but it also means that Sprint (or Verizon or ATT or whoever) is not going to make as much money (due to the subsidized portion of the phone cost being higher). I've even heard that they started losing money on some of the top-end phones since the subsidized costs were higher than the recouping they were doing. (note: the previous sentence is hearsay and no credible source has been given to me).

At first, Sprint (and others) tried to recoup those losses by incurring a "smartphone" fee. I remember the first time I saw a $10 "Premium Data" fee, I knew it was bull**** (pardon the language), but I was also stuck in a contract. Despite much arguing with various supervisors, I still ended up paying it, but not before threatening to leave numerous times (even with the ETF). If it weren't for my 18% "employee" discount, I would've switched.

Un-Subsidized Phones and the Future of Phone Buying (IMO)

I think the Framily Plan is interesting. They are basically taking the subsidy cost out of the phone plan and having the customer pay for what they actually get. In my opinion, this is much better.

Yes, I get a gut reaction when I have to pay full-price for my latest-and-greatest phone (since I'm so used to my subsidized price). But for those customers who are OK with keeping their technology a bit longer or buying second-hand phones, they can make some pretty significant savings. It also means that you don't have to buy your phone from Sprint or Verizon. The customer has more options when it comes to buying their phone.

So, all-in-all, I think it's a good move and I can see all carriers moving towards this model in the future.

Transition between Subsidized and Un-Subsidized Plans

This is where I believe you, MikeyLee, are stuck. Sprint can't recoup their losses from your subsidized phone because you're now paying $25/month on the Framily plan. This is why they initially had the whole "existing members can't join the Framily" crap. They loosened that to some members being "merge eligible," meaning they were allowed to switch to the Framily Plan. I believe the only check for "merge eligibility" was whether or not Sprint had recouped enough of their subsidy.

For those of us who were merge eligible but who still had time before their old two-year contract was up, Sprint also has an ETF to cover the remainder of the original two-year agreement (and recoup their losses from you leaving and not ponying up for your subsidized phone).

In Closing

I personally like the Un-Subsidized plan. For me, I went from paying $150/month down to $75/month (2 lines, one with unlimited, not counting phone monthly payments). Even when I factor in the cost of two new top-tier smart phone every 2 years, I still save $700 over the two years.

It also makes more sense for people like my in-laws, who don't need (or want) the latest-and-greatest and would rather keep their phones for decades if they could.

But yes, the transition between the two is inherently going to be messy. Hold out to see the real value of un-subsidized plans!