Telstra customers will be able to change handsets yearly under new 24-month plans launching in March.
An optional $10 monthly surcharge will enable customers to swap their handset every 12 months.
Under current plans, customers must wait two years for a replacement handset.
The move follows some US carriers and comes after a Telstra-commissioned survey of 1000 Australians found 46 per cent would like their telco to offer them the option of upgrading their handset part-way through their plan.
Independent research shows Australians are growing increasingly sceptical of long-term lock-in contracts.
Four in 10 Australians who acquired a new phone in 2013 did so via a phone contract, down from nearly six in 10 in 2012, according to research released in January by analyst firm Telsyte.
As handset prices drop and hand-me-down handsets proliferate, customers are increasingly drawn to smaller operators offering pay-as-you-go options, Telsyte analysts say.
A recent Telsyte survey of 1000 mobile phone users found close to half had switched providers in the last three years, with about half of those people ending up with a budget operator.
Customers on the new plans will pay three cents per MB of excess data usage, compared to the current 10c, as Telstra looks to cut down on bill shock.
