What does the term "upgrade" mean?

Each Carrier will allow customers to “upgrade” their phones (handset) at some point during their agreement.  If you qualify for a carrier upgrade, you’ll likely receive a discount off the normal retail price of the phone if you agree to extend/renew your contract for an additional one or two-year term.  Each carrier has different upgrade policies, but most will require that you are at least 12 months into your contract term before they’ll offer a discounted upgrade rate.