Skip to comments.The 2-Year Phone Contract Is Dead
Posted on 01/19/2016 3:15:13 AM PST by Up Yours Marxists
You won't be getting a subsidy on your new smartphone in 2016.
AT&T (NYSE:T) and Sprint (NYSE:S) are the last two of the four major wireless carriers to do away with the two-year phone contract and subsidy model. Now, any new contract requires customers to pay for their new smartphone upfront or in installments separate from their service bill.
Verizon (NYSE:VZ) killed off smartphone subsidies in August, and T-Mobile (NASDAQ:TMUS) is now three years removed from its Uncarrier initiative that kicked off this whole trend. Ultimately, wireless carriers could be better off for it, and big phone companies like Apple (NASDAQ:AAPL) and Samsung (NASDAQOTH:SSNLF) have plans to take advantage of the change as well.
How the wireless carriers benefit from no contracts Two-year contracts have practically been dead for some time now since competing carriers have offered to pay early termination fees for customers willing to switch to their networks. Therefore, the negative impact from customers being able to switch carriers more easily should be minimal.
At least with the new system of installment and early upgrade plans, carriers can benefit from customers when they decide they want to upgrade equipment before their two-year contracts would be up.
(Excerpt) Read more at fool.com ...
About 3 years ago we switched to Boost, where for $35 a month we enjoy unlimited everything. My wife’s smart phone is only $45 a month.
I’ve been to several states, both rural and urban, and never had any signal problems.
I’ll never go “contract” or “bu-the-minute” again.
Or... the market will drive the price of the phones down. People might not fork over 700 dollars upfront for a new phone, but they might pay 300.
It's just the maturation of the market, not The End for anybody.
Besides, both Apple and Samsung are ready to bring out new product lines -- phones are so 2012 anyway... :-)
I have to agree.
People like myself will keep their current cell phone until it dies or it is no longer supported by the carrier technology.
Or the beginning of the end?
Or only the end of the beginning?
I think you are right...the price of these phones has been artificially raised by the subsidies. I bought my latest phone direct from Motorola a was as to get option I never got from Verizon. And the price e was quite reasonable.
Except for the battery, there are almost no new innovations with phones that are really needed. Most phones have plenty of memory and gorgeous displays. Screens don’t crack under normal usage anymore. For the most part, unless there is something revolutionary coming that I am completely unaware, the high end phones are pretty much maxed out in their potential.
The fact that IPhone 7 is reported to have no headphone jack may be a game changer - we’ll have to wait to see...
Not true. The rest of the world does not use contracts. Nor do they have locked phones. You buy your minutes at a grocery or convenience store and load them up. People still buy the latest top of the line phones.
Are they going to increase the battery size to account for the power used to transmit sound to headphones?
I find it not such a big deal with Sprint at least. I got a deal for it being free ($10) for the loan, and add a $10 yearly upgrade. So basically in the end I get a yearly phone instead of bi-yearly for almost the same cost. Now if I had to pay that $10 it would end up being more of course.
Oh, and I had to add the $11 warranty, cause with a loaner you’ll have to pay the full $600 or whatever if you lose or break it. Used to be you could get a refurb for $35.
So it is a bit of a worsening, but oh well.
Only in the US and Canada do people have phone contracts. Everywhere else, it’s prepaid.
“Are they going to increase the battery size to account for the power used to transmit sound to headphones?”
No. It’s a typical crappy Apple thing - no more typical headphone/microphone port - instead it’s Apple’s proprietary lightning connector - so everyone will have to pay a royalty to Apple for converters.
Why is it a worsening? American consumers were paying for the phones all along—the cost was simply hidden inside your monthly bill.
The phone’s price should be transparent and separate from the service. This is a win for consumers.
The battery is the biggest scam in wireless communications today.
I know these techheads have the knowledge to create dual-core or even quad-core type batteries, like they did to processors.
There are potentially a lot of technological innovation that could still come to a cellphone, but all of them require too much power to be any good. Without figuring out how to either increase the battery power or reducing the power needed to use cell phones drastically, those innovations pretty much stay on the drawing boards or in the labs.
It doesn’t change basic physics. You can only fit so many electrons in a given space.
I’ve had Consumer Cellular for years. Buying the phone up front does keep the price in line. I like everything about owning my phone and not having a contract. They have to compete for my business, every month, by being very good.
Verizon didn’t drop the rates when they quit including the cost of the phone. I have about one year stuck with them before the last phone contract runs out, then I’m switching to someone cheaper, probably with GSM phones.