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The 2-Year Phone Contract Is Dead
The Fool ^ | January 18, 2016 21:16 UTC | Adam Levy

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 ...


TOPICS: Business/Economy; Culture/Society
KEYWORDS: apple; cellphones; samsung; smartphones
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To: Up Yours Marxists

Possibly. The so called “smart watches” may see a new kind of applicability they never did before (or were never intended). Perhaps something like smart watches directly syncing with computers, after the ability to send and receive calls are added to the watch itself.

Most likely short term though, little impact will be felt in the smart phone market. The payment plans make it virtually like having a “two year contract” because the cost works out to be about the same, on a monthly basis, once the payment per month is factored in.

It really all depends on whether or not a company can make some kind of receiver of calls (like the smart watch above) much lower in cost than the current phone. People are now too addicted to all the features of a smart phone and also the ability to make and receive calls anywhere.

The age of the pay phone (the phone booth) is what’s dead.


21 posted on 01/19/2016 4:43:51 AM PST by FourtySeven (47)
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To: PAR35

You could also see if Verison will give you a better deal by telling them what others are offering for your business


22 posted on 01/19/2016 4:49:56 AM PST by Jonty30 (What Islam and secularism have in common is that they are both death cults)
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To: grania

I personally will never be on a locked phone ever again. It makes travelling very convenient. I only have to buy a simcard and prepay time where I am.


23 posted on 01/19/2016 4:55:49 AM PST by Jonty30 (What Islam and secularism have in common is that they are both death cults)
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To: Up Yours Marxists

Apple already created its one lease/upgrade plan, get your phone from them pay them so much a month and trade up whenever you want.

I agree the two year cycle of guaranteed big sales are over for the manufacturers but the only actually making any money has already adjusted. Not sure how it will work out but depending on their monthly fee to lease probably will about the same to lease plus service as it is now for service with phone for 2 years.


24 posted on 01/19/2016 5:18:35 AM PST by HamiltonJay
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To: dinodino

Well I didn’t mean worsening a lot. It’s slightly more expensive this way I think. But not terribly so.


25 posted on 01/19/2016 5:29:28 AM PST by Monty22002
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To: Up Yours Marxists

“Now, they can securitize these contracts and sell them to institutional investors...”

Subprime cell phone bubble ahead.


26 posted on 01/19/2016 5:40:57 AM PST by moovova
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To: FourtySeven
The age of the pay phone (the phone booth) is what’s dead.

Very true.
We have a Verizon "Home Phone Connect", which is a cell-phone in a small box that has two POTS connectors instead of any screen or buttons. Just plug in a cheapie wireless base, and you have essentially the same service as your old POTS system with a wireless handset.
The best feature, though, is the price: ~$20/month for unlimited calling. I've often thought that would be a great replacement for phone booths. Set one of those up with a digital timer - 5¢/min or so. Probably wouldn't work, not because it wouldn't be feasible, but because of abuse, both physical and druggie/terrorist/etc.
27 posted on 01/19/2016 5:47:37 AM PST by Montana_Sam (Truth lives.)
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To: dayglored

it is wise to remember that an I phone is in reality a hand held computer with a telephone ap


28 posted on 01/19/2016 5:51:48 AM PST by bert ((K.E.; N.P.; GOPc;+12, 73, ....carson is the kinder gentler trump.)
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To: Up Yours Marxists

The US model was buy subsidized equipment and overpay for service. The rest of the world’s service was cheaper, but folks bought their own equipment. Now, US carriers want to retain their high pricing and stop the preferred equipment pricing. We’ll see how that shakes out.


29 posted on 01/19/2016 6:08:13 AM PST by Sgt_Schultze (If a border fence isn't effective, why is there a border fence around the White House?)
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To: Up Yours Marxists

The US model was buy subsidized equipment and overpay for service. The rest of the world’s service was cheaper, but folks bought their own equipment. Now, US carriers want to retain their high pricing and stop the preferred equipment pricing. We’ll see how that shakes out.


30 posted on 01/19/2016 6:08:30 AM PST by Sgt_Schultze (If a border fence isn't effective, why is there a border fence around the White House?)
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To: Up Yours Marxists

People will just add it to the payments. My sister’s cell phone bill is $350 a month for 2 phones.


31 posted on 01/19/2016 6:09:36 AM PST by AppyPappy (If you really want to irritate someone, point out something obvious they are trying hard to ignore.)
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To: AppyPappy
That sounds high end. We have had AT&T wireless for years. For three phones (well,two are flip phones) and my wife has one of them phones that is constantly making noises and she slides here finger across the screen a lot,we pay $111.00 bucks a month.
32 posted on 01/19/2016 6:15:52 AM PST by 4yearlurker (Sodom punished for those who practiced an abominable vice as a religious rite-Henry C. Beck)
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To: Sirius Lee

Precisely


33 posted on 01/19/2016 6:18:59 AM PST by Nifster (I see puppy dogs in the clouds)
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To: 4yearlurker

She uses her phone as her internet connection.


34 posted on 01/19/2016 6:27:24 AM PST by AppyPappy (If you really want to irritate someone, point out something obvious they are trying hard to ignore.)
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To: Up Yours Marxists

All they are doing is breaking out the monthly bill so that consumers can see what they are paying for service. If they want the latest and greatest phone, they can setup a monthly payment plan to pay that separately. The two bills combined will probably not be much different than what they were already paying combined.


35 posted on 01/19/2016 6:32:28 AM PST by SamAdams76
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To: Up Yours Marxists

I have Tracfone and get good service at a very reasonable cost — about $8/month. Purchased minutes roll over.

I live in an area that does not have 4-G and I do not actually do much Internet related on the smartphone. I do have the phone connect my local home network WiFi, however.

I do not make many phone calls, so I do not have to worry much about the minutes usage.


36 posted on 01/19/2016 6:32:35 AM PST by TomGuy
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To: AppyPappy

You should suggest to her to turn off data, when not in use. Everytime it pings a tower,you’re paying data.


37 posted on 01/19/2016 6:34:10 AM PST by Jonty30 (What Islam and secularism have in common is that they are both death cults)
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To: ez

I bought a Motorola (Moto E)smartphone/Tracfone package via QVC for $99.

It is 3G, but my area doesn’t have 4G, with triple minutes and an initial bundle of 1200 minutes (talk, text, data, and 1 year of service). I do not use anywhere near that much time via smartphone for talk + text + data.

Not bad for about $8/month. My old, now disconnected, landline cost me $25/month + long distance.


38 posted on 01/19/2016 6:38:32 AM PST by TomGuy
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To: dayglored

If you expect the unexpected. Isn’t the unexpected expected?


39 posted on 01/19/2016 6:40:39 AM PST by BubbaBobTX ("The problem with socialism is you eventually run out of other peoples money." Margaret Thatcher)
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To: Jonty30

The payment is static. It’s a set amount which is why it is so high. It would be cheaper to just get a home internet connection but that’s talking to a brick wall.


40 posted on 01/19/2016 6:43:38 AM PST by AppyPappy (If you really want to irritate someone, point out something obvious they are trying hard to ignore.)
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