Mobile Phone Service Contracts

I don’t like this whole business about “sign a contract for two years and we’ll give you a subsidized phone” (I touched on this a few months ago). It means the wireless carrier recoups the cost of your phone through your monthly fee, which means your monthly fee is higher.

However, when your contract ends you continue to pay the same price. Which means that, as a consumer, if you don’t upgrade your phone as soon as your contract ends then you’re effectively paying for something you’re not getting.

I would much rather pay full price for a phone up front, and have a monthly fee that reflects only the cost of the service and not the cost of the phone. And then consumers can choose to upgrade their phone whenever they wish. Be it after 1 year or after 4.

I recently learned that T-Mobile actually does this. Their service plans are $10 less per month if you don’t have a contract/subsidized phone. If you’re looking at buying a new phone and wondering if you should sign a new 2 year contract, you can look at the price of the phone with and without the contract. If you would pay less than $240 more for a non-subsidized phone, then in the long run you’re probably better off not signing the contract.

And T-Mobile is already cheaper than AT&T and Verizon. While I pay $60 a month for 300 minutes+400 SMS+unlimited data, Emily pays $75 for 450 minutes+200 SMS+unlimited data. And if we both continue to use the same phone after our contracts expire, mine will go down by $10 and hers will stay the same.

Thank you, T-Mobile!

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