Back when the iPhone first launched, there were many people who wanted to get one but had to decide whether it was worth it or not to be locked into a required 2-year contract with AT&T. As it turns out, a good chunk of people must have felt it was in fact worth it, given how well the iPhone has done so far. Every cell-phone provider out there that we know of requires people to sign at least a one year contract at the time they subscribe for service. This contract that locks users in to one carrier is part of the reason that companies are able to offer phones at subsidized prices. If someone decides to break their contract though, it can be very costly and include a lot of hassle.
The reason we’re bringing up the topic of a contract free cell-phone is that earlier this week, a State Representative from Massachusetts proposed a bill which would force the cell-phone carriers in the United States to offer no-contract phones. The only condition under this bill, if the subscriber decided to go this route, would be that they’d have to pay full price for a phone. In return though, they would not be locked into one provider and wouldn’t have to worry about paying early termination fees. Additional items that are part of the bill which is being called the Wireless Consumer Protection and Community Broadband Empowerment Act include:
- Better and more detailed coverage maps
- No penalties for canceling a contract within 30 days (if a user decided to stay locked-in a contract)
- Detailed cost breakdowns for wireless plans that are clear and easy to understand
- Carriers would be forced pro-rate early termination fees for contracts (some already do this)
- Phones wouldn’t be able to be locked to just one provider (e.g. Apple and AT&T would be forced to unlock the iPhone)
Some of you are probably thinking that not having a contract would be great because you have an iPhone and you already paid full-price. You may want to think again though because some analysts have estimated that AT&T already subsidizes the phone by $400 meaning you’d pay $800 for the phone with no contract.
Given the choice, would you be willing to pay more for a contract-free phone? Take our poll below! Please note that you must have Flash enabled and the poll below does not replace the current site poll in the right sidebar.
I’d absolutely pay more for freedom from being extorted by the cell phone company.
It’s a pity that congress is bought and paid for by these big companies… it’s really unlikely for these bills to get any traction without massive grassroots support from us.
But if the phones ends up costing the more than the termination fee what’s the point?
Wouldn’t you buy the iPhone from Apple though? So their price is $400. If they’re not in an exclusive deal with AT&T, then why wouldn’t you pay $400 for the phone (money goes to Apple) with no AT&T involved? Then people would be able to buy whatever service plan they wanted from whatever company. That would be awesome.
It was difficult for me to answer this one, but I answered based on the situation in my country:
1) You can get a 1 or 2-year contract with a phone company and they offer you a phone for free or for a small amount of money (simlocked, which you can get rid of after 1 year). Your monthly subscription cost is high for the length of the contract. Your termination fee = the monthly subscription cost * the amount of months left in your contract.
2) You buy the phone separately (without simlock) and choose a 1 or 2-year contract with any phone company. Your monthly subscription cost is low (lower with a 2 year contract). Or you use pay-as-you-go (prepaid). You still have a termination fee if you go for a subscription = the monthly subscription cost * the amount of months left in your contract.
So, I’d rather pay more for a contract-free phone if I get lower subscription fees (in my case €10/m instead of €30/m) in return.
In the US it seems the other way around though: you pay more to get more freedom, but your subscription costs don’t go down. That decision is a lot harder!
I don’t use a cell very often, for me it is emergency phone. I have a prepaid that I must spend $20 dollars on every 3 months to keep my number/account open. I don’t have an iphone, but if my car breaks down on the side of the road, I can call a tow truck, and it didn’t cost me $400+ for a little roadside assistance.
taf
Yes in a heartbeat especially for the iphone. I want to use it in Asia.
I would say yes, with some revisions. It the pricing of the phone is left entirly up to the manufactor, and there is nothing to stop a phone company to offering the phone for a lower cost with a contract I am sure we will see phones, like the iPhone, go on sale for something like $900~1200 where you would then beable to get the phone from a phone company (At&T) for much less [400]..
Selling phones with a contract tied to it is forbidden by law here in Belgium. You’d think that that jacks up the price a lot, but it doesn’t. You can get a VGA camera phone with MP3 player and all that stuff for as low as 100 euro (151.88 dollar at the moment, but that’s due to the low value of the dollar) these days.
Would You Pay More for a Contract-Free Phone?
No as in the UK you can get a pay as you go phone, cheaper anyway and you only put money on the phone when needed it suits me and not the phone company.
It seems America in all businesses the customer is given a bad deal
As long as I can remember in Canada, you have always been able to buy a cell phone for full price without a contract. You also have the option to buy a subsidized phone on a 1, 2, or 3 year contract with 3 years having the best subsidy, sometimes as much as 100% (i.e. free phone). Termination fees are brutal if you cancel early – usually about $20/mth for the remainder of the contract. We only have three national providers who own cellular infrastructure plus a few regional virtual network providers – those who provide service on somebody else’s network. Because not all our providers use one protocol (we’re split between CDMA and GSM), I don’t see much point in buying a phone from one company and purchasing service from another, especially most phones available from one provider have a similar model available from the others.
Actually that is what I thought also but, when I went to a local wireless store I found out with MetroPCS you don’t have a contract, it’s a monthly payment, but there is no contract so you can leave whenever you want. I just switched over from AT&T to MetroPCS and so far been very happy. $40 a month of unlimited local and long distance and as well unlimited text messages.
You’re exactly right and it is a shame that money talks in congress.
I doubt they’d tack on more to the price than what the termination fee would be but I guess you never know.
For some people, like myself, I do not have a home phone. That means that my cell-phone is all I have to communicate with friends and family. Other people use their phones for business which means it serves yet another purpose. If someone like yourself was using the phone for emergency purposes only, then of course anything but a pre-paid phone wouldn’t be worth it.