Cell Phone Contracts

  • NerdLifter

    Posts: 1509

    Mar 24, 2011 6:51 PM GMT
    Anyone else find these things ridiculous? The price and terms are so expensive and binding. By the time you get your phone, you are paying multiple per month charges that add up fast (IE mandatory data plans charge additions for smart phones, sometimes text messaging charges, on top of phone service charge, etc)

    Can someone explain to me the costs of a wireless provider? Maybe something that justifies the highly binding contract and ubiquitous fees. As an engineer and a consumer, I wish I knew more about the industry.
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    Mar 25, 2011 2:47 AM GMT
    My contract is ending in a couple months. I'm switching to prepaid. No lame taxes or fees. You pay for what you actually use.

    I still think Virgin Mobile has the best calling plans for smartphones. I just wish they were on a GSM network. Their CDMA phone selection is kinda weak.
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    Mar 25, 2011 3:22 AM GMT
    i hear you.
    over 2 years ago i signed up with Rogers for a 3 year contract with a BB Bold.
    I nearly resigned this year to get a new phone, but i sobered up and decided to wait till next Feb. when my contract expires
    i hardly use 1/2 my monthly minutes and same for my data plan .
    I can't really complain about the service, i just think they way overcharge for it.
    so no more contracts after that, just prepaid also.
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    Mar 25, 2011 3:31 AM GMT
    I have Verizon and yes the contracts and extra's suck. A friend of mine has Straight Talk and I do believe they use the same CDMA network as Verizon. They have a full unlimited plan that is $45 dollars a month, and that is unlimited, talk, text, and internet, but no they do not have a good phone selection. The more I think about it I am paying double, and do not get unlimited calling. I think I may just bite the bullet of the super cool phones, and switch when my contract is up.
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    Mar 25, 2011 3:47 AM GMT
    Studinprogress saidAnyone else find these things ridiculous? The price and terms are so expensive and binding. By the time you get your phone, you are paying multiple per month charges that add up fast (IE mandatory data plans charge additions for smart phones, sometimes text messaging charges, on top of phone service charge, etc)

    Can someone explain to me the costs of a wireless provider? Maybe something that justifies the highly binding contract and ubiquitous fees. As an engineer and a consumer, I wish I knew more about the industry.


    the justifications for the contract are because the carrier subsidizes the end user for the phone. the "free" phone or the $199 iphone aren't actually "free" or "$199." it actually costs the carrier a few hundred dollars for the "free" phone and several more for an iphone. by locking you in a contract, they can make back the amounts they subsidized by spreading it out over the two year period. that's also the reason why they have an early termination fee — to recuperate the initial costs. added to that, each of these carriers invest billions of dollars annually in maintaining and building their networks.

    that said...

    the contract more than makes up for whatever amount they subsidize; early termination fees are egregious in that the amount doesn't go down proportionally with time (e.g., 1 year into a 2 year contract, someone still owes over $100 in ETF that was only $175 if he cancelled on day 1); data plans (especially sms plans) are also ridiculously over priced - i think someone estimated based on .25/msg that 1 MB would exceed $1300.

    luckily, you have all these lower cost carriers (note that these carriers either lease their networks from the main carriers or are subsidiaries of the main carriers) that are kind of revolutionizing the industry with the low-cost unlimited plans.

    i'm actually thinking of dumping an iphone for an android with virgin mobile. $25/mo (inclusive of taxes) includes 300 min and unlimited data & text; $40 ups you to 1200 minutes.