How You Buy Cellphones Is About to Change Forever

[Purveyor]

Verizon's new plans are a sign of massive change in the phone business

Alex Fitzpatrick @alexjamesfitz 11:35 AM ET

Lots of people think a top-of-the-line iPhone costs $199.99. Lots of people are wrong. The iPhone 6 costs $649.

This misconception owes to mobile carriers’ longstanding practice of offering discounts on phones for customers who agree to a two-year contract. For years, the deal was generally this: You go to a company like Verizon or AT&T, you sign some paperwork locking yourself into 24 months of wireless service, and Verizon or AT&T gives you a shiny new phone at a subsidized price—or even free, if you opt for less than the very best hardware.

The carriers could afford this subsidy because they’ve locked you into a contract. This is the genesis of the dreaded Early Termination Fee. ETFs let the carrier recoup the costs of that hardware subsidy should you renege on your side of the deal before your two-year commitment is up.

But mobile carriers have long been flirting with ditching this way of doing business. T-Mobile, known for its industry-disrupting practices, was the first major U.S. carrier to move away from subsidies and contracts in a significant way. Instead, it began offering contract-free deals that require customers to buy a phone at full price, either right away or through installments tacked onto their monthly bill.

Soon after T-Mobile’s move, the country’s two biggest mobile carriers, AT&T and Verizon, followed suit with similar offerings of their own. But neither made contract-free plans their primary offering. Until now.

MORE...

http://time.com/3989731/verizon-new-plans/

[hobbit709]

1. My Tracfone cost me $20. Does everything I want for about $7/mo.

[RKP5637]

3. Same here. I have an incredible Tracfone. I just could not want more. I have three

very capable PC's at home, I have no need to carry around the net. And, the Tracfone coverage is incredible.

[callous taoboy]

14. Which plan are you on?

[LiberalElite]

17. Tracfone doesn't have plans -

you purchase the airtime. That's it. No contract either.

Back around 2008 I decided I wanted to be able to get email on my phone. At that time, email and internet access in general was very time consuming / nearly impossible to achieve on Tracfone so I switched to Metro PCS. I have used Metro PCS and Consumer Cellular since then. Tracfone's internet/email has probaby improved since 2008! Anyway, you purchase a phone from any of these carriers or bring your own. There's no contract with any of them. The "bring your own phone" isn't a new thing. You can bring your own phone to those carriers as well as Tracfone with certain conditions. It's just new to Verizon, et al.

[hobbit709]

19. Buy an airtime card whenever I need one.

The phone came with triple minutes for life.

[tularetom]

2. I don't want to make 2 years worth of interest payments to my phone carrier

I'm still using my old 4s because they wanted to charge me something like $50 a month for a new iPhone 6.

But the battery life is going down the crapper and I'm going to have to upgrade soon. I'm going to tell AT&T to kiss my ass and go elsewhere.

[RKP5637]

6. Take a look at Tracfone.

http://www.tracfone.com/

[WillowTree]

9. Or look for a newer phone on e-Bay. There are lots of them out there.

[Le Taz Hot]

4. I paid full price for my iPhone 6

but didn't have to sign a long-term contract. That was this last spring. The guy at A.T.&T. said that they were just switching over to this business model.

[GoneOffShore]

5. We've used T-Mobile since the early 90's.

And have a tendency to keep our phones and not change them every year or so.

Bought an iPhone 5s in 2014 and then another one for Mrs GoS a week ago.

Paid cash for both.

Plus bought AppleCare for the phones.

It's a better deal and cheaper in the long run.

[Johonny]

7. That was the deal with Sprint when I wanted to upgrade to a Galaxy 6

walked out of the store with my Galaxy 4. I'll wait it out if they aren't even trying to retain my service.

[WillowTree]

8. Sprint's doing the same thing.

So I bought my LG G3 for a lot less than full price on e-Bay and I'm hanging on to the good plan that I've got at a good price as long as I can.

Progress. Ain't it wonderful?

[yeoman6987]

11. We will see. Somehow I doubt we will beat them.

[Facility Inspector]

10. phase out dumbphones

give away smartphones

then make them pay for the smartphones.

yup.

[csziggy]

15. My dumbphone still works on Tracfone

An old Nokia, no apps, barely does text but is great for battery life and reliable for phone calls.

Tracfone forced it on me for free when the cellular towers were upgraded and my even older Nokia would no longer work.

I pay about $150 every two years and get more minutes than I use. Their lowest package gives me one year service, 450 minutes for $99, then for another $50 I get an extra year service. If for some reason I needed more minutes, I could buy them as I go.

My husband just bought a smartphone (Samsung Galaxy, Tracfone model probably equivalent to a S4) for $60 which upgraded him to triple times minutes anytime he buys more. He transferred over the minutes from his old Tracfone without any problems. I bought him the same package I got and with the smartphone and data we will have to buy him more minutes eventually.

Unless I start traveling more by myself, I will stick with my old Nokia brick as long as it works.

[JCMach1]

12. Welcome to how the rest of the world works... buy a phone

then find a carrier...

[tammywammy]

13. Exactly. n/t

[LiberalElite]

16. I know what top o' the line phones cost -

I've been using no-contract mobile carriers that require a phone purchase. I'll be damned if I'll pay $$$$ for a phone and the most I've paid is $150, with most of them less than $100, using Tracfone, Metro PCS or Consumer Cellular.

[aikoaiko]

18. Weird thing about the Verizon Next plan - they say its 32/mth for an Iphone6, but they waive 25/mth

So its really $7/mth for 2 years.

[Recursion]

20. This is how the entire rest of the world does it, and it's better

I'm really glad to hear the US carriers are moving towards this

[BadgerKid]

21. But can we switch carriers or "Bring Your Own Device"?

Then there is still the issue of choosing between GSM (AT&T, T-Mobile) and CDMA (Sprint, Verizon) carrier systems.

[Recursion]

22. Yeah, CDMA is also something I don't miss about US mobiles (nt)

[mythology]

23. My problem is with how carriers refuse to provide software updates to phones

particularly on Android phones.

This new policy is going to increase the number of unpatched phones as people won't want to shell out for a new phone if there is a cost increase. Yes people won't be paying the full price right away, but they will see the lowered cost once the phone is paid for and some percentage won't want to get a new phone and pay the monthly cost.

Android phones already have a problem where Google will provide a fix like for the recent Stagefright exploit, but the carriers won't release a patch for their models.

It will certainly make me more likely to either go with a direct Google model, a phone that is supported by Cyanogen or an iPhone as security is important.