Mobile Phone Contracts

Contracts are all the rage in the cell phone industry. At least in Canada. I’m not as familiar with the US system.

The 3-Year Contract

If you want to buy a new cell phone, the best deals come on three year contracts. You get a little discount on a one year plan, a little more on a two year plan, but it’s always the three year plan that’s the sweetheart deal you can’t afford to pass up. What is it about that three year plan that makes it so worthwhile for mobile phone companies that they push it so hard?

The reason why it’s lucrative for phone companies to sell 3-year contracts is that mobile phones only last two years on average. That means that when your phone breaks in the second year of your three year contract you’re stuck with a one year contract. You still have to pay, but you have no phone. You either need to buy a new phone, or else pay the expensive fees required to get out of the contract. Of course, the phone company will gladly help you out of this little fix. They’ll happily give you a new phone for free or a nominal fee. The only catch is that they’ll want to extend the contract…by two years. That way you’re right back where you started, ready to repeat the process two years down the road.

She’s a brick…phone. She’s mighty mighty

Mobile phones were sturdy and reliable when they first came out. The old brick-sized phones were durable and solid as a rock. As phones have gotten smaller, thinner and more complex, one of the side effects is that they have become more fragile. The phone companies are aware of this, of course. Building technology with a predictable date of expiration is a long tradition in the electronics industry. Paying a little more up front for a phone with a shorter contract might leave you with more options later on. Be careful what you’re signing on for and how long you might be stuck with it.

Believe it or not, not everyone is dissatisfied with the concept of planned obsolescense. A lot of customers want the newest, flashiest phone. Your mobile phone has become a statement about who you are and what you can afford, like clothing or a car. But, unlike a car, a mobile phone doesn’t cost tens of thousands of dollars and can be strategically placed on a conference table for everyone to see. If the snazzy new phone you bought lasts more than a few years, it will become woefully out of date. For ‘fashion conscious’ consumers, the phone companies are almost providing a service by building in the excuse to upgrade on a regular basis. This may seem silly to some, until a TV show from more than 10 years ago comes on and laughter ensues at the ridiculously large phones.

Churn it Out

For a long time in Canada, it just wasn’t possible to get a free or low-cost phone unless you signed a long-term contract. The situation is changing. While all the mobile phone companies in Canada were offering the same sorts of contracts, there wasn’t much incentive to change your company. The deal from the next company over wouldn’t be any better. There was only the satisfaction of shaking the dust from your shoes as you left them behind. The problem was, with only a few mobile phone alternatives in Canada, there was probably a steady stream coming to the company you just left from the one you were going to.

New, smaller players have since entered the Canadian market, thanks to some new rules introduced the last time radio spectrum was sold to companies for mobile phones. Some of the new companies will last, some won’t. But, what they will bring to the table is an alternative. If customers can actually leave and find a better alternative, that could actually convince the larger, more established mobile phone companies to offer more attractive rates and phones. I know that I may be dreaming, but I think it actually could happen. In any case, look around next time your old phone dies. You might just find a deal.