Cell Phone Contracts - Don't Do It!Are you tired of cell phone contracts? If so, you're not alone! In fact, I would say that generally speaking, people are pretty fed up with mobile phone contracts. It's especially hard to stomach when you start with a new wireless carrier. You're not sure whether you're going to like the service, whether coverage will be good, and whether their customer service is friendly and helpful. And yet we're expected to sign a multi-year contract...wow! Although having to sign cell phone contracts is enfuriating, there is a reason, and a very good reason why it's required. It all comes down to the handset subsidy the carrier is giving 
you.
A subsidy is basically taking a phone that they buy from an
OEM (Original Equipment Manufacturer like Samsung or Motorola) for lets
say $400, however, they then only charge you $50 or $100, or sometimes
even $0! They can do this only because they know they've got
you locked in as a customer for a certain number of years. If
they didn't have that assurance, there's a very good chance that you
would leave to use another carrier before they can make their money
back from the phone subsidy. For a more detailed discussion
on this topic, please visit Subsidies
section.North America is Unique! In the U.S. and Canada we're used to getting phones cheaply (i.e. subsidized). Although in the past we would pay $400 or $500 for a PDA (Personal Ditital Assistant - like a Palm), we're not prepared to pay anywhere close to that amount for a smartphone that has a lot more technology in it! I think it's really a cultural/historical thing, and boils down to the simple fact that "we're just used to it." When you think about it, it really doesn't make any sense! We keep computers, PDAs (before they were extinct that is!), cordless phones, DVRs/PVRs, and a whole slew of other electronic gadgets for years, and yet we get annoyed when we can't get a free, or very inexpensive cellular phone, every year. Is it just me, or is this really strange? When you continue to think about it even more, without a contract, not only would wireless providers have a huge risk of losing money on us, but having only spend $50 or $100 on a phone (or less!), we're not really invested in keeping that phone. In other words, next year when a newer, sexier phone comes out, we really don't think of it as a waste to put our one year old phone aside and buy another one. In most other countries, phones are either not subsidized at all, or subsidized very little. People overseas are willing to invest in their wireless handsets, and for that upfront cost, they don't have to sign cell phone contracts, because most countries are predominantly prepaid! Keeping Your Number Hurts Carriers Even More! Also, once WLNP (Wireless Local Number Portability) came into effect on November 24, 2003, it became even easier for customers to switch wireless carriers because we no longer had the downside of having to give up our phone number. So as much as we love to hate our wireless provider, when you sit down and really think about it, there's really a lot at play here! The Bottom Line We don't like cell phone contracts, no doubt! However, we also don't like paying a lot for our wireless handsets. I think the best compromise is for us to be willing to pay a little more for our phones to avoid having to sign cell phone contracts. And for that committment/investment, carriers can't lock us into their service. If they want us to stay with them, they'll need to provide good service, with a good value, and great customer support; is that really so bad? Note that as the cost of wireless phone technology continues to come down, it will be easier for wireless carriers to offer phones at a reasonable price (with little or no subsidy), and for OEMs to still make money on selling their products. At the end of the day, it should be a win-win! Please share How Much You Would Pay for a Phone to Avoid a Contract? And the real bottom line is: Take Back Your Freedom - Go Prepaid Wireless! Return from Cell Phone Contracts to Prepaid Wireless Guide Homepage
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