I read your article about handset financing, and found it to be very interesting, but maybe somewhat simplistic in its conclusions. Sure, it makes sense that if you can afford a monthly payment, you can simply make that monthly payment to yourself and save up that money. Once you have the cash available, you can simply go out and buy that fancy smartphone that you want. It's all about delayed gratification.
It even makes sense that by the time you save up, the phone you'll be buying six or twelve months later will be notably better than the one you would have purchased at the time had you used some kind of smartphone financing program. Sure, it's all logical and common sense, and signing a contract seems pretty lame. I couldn't agree more. It even speaks to a basic human flaw of a general lack of patience, which most modern societies, particularly North America, seems to lack.
Are companies preying on this common attitude/weakness? Absolutely! It feels logical to borrow money to buy a home, otherwise you'd be saving for 30 years, which really isn't practical. But what about cars? It wouldn't be unreasonable to save up $10K for a car, but if you want to buy a $30K or more car, the waiting period seems to get a little impractical. You could then argue that would mean that you can't actually afford that more expensive car, and that living within your means is the wise decision. Can you imagine if everyone applied "financially responsible logic" to such purchase decisions? A large part of our economy is based on the economics of "buying stuff" and financing is a huge part of the wealth of the economy; it makes the world turn. Ok, maybe it's all actually artificial, which resulted in the financial bust of 2007-2012, but that's another topic.
So back to prepaid wireless. The fact is that companies like T-Mobile started eliminating
contracts, but offer smartphone financing options in its place. The bottom line is that we want things now, and we don't want, or can't afford to fork over hundreds and hundreds of dollars at one time. So the appeal of programs like T-Mobile first launched is to get people who would otherwise gravitate to postpaid contract plans. The real paradox here is that if you use smartphone financing, you're really then signing up for a contract. Though, arguably, the terms of financing within prepaid carriers are more flexible, and tend not to have elevated plan pricing like postpaid carriers do. In other words, they're a better deal, and you can easily end your financing contract any time by paying it off.
Are these programs ethical? I don't think it's a matter of what's right or wrong. It's about companies competing for customers. If they don't grow, they die. And in the wireless industry, it's hard to stay the same size. You're either growing or shrinking, and if you're shrinking, you WILL die. No one wants to "take the high road" that could lead to bankruptcy. So if one carrier is doing it, they all need to do it; of course assuming that customers gravitate towards these programs.
So, MY conclusion is that yes, smartphone financing is lame. The points you make are very sound. However, human nature, as flawed as it is, WILL prevail, and prepaid carriers need to play in the game to stay alive, and no doubt they will take that path. Like you said, at the end of the day, it's the customer's choice to decide what path to take. If we lack patience and financial will power, we'll go for the financing option. And if we have good credit, it could be at 0%, which I suppose isn't really damaging in the long run to personal finances. All in all, smartphone financing is here to stay, and customers will love it!