We should make contracts illegal

[MedioGringo]

Hear me out and feel free to pick this idea apart.

We should get rid of all cell phone contracts. They are stifling capitalism.

What if:

1. All phones had to be able to work on all 4 major carrier and came unlocked.
2. There were no contracts and all phones were paid for in full up front (or in 3-4 installments at the most)

Think about it. How much cheaper would phones be if they had to truly compete on price? Think about how cheap the new Nook tablet is, with amazing specs. This is a direct result of competition with Amazon. Look at the used phone market. A year ago, a high-end Android phone went for 400 bucks. I sold my Nexus One to get an Evo 4g for $425. Now, with the market flooded with devices, you can grab a Nexus S for 200 bucks. I'm willing to bet that even the most high-end phones would sell for about $400 if you had to buy off-contract. Maybe less.

Now consider what true competition would do for the price of our cell phone plans. What if you were never tied to a carrier and could jump from ATT to Verizon to TMo whenever you wanted AND keep your phone? You think we'd still have the highest prices in the world? Think about the car insurance market, where you can jump from Geico and Progressive whenever you want without penalty and you can customize the crap out of your plan so that you just pay for what you want. Imagine if mobile phone plans worked the same way. Any extra cash you had to plunk down to buy a phone outright would easily be clawed back in cheaper monthly costs on your phone bill. I bet you could get unlimited everything for 50 bucks a month.

Yes yes, I know, this would never happen. But it could if the government had the balls to take on the telecom giants. They did something similar in the UK with cable TV service, and it worked wonders for that market.

Right now, prices are out of control. $300 for a GNex plus a $350 cancellation fee means Verzion will get $650 bucks out of you unless you keep your phone for the full contract. No way I'm doing that. At those prices, I might as well buy the phone outright.

What do you think, would you guys go for this considering how high phone prices and plans are getting these days?

 

[jdbower]

A lot of places outside the US phones are not subsidized and don't come with contracts. You pay full retail price for them (usually more than the US full retail since we don't need to worry about VAT). I'd prefer this but only T-Mobile will give you a discount for bringing your own phone so the money that would normally go towards paying off the loan VZW gives me on a new phone would be wasted. A side effect of this is that if we start paying full retail we could buy the phone direct from Google or from any third party - removing the carrier from the software stream means less bloat and faster updates.

Phone prices are about $650, this is where you get the $300 upfront and the $350 cancellation fee from. You buy a phone and cancel day one it's just the same as if you paid full retail, but the phone is now yours. The ETF is prorated, so if you cancel after a year you only pay $175.

Jumping between AT&T and Verizon would still be expensive, AT&T is GSM and VZW is CDMA. Sprint is also CDMA and T-Mobile is also GSM, but you'd still need to support different bands. With LTE at least we're all adopting the same tech, but the band problem is even worse since Europe is also not standardized. Hopefully software selectable radios will start popping up supporting the appropriate bands.

In short, I support your goal of decoupling the carrier phone subsidies but I also understand that this means spending $650 on a superphone.

 

[BlackHawkA4]

I just wish you could buy whatever phone you wanted and the only thing the carriers had any say in was the service. For instance:

For instance:

Each manufacturer makes their one phone which works for all carriers. You buy it for $650. Then, you decide who you want to go with Sprint, Verizon, Etc. Then, you still sign a contract with them. Except, now, they give you the $350 back for you phone which is any phone you wanted in the entire world and your not settling for something else. The contract doesn't bother me as much as select phones being on select carriers with select features. I think it's ridiculous that Verizon has the rights to everything for mobile! They had NHL and went and took our NFL away from us. What gives them the right.

More importantly why do the people who provide this content want to limit to one carrier. I would have probably payed for the NHL season to be able to watch games on my phone by now. I'm not going to go out and switch to Verizon just to get it, however.

 

[jdbower]

I'm hoping that this shift to LTE across the board will help enable at least part of your dream. Once we can drop the legacy services like we did with analog in theory you can grab an LTE phone from anywhere and pop it onto any LTE network - once we get this software-selectable radio frequency thing straightened out. Luckily, by the time we can retire the <4G network that should be a no-brainer...

As for content exclusivity, that's a nightmare across the industry and I'm very glad I don't watch sports - ESPN may be responsible for pushing the limits by bringing HD and 3D content to the masses but they also have the worst habit of content exclusivity and wringing every nickle out of their sheep, er, fans. The sooner the industry realizes that *I* want to pay for content but I don't want to be restricted where I can watch it the better.