Walking into a Verizon store to buy a new phone may seem like a pretty normal thing to do here in the US, but in other countries that’s not the case. An easy way to look at the carrier situation is with the example of roads and cars. When you buy a new car from a dealership they don’t also get to decide what roads you can drive it on. You buy the car and decide to drive wherever you want.
US carriers sell you a phone that can only work on their network. They essentially lock the car down to certain roads. In many other countries you simply buy a phone and then decide what carrier to use with it. These are called “unlocked” phones. In the US it isn’t as easy because carriers like Verizon and Sprint don’t support many unlocked devices. Still, there is a way to take some control away from your carriers: buy phones without signing a contract. Here’s why you should do it.
When you sign a contract from a carrier you are locking yourself to that network and device for 2 years (or however long the contract is). Up front that may not seem like a big deal, but down the road you may regret it. If you want to get a new phone or switch carriers there are pricey fees that you will have to pay. Several carriers have started promotions where they pay the ETF from your old carrier, but this is just another ploy to get you to sign their contract. Don’t do it.
If you can buy an unlocked phone you get even more freedom. When you travel to another country you can easily swap in a different SIM card and be good to go. You’ll also be able to switch to a new carrier here in the US whenever you would like, assuming they support SIM cards. Unlocked devices offer a new level of freedom and choice.
Cheaper Monthly Bill
The biggest reason that signing contracts with phones has become so popular is the price of devices. Most people think that the average smartphone costs around $200. We know that this isn’t true. The HTC One M8, for example, costs $600 off-contract. This is the real price of the device. Verizon takes $400 off the price if you sign a contract because they know they will make it back in the long run.
When you buy a subsidized phone you are paying for it every month. It may be cheaper up front, but in the long run you end up paying more. You can avoid this by simply buying the device at full price right from the start. The money you save every month will quickly add up to pay for the full cost of the device. Plus, some carriers even offer special plans for people who bring their own device.
We already mentioned that you will have more control to switch phones or carriers by not signing a contract, but there is even more you can do. When you sign that contract you are like a lobster in a tank. They’ve already got you. By not signing a contract they will do a lot more to keep you as a customer. You will have more power in negotiating to get discounts and deals. Just call them up and tell them you’re thinking about switching. You’d be surprised what they’ll do to keep you.
The moral of the story is very clear. If you want control of your device and service don’t sign a contract. Look at the big picture and don’t let them hook you in with the cheap initial cost. They want your money more than anything. If the carrier situation in the US is every going to get better we have to stop giving them control. T-Mobile has done a pretty good job at shaking things up, but it’s not enough. When you buy your next phone consider buying it off-contract. You’ll thank me later.
What about you? Do you buy phones off-contract? Would you consider it in the future? What is holding you back?