Will T-Mobile's move away from cellular contracts change the industry's business model?

Answer

becker
Vote Up (10)

I was about to get all snarky and point out that T-Mobile was so far behind AT&T, Verizon and Sprint that the others wouldn't even notice that T-Mobile had done anything.....then I saw a headline that Verizon announced a $35 per month no-contract plan. And THEN I read the article and saw that the $35 Verizon plan was only for feature-phones AND they changed their upgrade policy to mandate 24 months before customers are eligible for an upgrade. So back to the snark.......

As long as people don't do the math and figure out how much they are actually paying over the term of their contract for that "inexpensive" iPhone, the 2 year contract model is going to stick around. Aside from T-Mobile there have been no-contract carriers for years, and even AT&T offers a pre-paid, no-contract option (GoPhone), so the industry isn't exactly a monolith. In the past, it was something of a negative status indicator when you had a no-contract phone, in part because the selection of hardware generally sucked, and in part because the carriers marketed to less affluent potential customers. I used to live in England, so when I saw Virgin Mobile here in the States, I was happy to sign up a couple of years ago. Only when some of my friends made some jokes did I realize that the target market was different in the US. The funny thing is that now a number of my friends have switched over to no-contract because they know me and how comparatively little I pay per month. I have also noticed a shift in perceptions as the selection of phones has improved.

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