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I don't understand the article. I understand that the US mobile phone market is broken because there is too little competition between carriers, but in what way

I don't understand the article. I understand that the US mobile phone market is broken because there is too little competition between carriers, but in what way are the contracts perpetual? You can get a cheaper plan if you extend your contract with two years, that's fair, the same kind of deals are common in Europe as well, but that only leads to perpetual contracts if you absolutely have to switch phones more often than every two years, right? So by being less tech-horny and waiting until your contract has expired, you will be free to switch provider freely, right? And what's stopping people from always buying the phones full-price and refusing to bind their contracts? Are the talk and data-rates suddenly that much higher? Are people not valuing the freedom to switch more than saving a few percent on the rates? Why are the US phone consumers consistently making the choice to bind themselves to a provider?

wmf 17y ago
If every year you break your phone and extend your contract by two years, it is effectively perpetual. I don't know how often this happens in reality, though. And what's stopping people from always buying the phones full-price and refusing to bind their contracts? You can't buy a full-priced phone in any US store, and you have to go looking for them on the Internet. And if you do buy an unsubsidized phone, your service plan won't be any cheaper (except, very recently, T-Mobile).
- houseabsolute 17y ago
  I know a guy who breaks his phone more often than that. But I don't feel much sympathy. If you can't keep your phone in one piece, it's your own fault and your own problem. Carelessness costs money.
- portman 17y ago
  "You can't buy a full-priced phone in any US store" Actually, I always buy full-priced phones in US stores. In reverse chronological order: - Motorola Droid purchased in a Verizon store for $579 - G1 purchased in a T-Mobile store for $499 - HTC Shadow purchased in a T-Mobile store for $449 - Sidekick (forget which one) purchased in a T-Mobile store for about $500 Every carrier lets you buy an unsubsidized phone. It's really not hard. It's just that Americans don't do it, for some reason.
- semanticist 17y ago
  Mobile phone insurance is really common in the UK. Most networks try to up-sell you their insurance, and many bank accounts even include it in a bundle of extras. That takes care of the broken phone problem.
dmnd 17y ago
"What if I buy the phone full-price?" I ask. "Do I pay the same rates, even though I’m not getting a discount for the phone?" Yes. Same rates, even though I’m no longer amortizing a phone. There doesn't seem to be much to gain by owning a phone outright if the monthly rates are identical. At the end of your contract, when your phone is paid off, if you don't get cheaper rates by continuing to use it, why not upgrade? But upgrading your phone and getting another contract just means the same thing will happen 2 years later. The only thing that can break that cycle is a carrier that offers decent rates independent of a hardware purchase. This kind of carrier doesn't seem to exist in the US.
- orangecat 17y ago
  The only thing that can break that cycle is a carrier that offers decent rates independent of a hardware purchase. This kind of carrier doesn't seem to exist in the US. T-Mobile charges $20/month less for their "Even More Plus" contract-free plans. That makes it a better deal to buy the unsubsidized Nexus One for $350 more, because you can save $480 over the next 2 years with the same plan as the subsidized phone. And you won't have to deal with ETFs if you need to cancel.

wmf 17y ago

If every year you break your phone and extend your contract by two years, it is effectively perpetual. I don't know how often this happens in reality, though. And what's stopping people from always buying the phones full-price and refusing to bind their contracts? You can't buy a full-priced phone in any US store, and you have to go looking for them on the Internet. And if you do buy an unsubsidized phone, your service plan won't be any cheaper (except, very recently, T-Mobile).

houseabsolute 17y ago
I know a guy who breaks his phone more often than that. But I don't feel much sympathy. If you can't keep your phone in one piece, it's your own fault and your own problem. Carelessness costs money.
portman 17y ago
"You can't buy a full-priced phone in any US store" Actually, I always buy full-priced phones in US stores. In reverse chronological order: - Motorola Droid purchased in a Verizon store for $579 - G1 purchased in a T-Mobile store for $499 - HTC Shadow purchased in a T-Mobile store for $449 - Sidekick (forget which one) purchased in a T-Mobile store for about $500 Every carrier lets you buy an unsubsidized phone. It's really not hard. It's just that Americans don't do it, for some reason.
semanticist 17y ago
Mobile phone insurance is really common in the UK. Most networks try to up-sell you their insurance, and many bank accounts even include it in a bundle of extras. That takes care of the broken phone problem.

dmnd 17y ago

"What if I buy the phone full-price?" I ask. "Do I pay the same rates, even though I’m not getting a discount for the phone?" Yes. Same rates, even though I’m no longer amortizing a phone. There doesn't seem to be much to gain by owning a phone outright if the monthly rates are identical. At the end of your contract, when your phone is paid off, if you don't get cheaper rates by continuing to use it, why not upgrade? But upgrading your phone and getting another contract just means the same thing will happen 2 years later. The only thing that can break that cycle is a carrier that offers decent rates independent of a hardware purchase. This kind of carrier doesn't seem to exist in the US.

orangecat 17y ago
The only thing that can break that cycle is a carrier that offers decent rates independent of a hardware purchase. This kind of carrier doesn't seem to exist in the US. T-Mobile charges $20/month less for their "Even More Plus" contract-free plans. That makes it a better deal to buy the unsubsidized Nexus One for $350 more, because you can save $480 over the next 2 years with the same plan as the subsidized phone. And you won't have to deal with ETFs if you need to cancel.