Cell Phone Carriers Are Killing Phone Subsidies

Posted By on September 1, 2015

In a seismic shift that is toppling a long-standing pillar of the cellular world, cell phone carriers are beginning to do away with phone subsidies for their customers. For years now, customers could get the latest and greatest phone for very reasonable prices if they were willing to sign a two-year contract with their cell phone carrier. All that has begun to change as T-Mobile and other carriers are now ending subsidized cell phone prices and are expecting customers to purchase their phones upfront when they get service with the carrier. This certainly will change the face of how the cell phone industry operates.

As this shift in the cell phone industry landscape takes effect, there will be a few significant changes that customers will experience in their interactions with cell phone service providers. Some of the changes are outlined below.

1. iPhones Will No Longer Be Sold for $199.99

For a long time now, people could buy a top-level iPhone for just under $200. With the shift by the major cell phone carriers to a situation where customers are expected to buy their phones, the Apple iPhone 6 will begin to be sold for its full price of $649.00. This is sure to make some customers look for other options.

2. Android Phones Will Become More Popular

As customers experience the sticker shock of having to pay the full-price of the iPhone, they will be looking for affordable alternatives. One affordable alternative that will increase in popularity is the line of phones that use the Android operating system. Since top-level Android phones can be bought for less than $150 in many cases, customers will begin to utilize these phones as they replace their present phones or look for alternatives to the pricier iPhone. This will mean that Google will be able to gain quite a bit of the market share from Apple unless Apple quickly develops a more affordable iPhone.

3. Switching Carriers Will Be Easier Than Ever Before

Because customers are now having to buy their phones and the two-year contract is becoming a thing of the past, customers will now have the freedom to switch carriers easily. It used to be that switching carriers was a painful experience because of contract buyout fees and other penalties that a customer faced when breaking a contract with a cell phone carrier. Now without a contract, jumping carriers is as simple as snapping your fingers. This change will definitely be a good thing for customers since carriers will be forced to provide better service or face having their customers switch services.

All in all, the end of phone subsidies by cell phone service providers seems that it will be a good thing for customers, but will bring quite a bit of change as the industry gets used to the new way of doing things. What remains to be seen is just how this change will alter the way the cell phone industry operates as the future progresses.