Recently, AT&T announced that they “…will no longer offer discounted phones with two-year contracts starting Jan. 8.” This correlates with T-Mobile’s and Verizon’s similar announcements made 3 years ago and back in August, respectively. Now Sprint is the only carrier that is left to get rid of this depreciating business model, and the CEO has been hinting they will be doing so soon.
“Well that’s just dandy…how does this affect me?” you may ask. Those of you who are not on yearly contracts, these announcements should mean nothing to you. But those of you who are on yearly contracts or looking to sign up for one, you may want to think twice before jumping right into it.
Here’s an explanation of the changes, provided by a recent article on Yahoo News:
WHAT ARE MY OPTIONS NOW?
Most people now buy and pay for phones in monthly installments, though you can also pay the full price upfront. You can also bring a used device, such as one from a friend or family member who has upgraded to a newer model. Sprint and T-Mobile also have leasing options — you pay less each month, but you don’t get to keep or resell the device in the end.
WILL I PAY MORE?
Not necessarily so, even though you now have to pay the full price for a phone.
When you got a discounted phone under contract, you were already paying the balance in the form of fees. For instance, the full cost of an iPhone 6s is $650. Although you pay just $200 at the contract rate, the phone company passes along the remaining $450 in higher monthly fees for voice, text and data. Over two years, the $450 comes to $18.75 a month. Put another way, your phone company is subsidizing your phone by $18.75 a month and tacking that on to the phone bill for voice, text and data.
If you forgo the contract, your monthly bill for voice, text and data is typically reduced by $15 or $25 a month. The $25 discount applies for higher data plans — usually ones you share with family members. In such cases, you’re actually better off buying the phone yourself, as you’re getting a $25 bill reduction but giving up only $18.75 in subsidies.
If your discount is only $15, and you’re giving up $18.75 in subsidies, then technically your bill is going up slightly. What you get instead is flexibility.
WHAT DO YOU MEAN BY FLEXIBILITY?
Because phone companies were subsidizing phones, there was an incentive to get the most expensive model, even if you didn’t need that. These days, there are many mid-range Android phones that do what high-end phones did just a few years ago. If you choose one of those models, you keep the savings. That’s also the case if you get a friend or relative’s old phone. You no longer feel that you’re losing out by not claiming the most expensive phone in a contract renewal.
And if your phone lasts longer than two years, there’s no longer the pressure to upgrade just to claim the phone subsidies. You simply pocket the savings. More important, you’re no longer tied to two-year contracts.
DOES THIS MEAN I CAN SWITCH WHENEVER I LIKE?
Yes and no.
If you buy a phone under an installment plan, you’re still stuck with the phone company until you pay off the phone. That said, rival companies often have promotions to pay off the balance for you. And if you pay the full cost of the phone upfront, you own the phone and can switch whenever you like.
Just be aware that certain phones work on limited number of networks, so it’s still not total freedom.
WHAT IF RATES INCREASE ONCE I PAY FULL PRICE FOR A PHONE?
Phone rates can go up at any time, but that historically hasn’t happened because of stiff competition. In fact, phone companies have been offering more data for the same prices, an effective price cut.
And if your phone company does increase the rates, just go to another. Again, rivals typically offer promotions to switch. You can always take your phone number with you as long as you sign up with the new company before cancelling.
How GS is Here to Help
Because phone companies are pulling out the contract, now you can receive reduced rates on your monthly bill when you bring in your own phone. Whether you decide to pay over $8 million for a Diamond Rose iPhone 4 (Top 10 Most Expensive Phones in the World – ABC News), $650 for a new iPhone 6 or Galaxy S6, or just $199 for the GS1 Raptor, you will receive the same discount on wireless plans.
The GS1 Raptor is completely unlocked and works on GSM networks. Wherever you go, whatever plan you decide to sign up with or switch to, or whenever you decide to switch, our phone will always be there to work for you. No need to pay to have your phone unlocked or get a new phone, once you stick in a new SIM card, the Raptor automatically recognizes the APN settings and gets you calling, texting and surfing the web immediately. The Raptor is the perfect option for those looking for the flexibility that was mentioned above or to save money on your phone bills.