Most consumers who own a cell phone or smartphone also have a service contract in place with their mobile phone carrier. It is common, for example, for most cell phone service providers to lock their consumers into a contract for as long as two years. For consumers, there is often a benefit to accepting a long-term contract, and this benefit generally is the ability to purchase expensive cell phones and smart phones at a discounted price. Cost-savings may also continue with more affordable service plans to contract holders. However, some consumers today are making the decision to abandon cell phone contracts and to select a no-contract option. With a closer look at what this is, you will see that there are good reasons for this shift.
Quality Phones Available
With some models of smart phones and cell phones, the only way to get a particular model is to sign on to a contract. However, there are now more options available for no-contract phones. For example, the Google Nexus 5 rivals popular smartphone models, and it is available without a contract for around $350. Some smartphones have a price tag higher than this even with a contract obligation in place. There is also the Virgin Mobile, and this phone comes with no early termination penalty, a low monthly data rate and a reasonable price for the phone itself.
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Mid-Range Phones Are Functional Enough
The real benefit to most consumers to sign onto a lengthy contract relates to the cost savings. By signing onto a contract for an iPhone, the consumer could pay less than $100 with a contract or several hundred dollars or more without a contract. Some also enjoy improved data rates with a contract for on-going savings each month. However, the fact is that some consumers are happy enough the functions of rather affordable mid-range cell phones that they are agreeable to paying the full cost of the phone up-front without having to sign onto a contract. Mid-range cell phones and smartphones may have enough data capabilities, functional apps and power in the processor to meet the needs of a consumer, so paying more for a high-end phone is simply not necessary.
Better Competition in the Market
While some of the long-standing cell phone service providers like AT&T and Verizon have stood their ground with long-term contract options, other companies, like T-Mobile, are competing fiercely with no-contract options. T-Mobile offers some great services to its clients, such as an early upgrade program and free international data and texts. In addition to T-Mobile, some smaller cell phone companies that offer pre-paid phone services are also making an effort to compete in the marketplace with no-contract options.
While there is a growing trend among consumers to abandon the traditional cell phone contract model and to purchase a phone outright at full cost without a service contract, it is unlikely that service contracts will completely go away. This is because there still is some financial benefit to consumers to sign a 2-year agreement, and this is especially true for consumers who want to purchase a high-end phone with all of the bells and whistles.
John Parker loves to blog about smartphones and tablets. For cheap monthly wireless service without long term commitment he recommends Virgin Mobile.