Why Buying SmartPhones from Carriers Can Really Suck!

For years, the wireless carriers bundled services and equipment without ever breaking down what subscribers were really paying for. In the US, the standard model was to sign a binding two year agreement with early termination fees. Should you try to leave before the 2 year term ended, they would bang you for as much as $350. In return for signing that two year contract, the carrier would give a "FREE" phone or $450 credit towards one. The biggest problem with this model was the opaqueness of what you were paying for. 

In 2013, T-Mobile broke the mold and abandoned offering contracts. They disclosed what we all had expected all along - Those FREE Phones were never FREE. The carriers simply bumped up their plan costs $20-$30 per month. So the gift of a FREE phone of $450 credit was a bit deceptive, like a mirage. If you chose your carrier and plan correctly and did your upgrade immediately becoming eligible for it, this was not really that bad of a deal, except for those who did not immediately upgrade. That's because the carriers made an extra $20-$30 per month after month 24 for those who continued using their old devices. For those who had crappy coverage or went with a carrier that charged overage fees for excess data, roaming or long distance charges, carrier contracts could be a nightmare.

T-Mobile actually started the BYOD (Bring Your Own Device) revolution. They began disclosing what they were charging and encouraging users to bring their own devices. They also began offering contracts on devices, not services, with no termination fees. Add zero interest financing, and it was now possible to buy an iPhone 6s'16GB for $27.09 per month x 24 months. The device charges are simply added to your bill and fall off month 25. What a concept! T-Mobile also did away with data overage charges and in most cases, global data and texting charges.

The other carriers were much stricter about what devices they allowed to utilize their networks but have finally started to come around. The problem is their "early upgrade" programs are really no better than the contracts they replaced. They still bind users to their carrier. Savvy wireless users are beginning to figure out that in many cases, it is wiser to bring your own device to a carrier, versus getting one from them. Obviously, this requires getting the right technology and proper 4G LTE frequency bands on the device that support the carrier you choose. 

Thanks to the FCC's Tom Wheeler, Apple and Google for breaking the carriers stronghold on the industry. AT&T announced that effective January 8, 2016, they will cease offering contracts to join T-Mobile. Officially, Verizon only offers contracts to their legacy users and those who upgrade. The reality though is Dr Wireless can still offer 2 year Verizon contracts to anybody who asks for them. Since even Verizon now discloses exactly what they are billing you for with their newest S, M, L, XL and XXL plans, getting a contract with them is not a bad idea, proving you upgrade month 25. They also offer zero interest financing as do all of the carriers.

Today, Sprint offers the widest array of purchasing options. They have contracts, zero interest financing and lease programs available. To sum it all up, Verizon still offers the most comprehensive domestic coverage of all the carriers in my opinion. T-Mobile offers the most value, features and global roaming and long distance benefits. For monster data users, Sprint and T-Mobile are the only carriers that still offer UNLIMITED 4G data plans.

Oh, before I forget...Just because the carriers are getting a bit more transparent does not mean you are completely safe. There is still fine print. An example of this is the zero interest financing programs. While all carriers now offer these, they are structured differently. AT&T and Verizon offer two options - paying the monthly premium each month, or paying the total amount off in full. With T-Mobile's finance program, it is possible to increase the amount of your monthly payments if you wish to finish the device finance agreement off early.

One of my wireless industry colleagues just did an interesting carrier expose worth reading. He explains the confusing options such as early upgrade plans very well.

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