Price Changes in Service Plans Beam Cell Phone Users into the Future

In this age of technology, it’s hard to fathom how far technology has come in such a short time. Fifty years ago, when Gene Roddenberry rolled out Star Trek, we swooned with envy over the communicator--a sleek, silver device crew members could use to talk to one another from anywhere on the planet.

Since that time, of course, cell phones have arrived and largely surpassed the old Star Trek communicator. It was like Steve Jobs made Gene Roddenberry’s dream of ubiquitous communication come true.

That version is, of course, terribly simplistic and probably a few shades shy of reality, but the point is that we are at a place in innovation now that if you can dream of it, someone will figure out the technology to build it. It might take fifty years, but, in the history of time, fifty years is no more that a flicker in time.

A Vulcan cosplayer shows how many options you have when it comes to cell phone plans.

A Vulcan cosplayer shows how many options you have when it comes to cell phone plans.

Back to our communicators. 

Last year, the major phone carriers eliminated the two year phone contract, which means your options have changed. Fierce little carriers like Sprint and T-Mobile have kept the big boys--Verizon and AT&T-- in check and prices competitive.

But, the pricing structure has changed. Consumers should alway be leery when all of the competitors jump on the bandwagon, but in this case, they’re responding to our crazy need for the newest technology. Since about 60% of the iPhones in this country are under two years old, they’re pretty confident we will buy anything new Apple sells. Are they right? Since Apple has sold over a billion phones in ten years, or about 400 per minute, that’s a pretty good indicator we will. We are hooked.

Remember her earpiece? It was a chrome-plated Airpod.

Remember her earpiece? It was a chrome-plated Airpod.

The cost of phones is no longer being subsidized by cell phone carriers. However,  the new plans include payment plans on the phone itself built into the bill. If you leave the carrier, you’re forced to pay the entire balance of the cost of the phone. (Remember those early termination fees?) The net result is that consumers pay a deposit and have a payment plan which is about 25% higher than the cost of service alone.

So, instead of paying for a two year, high dollar contract, which was basically subsidizing the cost of your ‘free’ phone, the new plans have a payment option on unsubsidized phones. Essentially, once your phone is paid off, that payment stops, compelling people to keep their phones longer.  Without a device payment built into the monthly cost, it drops even lower. 

This is a win for the carriers, because buying the phone on a contract forces loyalty, but, if your phone is already purchased, the payment is lower, and lower prices buy loyalty, too. Plus, if you keep that iPhone, the cost of having it repaired is significantly lower than the cost of a new one.

For the consumer, this is a win, because we have more freedom to decide what we want. 

Remember our sleek, silver communicators? The same way that technology surpassed our dreams then, technology will continue to wow us with better phones, better cameras, 3-D holographic magic from Apple. Count on it.

Talk on.