If you're tried of calculating exactly which US carrier gives you the lowest absolute price on any given smartphone, you can start by "blaming" T-Mobile.
Brassy shock-jock CEO John Legere's campaign to position the carrier as the simple, refreshing upstart vis a vis AT&T and Verizon's corporate greed has seen success: T-Mobile has picked up more competitor customers, and AT&T and Verizon rolled out similar up-front pricing and early upgrade plans of their own.
Today, T-Mobile gives you two ways to pay for a phone (everything up front, or down payment and monthly), Verizon offers three (two-year contract, Edge, and month-to-month), and AT&T provides you a whopping four (two-year contract, 1 year contract, next, and month-to-month). Some second-tier carriers have also introduced more payment methods as well.
Let's say you'd like to buy the Samsung Galaxy Note 3, which I'm choosing because it's a new phones on all carriers that has not been subject to discount. You now have nine pricing options to compare on T-Mobile, Verizon, and AT&T alone.
| T-Mobile | Verizon | AT&T | |
|---|---|---|---|
| Full retail | $704 | $700 | $725 |
| Over 24 months | $200 up front, $21 monthly | $300 (contract) | $300 (contract) |
| Special plan | N/A | $29.31; Edge plan | $35 for 20 months; Next plan |
| 1 year contract | N/A | N/A | $550 |
The price of the hardware is just the beginning of working out the phone's total cost to you. There are additional fees to consider, like activation, data plan choices, and how many devices you'll want to connect to a shared data plan, if any. All those factors contribute to the total cost of ownership over the course of two years.
Instead of simplifying anything, the country's three largest carries have now made seeking the best deal into a time-consuming, mind-numbing project.
Does a contract really matter?
These days, I think it matters less if you're technically on a contract or not. As I see it, the main reasons to switch carriers are to get a new phone that a current carrier doesn't have, to get a better deal, or to get better service, either in terms of network performance or customer care. And some of these thorns are going away.
These days, I think it matters less if you're technically on a contract or not. As I see it, the main reasons to switch carriers are to get a new phone that a current carrier doesn't have, to get a better deal, or to get better service, either in terms of network performance or customer care. And some of these thorns are going away.
For instance, more flagship devices appear across the carrier spectrum, which eliminates the need to switch providers if customers are happy with their service.
The same can now be said for early upgrades. Thanks to T-Mobile's industry agitations, carriers are understanding that customers want affordable options for switching handsets more often, which takes some of the sting out of getting a new device before two years are up. You'll still have to pay more for the privilege of upgrading (after all, smartphones cost hundreds of dollars each), but you won't have to shoulder the entire cost yourself if you want to switch phones on a whim.
That brings us to the two-year nature of the contract itself. T-Mobile is indeed a no-contract carrier in that it won't penalize you for switching once you pay off your device, but you'll notice that its upfront-plus-monthly pricing plan follows the 2-year contract model with 24 neat and totally digestible little payments.
An underlying psychology at play here is that paying off smaller chunks of change in installments makes the product seem more affordable, even if the cost remains identical over time. This, and a carrier's subsidy of a phone with a contract agreement, makes purchasing the most expensive phones seem much more attainable than a lump sum. It is a problem of perception that T-Mobile has "exposed" in its anti-contract potshots and tirades.
T-Mobile may not penalize you for leaving, but by hewing to the contract spirit with its 2-year payment cycle, it's hanging on to a deeper goal that's the prerogative of all carriers everywhere: keeping you on the network -- and paying those data bills -- for as long as possible, probably two years and quite possibly much longer.
Does cost perception keep you from your best phone?
My main concern, as someone who make phone recommends for a living, is if a higher up-front cost winds up steering price-conscious customers into making concessions they ordinarily wouldn't in order to save money.
My main concern, as someone who make phone recommends for a living, is if a higher up-front cost winds up steering price-conscious customers into making concessions they ordinarily wouldn't in order to save money.
If you avoid the pricier handset with an off-contract carrier in an effort to keep costs low, you might still wind up replacing the phone sooner than you had if you bought the higher-end device in the first place. On the flip side, if buying a more expensive phone on contract feels "cheaper" than buying the same phone off-contract, you could still wind up paying more for the phone and data, depending on your whole kaboodle of needs.
Price is important, of that there is no doubt, but it's still only one piece of the entire smartphone usage puzzle, alongside factors like the carrier's breadth and quality of coverage. Still, in pricing choices that are the most complex I've ever seen them, the industry as a whole is making it harder to buyers to calculate their overall costs, not easier.
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