Alright so this has been a pet peeve of mine for quite some time. Living in Canada over the past decade or so the “big 3” wireless providers (Rogers, Bell and Telus) have all historically tried their best to force customers onto outrageous three year contracts which you can’t get out of without paying a large fee.
Luckily this has begun to change as more competition has entered the market. Wind Mobile, Mobilicity and Public Mobile have launched over the past few years to provide consumers with alternatives to three year contracts. However, these networks are new, relatively small and the service is not always that great unfortunately. To compete with these new providers the big three have begun to offer cheaper, non-contract alternatives through their lower cost subsidiaries (Koodo, Fido and Virgin).
Unfortunately many consumers are still lured in to signing a 3 year contract by the promise of cheap, carrier subsidized phones. The go wide-eyed at that $99 price tag next to the brand new iPhone 5 and jump to sign on the dotted line committing themselves to another three years of overpriced service. Consumers need to step back for a minute and just do the math: you may be saving $500 up front on your phone but you will be paying an extra $20 or so per month over 36 months over deals you can find elsewhere so the bottom line is that you are losing that extra $220. After all, these companies exist to make a profit.
In the United States 2 year contracts are the norm which is much more reasonable and in line with the average life of a smartphone. Trying to keep the same phone for a full three years makes it much more likely that you will have to send your phone in for repair or end up dealing with technical issues and reduced battery life.
If carriers see their customers are no longer willing to sign up for term contracts then they will be forced to offer better non-contract options. So please step back and think about it before you commit yourself to another three years with your current provider!
/Rant