Cell Phones: Uncle Sam Says Bye-bye to Contracts

However much they’ve shrunk, going from three to two years after the imposition of new rules by the Canadian Radio-Television and Telecommunications Commission, contracts are still the big, unpopular thing in the world of cell phones.

For as long as I can remember, the mobile phone industry has used the following business model: They sell you a cell phone for a fraction of its actual cost in exchange for a service contract of a few years that allows the mobile operator to cover its costs. It’s a little like the principle of discount printers subsidized by really expensive ink cartridges, with the exception that, in that case, the contract is implicit rather than signed.

For a long time, these contracts have included aberrations: exorbitant penalties in the case of termination by the user, unilateral changes by the provider, the impossibility of unlocking the device, etc.

Most of these problems have been taken care of and, however much we don’t like the idea of a contract, we must admit that they have an upside. It’s thanks to them that you can get an iPhone 6S with 64 GB for about $530, rather than for its full price of $1,055, to name just one model. Ultimately, you will end up paying the $1,055 no matter what, but we must admit that few people have both the financial means and the awareness to prefer the “full-price” option.

But south of the border, more and more, they’re starting to say goodbye to these contracts, which are even endangered, according to Ars Technica.

At the instigation mostly of the eccentric John Legere, president of T-Mobile, the American industry has seen some quite novel models appear in the last few years. The one that’s popular right now allows the user to get a new device every year or every other year in exchange for a fixed monthly cost. It’s a little bit like leasing a car.

The other is to pay straight up for the telephone at full price in exchange for greater freedom and, above all, a reduced monthly plan.

This last idea has made a small breakthrough on this side of the border, but it hasn’t seemed to be able to get off the ground. Will we see the first one soon?