T-Mobile was the first major U.S. carrier to do away with the standard contract that locks a user to a company for usually about two years. With this shift, they also did away with the discounted or free phone incentive that came with the long-term carrier agreement.
Both AT&T and Verizon have since offered similar arrangements, with Verizon recently announcing that it is abandoning contracts and subsidies for new customers, and free and discounted phone offers, effective as of the end of this week. The decision has generated a lot of buzz, and some have even said this further shows that mobile carriers have now made the transition to Internet companies.
Image Source: Wikimedia
“It will be interesting, too, to see if Verizon’s move has any effect on the high-end phone business. Take the iPhone, for instance. It’s crucial to Apple’s success, accounting for more than 60% of the company’s revenue in its most recent quarter. But it’s also an expensive machine, again coming in at a starting price of $649 for the entry-level iPhone 6. Will fewer customers opt for the very best iPhone knowing they now have to swallow that cost themselves, even if it’s spread out over time? Or will this open a window for makers of cheap handsets, especially foreign brands like China’s Xiaomi and OnePlus? We’ll have to wait and find out.”