I don’t like signing up for two-year contracts when I buy a phone–in fact, I’ve frequently chosen to buy phones at full price and therefore avoid the commitment. But there’s been one giant argument against doing so: Wireless carriers charge folks who pay up front for a phone exactly the same monthly fee that they get from customers who opt to get the phone cheap in return for signing a contract.
Effectively, full-price phone buyers are paying back the subsidy to the carrier even though they weren’t subsidized in the first place. That’s why I reluctantly but rationally signed up for a two-year Verizon contract last week when I bought a Droid. (The Droid only works on Verizon in the first place, so it’s not like I have the option of leaving the carrier a few months from now and using the handset with another carrier.)
Now T-Mobile has become the first U.S. carrier to do the right thing: As Bob Tedeschi of the New York Times reports, it’s charging people who pay list price for phones less for monthly service than it does subsidy customers. By forgoing the subsidy, you’ll save money over the long run and won’t be locked into a relationship with T-Mobile; assuming you’ve got the cash on hand, it clearly becomes the smartest way to buy a phone.
Bravo, T-Mobile. May AT&T, Sprint, and Verizon follow your lead…