Wireless

How Will Removing Subsidies Impact Phone Pricing?

Posted by Drew Hendricks on February 2nd, 2013 at 5:09 pm

In the United States and other parts the world, phone subsidies are incredibly popular. In the past, all the major United States carriers strongly encouraged their customers to buy subsidized phones, and most people accepted this without much thought. However, T-Mobile has recently announced a decision to switch to a model where people pay for their phones outright and receive discounted service in return. How will this move affect the pricing of smart phones?

Cheaper options

With the release of the Nexus 4, Google has shown that it is possible to release a top-end phone without demanding the high prices that other manufacturers charge. In addition, Samsung and other manufacturers have been heavily targeting the low-end phone market, which has helped spread the use of smart phones to people in all income brackets. When people can pay more upfront in exchange for lower monthly fees, manufacturers will compete to target these groups. In the coming years, consumers can expect more affordable options to come to the market.

Cheaper plans

With the popularity of prepaid cell phone plans, is now possible to save a significant amount of money even when paying top dollar for a modern smartphone. As the media spreads this information and friends share with others how much they are saving, those who are leaving their contracts will likely start to investigate budget friendly phone plans and save money on cell phone bills. Consumers are learning how much they use their data plans and how many minutes they use each month, and many might make the decision to shop for a phone first and look for a provider second.

Diverse plans

Since consumers will be empowered and able to switch to different providers when they want, cell phone network providers will likely offer more diverse options. Some are already dividing voice and data and allowing consumers to pay for each separately, and some may offer significant discounts for bundled options. In the future, consumers will likely be able to tailor their plans to match their specific needs.

Internet calling?

With ubiquity of wireless networks and the spread of LTE, some cell phone providers may offer data-only options. By choosing these plans, consumers may be able to save money by placing the calls over their data connections instead of over the voice gateways. Further, the LTE specifications combine data and voice, so voice service may eventually become free with data plans. If this happens, consumers can expect much simpler cell phone plans to choose from.

Smart phones are becoming more powerful, but most people are satisfied with mid-end devices. As a result, it may be difficult for smartphone manufacturers to continue to charge high prices for processing power and features that consumers are not asking for. Regardless of which route the market takes, consumers can expect lower prices and more freedom in the future thanks in part to T-Mobile.

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