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Back to the budget brink

Jul 18, 2019

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Why wireless providers are ditching the two-year contract

Kai Ryssdal and Ben Johnson Aug 18, 2015
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Next time you go to your local purveyor of electronics and say you’d like to upgrade your aging smartphone because your two-year contract is up, you might be in for a surprise. Several wireless carriers are killing the two-year contract, which sounds like more freedom. But freedom from contracts also means freedom from the discounts on device sticker prices.

So what’s behind the shift?

Marketplace Tech host Ben Johnson thinks it’s about three things: adoption, technology and good old competition.

According to Pew Research, 65 percent of adults in the U.S. have a smartphone, which is double what it was just three years ago. “What all of this means for wireless carriers is that this pool of potential customers is much smaller than it used to be,” Johnson says.

On the technology side of things, phones just aren’t as groundbreaking as they used to be, he says; consumers don’t feel the need to upgrade every time Samsung or Apple releases a new phone because the devices just aren’t that much more exciting than what they already have.

“In a lot of ways this is actually a pretty good time to be a user and a customer when it comes to smartphones and smartphone service,” Johnson says.

This means that the device makers are having a tougher time than they were just a few years ago. But what does this mean for the average cell phone user’s bill?

“The wireless companies are going to show you a bill that’s actually pretty similar to the bill you’ve always had, but you’re going to be leasing the phone instead of locking yourself into this two-year contract,” Johnson says. 

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