No Option Is Not Agreement
I have to take exception with an opinion written by Lynnette Luna. She agrees that customers hate the mandatory early termination fees (ETF) that carriers charge when you break your cell phone contract. But she mistakenly tries to use the sale of the iPhone with its 2-year contract as proof that customers are OK with these contracts. To quote her directly,
ETFs exist to recoup the subsidy that mobile operators pay to offer cheap phones. Just look at the iPhone 3G as an example. AT&T and Apple obviously came to the conclusion that this device should be subsidized to the $200 level in order to drive mass-market adoption of the service. Consumers clearly have preferred to pay less for a device, and they have been willing to sign a two-year agreement with cancellation fees to do it. They do the same to rent apartments, lease cars and join gyms.
I am one of those users that would prefer to pay full price for the iPhone ($500) to save on the extra fees associated with a 2 year contract (over $2000). It is just not an option. Just because users are signing up for the contracts now does not mean that they are happy to do so. They simply have no choice if they want that phone.
Also part of her argument is that the contract gives the user a cheaper overall cost. But since other carriers are starting to roll out all-you-can-stream mobile options, especially on a month-to-month option, this argument is going to break down. The most likely result of all this interest in mobile and data plans is that they will become cheaper over time. Being locked into a 2-year contract may be a customer’s worst option. Of course, it will be a while before we see this with the iPhone in the U.S. since AT&T is the only authorized carrier. But I am sure that customers will eventually get what they want.