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| Source: http://sweet-tiramisu.deviantart.com/ |
This time I'm talking about cell phone contracts. First, let me tell you how I shop for a cell phone. I walk into a store and I say: "what is the best phone you can give me for free?" If I agree to sign a 3 year contract I can get a better phone than if I sign a 1 or 2 year contract, so I lock in for 3 years and walk out with a pretty decent phone. I use that phone for 5 years or so, then I do it over again.
I'm not one of those people who suffers debilitating embarrassment and anxiety if my technology is more than 6 months old. I have been using my decent - and FREE - LG Android phone for a year and a half now. I am half way through my contract, and I have no real desire to upgrade the phone or bolt to a different carrier.
Of course, the phone is not really free. I pay for it each month. Part of my monthly contract fee goes towards covering the cost of the hardware that I'm using. If I lock in to a 3 year contract then my service provider can count on 36 months of fees and can therefore give me my hardware for less, or no, money. At the same time, if I break my contract I should pay a fine because I haven't finished paying for my phone.
Perhaps the contract termination fees are too high. Maybe more clarity is needed in cell phone contracts. Maybe service providers should provide unlocked phones and scale back obscene roaming charges and keep records of cell phone serial numbers to stop thefts and black market sales of iPhones.
I am not ruling out that there may be room for improved regulation in the cell phone industry, but to remove three year contracts is to remove choice. You would think that consumer groups would be advocates for more choice, but not in this industry.
Representatives of three consumer groups urged the national telecom regulator (CRTC) to do away with three-year terms in favour of capping contracts at two years.I have a bit of advice for consumers who don't like 3 year contracts: DON'T FUCKING SIGN A THREE YEAR CONTRACT!
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"Consumers are sick of termination penalties designed to keep them locked into long-term contracts," said John Lawford of the Public Interest Advocacy Centre.
"Oh, but the phones are soo expensive with a 2 year contract" whine the pale skinny-legged consumers without looking up from their phones because they're busy tweeting what stupid badge they unlocked on Fourfuckingsquare. Well you know what? The phones are expensive because you haven't shown enough of a commitment to the service provider to warrant a heavily subsidized phone.
That's simple market arithmetic. You get a cheaper phone with a longer contract, which happens to be perfect for people like me. But the cheap phones are dependent on people honouring their contracts.
"Honouring their contracts? Whaaaa?" said the skinny-legged consumer as she was uploading a 6 second Vine video of her cat yawning. Yes, contracts. Ask your Dad. He'll tell you.
The norm in some countries is that consumers pay full price for their phone -- say $600 or so -- and switch plans and providers at will. For some people this would be better. We are actually lucky in Canada in a way, because we have the option of getting a subsidized phone with longer term contracts. I stress "option" because nobody is forcing anybody to sign up for three years.
Our contract fees may still be high, but part of that is due to the high cost of covering our low-density but second largest country in the world with infrastructure. And we may still have less choice than we should have, but ultimately a lot of the problems that plague our industry could be solved with more competition instead of more regulation. This includes opening up our market to more foreign-owned service providers like Wind Mobile.
What we should not do is regulate an industry to cater to a specific class of consumer that signs long term contracts without knowing what those contracts are all about
