We Need To Kill Mobile Phone Contracts

Products becoming outdated is by no stretch of the imagination a new concept. Look at raw materials, clothing, appliances, or essentially any material product and you will see that as time progresses, what was once considered to be the standard or the norm eventually falls behind and is no longer seen as “current”. Marketing is based greatly on convincing people that the products that they own are no longer up to par with the newer products available. While this is evident in pretty much any industry, the turnover rate (the rate at which products become seen as “outdated”) is significantly higher in consumer electronics products and services and services focused towards individuals. However, even when people are willing to part with their “outdated” product and upgrade to the newest and best, they are usually tied up on one thing. Contracts.

Look at the Motorola RAZR mobile phone. In 2005 and into 2006, the RAZR was one of the most highly sought-after phones. People were going gaga left and right, trying to get their hands on the thin and powerful phone. However, as 2007 approached, the novelty behind the Motorola RAZR had died down drastically. People were no longer as interested in the product, and the people who were were able to purchase the phone for a much more reasonable price. More importantly, some of the people who had purchased the RAZR less than a year and a half-before were already looking to ditch the phone that they had jumped through hoops to get, and were looking to upgrade to a newer, better, more feature-rich phone.

Now, a lot of these people who found themselves wanting to upgrade found themselves in a sticky situation. Because the typical mobile phone contract is two years in duration, many people were still locked in to their contracts and could not upgrade their phone without either sticking with their current providers and extending their contracts by an additional two years (causing potential problems down the road by making it more difficult to transfer wireless networks) and pay a higher price for the phone itself, or pay an “early termination” fee to get out of their contracts and move to another carrier.

The Apple iPhone family, which gets a new addition on an annual basis, sees a great deal of scrutiny because of this, as people are often only halfway through their two-year contract when the newest phone comes out. While AT&T has become more fair about early upgrades, the fact of the matter remains that there are still a lot of people who find themselves unable to upgrade because of their contracts.

This same concept can be seen in residential Internet services. Having said this, the availability of faster Internet speeds increases on a regular basis, and users who entered themselves into contracts for speeds that were the best at the time often find themselves stuck with what is seen as a sub-par connection.

What does this illustrate? This illustrates the fact that technology develops at such a rapid pace, that contracts actually prevent the user from upgrading devices and services. Sure, they could, but are often discouraged by the price in doing so.

More importantly, I feel that contracts do a certain extent of damage to the electronics industry, as they “lock” people in, preventing people from being able to switch providers or carriers, and ultimately eliminating competition. And without competition, the electronics industry isn’t forced to develop new and innovative products as much as it would be if contracts were non-existent.