Cell phone providers phasing out contract plans

NORTHAMPTON, Mass. (WWLP) – The way you buy a new cell phone is changing. Two-year contracts are going the way of the dinosaur.

In the past a cutomer would sign a contract that locked them into a certain provider, and in return, get a discounted price for a new phone. Not anymore. Contracts are out. Financing and leasing are in.

“It all depends on whether the plan itself is cheaper if it includes a phone subsidy. If the plan is cheaper and you get to bring your own phone then it would be worth it. But if they don’t give you that money back, whatever their saving on what they would have given you on the subsidy, it’s not worth it,” said Krishna Jagnanathan of New Jersey.

Cell phone providers like the idea because they no longer have to offer you an expensive discount on a new phone. Customers like the idea because it makes comparison shopping and upgrading easier.

The way the new plans work. Instead of signing a two year contract, you’ll actually be able to upgrade your phone much sooner than that. You can pay for the full cost of your phone upfront or finance it, and roll the cost into your monthly payment.

“I think that it gives the customer a lot more flexibility,” said Nate Bastarache, the owner of the Wireless Zone store in Northampton. “They can upgrade multiple times in two years and we found that a lot of people want to have a new phone more than once every two years.”

Unlike the contract plans, these new plans don’t have an activation fee, and your monthly bill should be easier to read. Not everybody is sold.

“The telephone company has a way to get you in the beginning or the end so I don’t know which is a better deal. I like no contract, but I’m sure you are going to pay somehow, either before or afterwords,” said Mauro Aniello.

AT&T is the only nationwide carrier that still offers two-year contracts. Sprint will completely phase out their two year contracts by the end of the year. If you don’t care about owning your phone, they also offer a lease.

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