You might think that buying a smartphone is pretty easy. What is there to do, really? Choose your software – Android 4.2 Jelly Bean, iOS 7, BlackBerry 10 or maybe a Windows 8 phone? Choose your model – do you need the newest device or are you content with an older version? Then finally, choose the most convenient contract or monthly plan to fit your needs – and ideally, instantly start texting, mailing, surfing the Internet, and downloading apps. But according to freshbusinessthinking.com, consumer lock-in contracts and lack of transparency are still huge issues in many countries.
When signing up for mobile communication, users usually have two options: they can provide their own unlocked device (BYOD), paying for the services only; or purchase a device from the mobile operator of their choice for a reduced price in exchange for a contractual agreement binding the user to that specific operator. This is called the “bundled” purchase of a handset device, potentially saving the consumer a fair amount of money through amazing deals – or at least that’s what mobile operators want consumers to think.
But take a closer look and you’ll find that buying unlocked devices will give you the upper hand: they do not tie smartphone users to one specific carrier and they get to choose which contract or monthly plan is the best for them by comparing the various alternatives. In some countries, users do not even have the option of being able to buy an unlocked smartphone. In Canada, for example, the iPhone used to only be available a part of a long term contract bundle – a clear breach of market competition standards that authorities finally stopped.
Comparing these two methods of purchase, it often becomes clear that BYOD tends to be cheaper than a bundled contract. This is something that most consumers might not realize, assuming that bundled deals save a great deal more money. To avoid this confusion, mobile communication operators have been advised to display the cost of the handset separately from that of the mobile service in adverts and on monthly bills. Providing clear information on the cost of the device makes it so much easier to compare the two options financially.
Unfortunately, most operators prefer to leave their customers in the dark about the actual costs. But of course not all bundled contracts are unprofitable: subscribing to such a service can mean regular updates to newer smartphone models in some contract packages.
Essentially, customers must be aware of the various choices available to them and do their research. Informed consumers should compare mobile plans and opt for a contract that allows for the greatest amount of flexibility. Eventually lock-in contracts will become something that mobile operators can no longer afford to offer, due to greater market competition, and customer purchasing power.