→ Kill the wireless contract

Tech Life

In her piece for the Wall Street Journal, Kill the Wireless Contract! Buy Your Own Phone, Joanna Stern writes:

I am an idiot. I signed a two-year contract to get my iPhone 6.

Without much thought, I did what most Americans do every two years: I agreed to be locked in by a multibillion-dollar wireless company. With pricey contracts and confusing add-ons, they make it incredibly hard to leave, let alone take our phones with us. I deserve to walk around with “Property of Verizon” stamped on my forehead.

We sign on the dotted line because we presume it will save us money on that new shiny phone and our monthly service. But here’s the thing they don’t want us to know: Neither is necessarily true anymore.

My experience (I’m in Europe) corroborates this. When I upgraded from an iPhone 3G to an iPhone 4 in 2011, I left a two-year contract with one carrier, Movistar, to start another two-year contract with a different carrier, Orange. At the time it seemed a better deal, and I paid €140 for my 16 GB iPhone 4 when unlocked it would have cost me €599. But to be able to pay such a low price for the handset, I had to sign a 18-month contract where I would pay €42 per month to have in return a bunch of free texts, 500 MB of mobile data traffic and (if I remember well) some discount on national calls, or something like that.

Of course, those €42 did not include VAT, so I basically ended up paying €50 per month, an amount which started to skyrocket every time I phoned my parents and friends in Italy (I live in Spain), because international calls and texts were not among the included expenses in that contract profile. To give you an idea of the craziness, a half-hour call to my mother would cost me roughly €20. A single text was something like 60 cents before VAT, so a couple of such calls and a bunch of texts would make for €100 (or more) monthly phone bills. Eighteen months like this… do the math. I naturally tried to limit international usage, but still, over the contract period, I more than paid for the cost of the handset. The last cherry on the cake was having to pay €10 to have the iPhone unlocked by the carrier once the 18-month contract period was over.

Finally, in February 2013, I decided to leave this absurd two-year lock-in model, and since then I’ve been a happy customer of a local carrier (a MVNO, or mobile virtual network operator) called Pepephone (the site’s in Spanish). The name may sound funny to an English speaker — I think it’s based on the company’s mascot, Pepe, who sorts of represents the man of the street, the ‘regular Joe’ — but hey, I’ve been enjoying a great customer service, low rates, and very good coverage. At the moment I pay a €6.90 monthly flat rate for 1.2 GB mobile data traffic (VAT included), and in the two years I’ve been a customer the highest phone bill was less than €20. (Yes, making international calls and sending texts to phones outside Spain is still comparatively expensive, but not like it was with the previous carriers.) Oh, and this company has the great habit of not raising prices whenever it upgrades the service or its offerings. For instance, all Pepephone customers are currently in the process of being upgraded to LTE, and when it happens, we’ll still be paying the same as now.

If you do switch to one of the smaller guys and you don’t like it — guess what! You can just get up and leave. That’s the real freedom. They’ll never dangle a contract under your nose. You can set up an auto-renewing monthly plan and cancel any time.

Exactly. My contract with Pepephone implicitly auto-renews, but I’m free to go whenever I want if I don’t like the service or if I find a better alternative (so far I haven’t); there are no strings attached.

But apart from praising this company in particular, the point here is that — as Joanna Stern explains in the article — life is better outside the lock-in mechanism of two-year carrier contracts. I’ve been ‘free’ since 2013 and I’m certainly not turning back. Sure, having to pay upfront the full price of an unlocked phone is hard, especially when the budget is tight or when there’s no budget at all. In my case, this has meant holding on to my iPhone 4 for a much longer period, and not upgrading to the latest and shiniest devices, but the amount of money saved in the process is indeed significant, and that’s what matters.

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