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As interest in the smartphone industry grows, owning one and paying for the service is becoming more and more expensive. New, data-optimized wireless networks are rapidly being built and expanded to accommodate for the millions of new data users; phones themselves are becoming more powerful with every generation and their price tags are starting to scale accordingly; and the associated data plans are more expensive and being capped or throttled to curb usage and alleviate some network stress due to an ongoing spectrum crisis.

What all of this amounts to, though, is subscribers shelling out more money to get the services and devices they want. Providing service isn't getting cheaper, nor are the devices and it's forcing carriers to reevaluate device and plan pricing.

Currently, all of the major wireless providers in the States offer devices to consumers at heavily discounted rates through subsidies. Instead of forcing customers to $500 or more for a device, the wireless provider will sell the device for $200 (give or take) with a two-year agreement, guaranteeing they will earn the money back over the length of the contract. While this has immediate and apparent benefits, like cheaper upfront prices on devices, it also means higher rate plans and locks customers in for the length of the contract. 

In March, T-Mobile CMO Cole Brodman expressed his displeasure for the current subsidy system, stating that if he were "king for a day", he would nix device subsidies altogether. Brodman explained further by saying: 

"I think it distorts the economic reality of what devices actually cost and it causes OEMs, carriers, everybody to compete on different playing fields. And I think it's really difficult, especially from a consumer perspective, because it causes consumers to devalue completely the hardware they're using, which is these days is amazing hardware but has become kind of throwaway. It's unfortunate you've got dual-core, multiprocessor devices with amazing HD screens that get thrown away in 18 months."

However, no subsidies would mean consumers would have to pay more for devices upfront, and without all stateside carriers on-board with such an initiative, T-Mobile would be a sitting duck and would likely lose subscribers. Most mobile subscribers outside the U.S. buy devices no-contract, but where subsidies have been the way for many years now, the difference in prices would come as a shock to most.

I wouldn't imagine any U.S. carrier would make the radical jump and abandon the subsidy system. But, as the retail price of devices become more expensive, the effectiveness of subsidies is waning. Look at Verizon, for example, who has set a standard of $300 4G LTE smartphones with two-year agreements versus the normal $200 price tag of previous years. Yesterday during a J.P. Morgan investor conference webcast, AT&T CEO Ralph de la Vega said "the carrier will do whatever it takes to minimize the amounts it gives away in phone subsidies," says Daniel P. of PhoneArena, alluding that increasing prices may also force their hand and bring higher priced devices.

The price of phones is only half the battle for consumers, though. Over the past two years, wireless providers have been moving away from unlimited data for much more profitable tiered data plans, which stifle usage while bringing in the same or more revenue. Those who use more data will have to pay more for it, and if they surpass their monthly allowance, they will either experience heavily throttled speeds or fork out an overage fee for additional data.

On Wednesday, we learned that Verizon would begin phasing out grandfathered unlimited data plans once they launch their family share data plans this coming summer. Yesterday, Verizon spoke out and shared a bit of silver lining in the midst of ominous news of family shared data. Those who want to keep unlimited data can do so by buying new phones off-contract. 

This is something I mentioned in my article yesterday about losing unlimited data. I said that I may purchase a 4G phone now and just continue to buy new phones off-contract to keep my unlimited data plan. That said, there is no telling how long this would work. I imagine Verizon will eventually axe that option as well.

I have always been a heavy data user, so tiered data can get quite expensive once I pass a certain threshold. (The largest data tiers offered by Verizon and AT&T are 10GB and 5GB, respectively. Verizon's 10GB plan costs $80 per month and AT&T's 5GB plan costs $50 per month, each with $10 per gigabyte overages. Nothing about either of those plans is cheap.) So anything I can do to extend the life of my unlimited data plan is worth exploring. It could be a long road full of $600 phone purchases and several headaches. But, given the right touch, buying, selling and trading phones sans contract can be just as easy on the wallet as buying with an agreement. 

As prices across the board continue to rise, I'm interested in where you stand, readers. Will you continue to fork over the extra cash for new devices and the associated rate plans? Or will you consider cheaper alternatives, such as pre-paid services? Is anyone else considering going no-contract on Verizon to keep unlimited data?


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Comments & discussions  

60 Reactions to this post

"So, Verizon's killing off grandfathered unlimited data plans soon. Are you willing to pay full retail price for your next phone to keep unlimited data?"


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Matthew Mills
Matthew Mills Verizon might have great coverage and fast data speeds. But i am glad i dumped them for Tmobile and save a good amount of money every month.
Nay VW
Nay VW not sure if this has been written or not. but you CAN KEEP YOUR UNLIMITED as long as you don't sign a contract and buy phones full price or one off ebay or something
Marcus Cadwell
Marcus Cadwell There's been a ton of hate on the phone companies for taking away unlimited, but I can't say it's not justified either. People look at it from a strictly consumers perspective of "I want this. Gimme!" but next to nobody knows how all this actually works. I think it sucks that our unlimited is getting taken away, but if I want to use more data I'll pay for it
Mauka Side
Mauka Side Switch to VOIP!!!
Gerald Mccrae
Gerald Mccrae I have Verizon now, and just bought a new phone from sprint to test drive it and so far it's working pretty good. We all better thank god AT&T didn't but T mobile
Marrion Bell
Marrion Bell @micca so right
Daniel Rivera
Daniel Rivera Okay now i am switching to Sprint!!! What the hell!!!
John Schulz
John Schulz Back to a land line for me. It'll be nice, not having to keep track of a phone again. I'll just have it mounted right there on my wall with a 60' cord so I can walk around the house with it. AWESOME!!! As an added bonus I'll be able to focus on driving my car & nobody will be able to track me down unless they catch me before I leave home.
Frankie Paz
Frankie Paz But to be honest, its gonna be hard on some people. Phones are expensive. Maybe they can come up with a great trade in deal? EBay is gonna be blowing up with phones for sale!
Frankie Paz
Frankie Paz I'd pay full retail but none of this throttling data hooey! Cuz that's just not nice!
Spencer ConservativeStoner Thorne
Spencer ConservativeStoner Thorne He he he I'm in love with TMobile.
Michael Franzone
Michael Franzone this is why sprint is the best but its ok ppl stay with big red only gonna take carte of u
Jack Meziel
Jack Meziel all you have to do is buy on ebay
Ryan Worley
Ryan Worley Yup! Already did!
John Rotarius
John Rotarius I love how everyone is saying Sprint speeds suck i have a photon 4g and on 3g i beat mu friends Verizon phone all the time my service isn't slow at all and i always have full bars
Bill Gillespie
Bill Gillespie @people switching to sprint. you guys are stupid wimax sucks, go to tmobile . love my galaxy s2 and cheap plan :)
Matt Dyer
Matt Dyer Just switched to Verizon I have no complants I don't need a smartphone but hope I can keep unlimitted texting after I get my prorated bill
Reid Harris
Reid Harris Sprint here I come :)
Major Crisis
Major Crisis If they do go along with it ill switch carriers there's no sence to stay with greedy Verizon.
Aric Osieczanek
Aric Osieczanek Plus now they charge you $30 to upgrade to a new phone with less data. Lame.
David Hilgendorf
David Hilgendorf Yes I will and the one after that and so on until they take it away
Stephen Redmond-Weigant
Stephen Redmond-Weigant Craigslist or ebay cheaper then verizon store get your next phone that way
Nicole Thomas
Nicole Thomas That was the only thing keeping me at verizon glad I switched.
David DiPilla
David DiPilla Not everyone can get a new phone at verizon so people if you want a new phone and keep your unlimted data buy a phone off of ebay or craigs list
David DiPilla
David DiPilla I bought a htc resound 4g of craigs list for 300 brand new so now I can't keep my unlimted data
Jordan Meinecke-Peterson
Jordan Meinecke-Peterson That is completely stupid! Can't believe this. Just a bunch of corporate bs!
Abram Wenevermet Dennis
Abram Wenevermet Dennis Unlimited data is a thing of the past..sprint = dial up speeds that's why it's unlimited you'll never use it.
Charles Phillips
Charles Phillips Google will be selling phones themselves hopefully sometime soon.
Mark Belkowski
Mark Belkowski Or you can buy a phone on ebay or craigslist and still keep unlimited. Myself were leaving verizon next summer when my contract is up.
Marc Barbieri
Marc Barbieri I already did and switched to Straight Talk where my bill is half as much
Jesus Q Velasquez
Jesus Q Velasquez Hey guys switch to page plus it has great service with unlimited talk n text with 1gb of data for 55 a month the speed is 1.5 to 2 gbs had to lines on verizon and was paying about 230 a month got page plus same service for 110 for two lines
Micca Koster
Micca Koster Everybody that has Sprint I hate to tell their network sucks and they will also drop their unlimited plan
Dave Moore
Dave Moore Are you kidding???? I'm going to AT&T this weekend
Dwight Barnthouse
Dwight Barnthouse Dave Moore is NOT going to like to hear this...
Ignacio Gonzalez
Ignacio Gonzalez I would paY full retail to stay grandfathered into unlimited data on Verizon. Just saying...iM already paying $80 a month for 20GBs of data, lol.
Matt Cain
Matt Cain I just went to Verizon because I got fed up with AT&T making my phone unusuable just because I had a grandfathered unlimited plan. I really don't believe that unlimited data clogs networks. I think this is just one of those ways a company and nickel and dime people because they know how much we rely upon these devices. It's just how the world works.
Brandon Worley
Brandon Worley Yall are idiots if u don't think sprint will follow aa well. U have no idea how the industry works. Sprint will change u in mid contract not even waiting till u renew...get over it people its the cost of doing business supply and demand.
Bryan Murphy
Bryan Murphy Just a bunch of money hungry corporate bullshit. Verizon and AT&T will try and do whatever it takes to earn that extra buck. I think I might just say the hell with both of them.
Kiid Azari Tee
Kiid Azari Tee I feel as if they need to get beat with a law suit we the consumer need to show who has the upper hand.
Chad Richter
Chad Richter It doesn't bother me much. If there's a phone I want, within 2 months I can get it for 50-100 more than on contract. Craigslist.
Zach Cline
Zach Cline @ Jeff- Because when you do you don't use an upgrade and you can hang onto unlimited data.
Ashley Cha
Ashley Cha Pay more? I'm already paying TOO MUCH!
Bruce Davis
Bruce Davis Going back to a dumb phone when it happens to my plan. I don't need a smart phone that bad. Customers need to start punishing them so they will think twice.
Steve C Trevino
Steve C Trevino I wish sprint was good but their data speeds are crap and their lte infrastructure is barely in existence and their coverage is horribly spotty in whereas Verizon 3g footprint is all over and lte is big. Ugh.. What to do.?
Jeff Hood
Jeff Hood I don't understand why anyone would buy a phone off contract unless you did not have an upgrade to use. It's not like you are going to get a better monthy rate
Tristan Smith Sr.
Tristan Smith Sr. Might just mean I will be going back to an ordinary phone or leave and go with someone like criket
Jesus Irene
Jesus Irene If this happens im just going to go back to normal cell phones. No more smartphones for me
Orlando Songwrites
Orlando Songwrites Sprint will scoop all verizons and att customers Lmao my contract wit sprint ends perfectly in November and.off to the iPhone I go right afterwards
Aaron Bergman
Aaron Bergman I like how people flip out without knowing what the new data share plans are... lol
Zach Cline
Zach Cline The only way you can keep unlimited data is to pay full retail which is bullshit
Thomas Carullo
Thomas Carullo All carries suck.
Willie McFly Beamen
Willie McFly Beamen AT&T will be following the actions of Verizon also! Glad I have sprint despite my at times frustrating data speeds!
Danielle Orange
Danielle Orange I think this will make me switch carriers. It was the only reason I was staying with Verizon.
Bryan Cotton
Bryan Cotton The only time Ive EVER heard anyone say, "Glad I have AT&T"
Pete Simpson
Pete Simpson yes
Rich Hernandez
Rich Hernandez People forget when u pay retail your not in contract. So you guys who think your getting a deal on a 200 dollar phone are suckered into paying more in the 2 years then just buying it.
Ian Cazabat
Ian Cazabat My question is, after your contract expires, can't they change you once you go month-to-month?
Zach Chapman
Zach Chapman No way in hell! Glad i have AT&T!
Donna Aldrich Florenzano
Donna Aldrich Florenzano glad i have ATT and the old date plan. no i wouldnt pay more. really? lol
Andrew Hennessey
Andrew Hennessey Nope, going to Sprint tomorrow and cancelling with Verizon.




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