There Is NO Excuse ...

iPhone.

AT&T/Cingular.

Supposedly the partnership between the two companies would rewrite the cellphone industry, right?  Up until now the phones were given away by the carriers to get the public's business.  The carriers were in charge and told the cellphone makers what they wanted, which features, etc. to put in the phone.  Then, for a nominal charge, you would pick your phone and sign a long term contract of one or two years depending on the discount you wanted.  The carrier would write the true cost of the phone into the contract's monthly cost.  Over the one or two year period of the contract the customer would be paying for the phone (ie, rather than buy a $340. phone, the customer pays $100 for that phone and the other $240 is paid for by bumping up the monthly plan by $10 a month with a two year commitment). 

This is the way the cellphone industry works, has worked, and all parties seemed comfortable with that: the cellphone makers, the carriers, and the public.

Then, along came Apple.

They made a phone that was so good, had so many features and was so slick to use that customers no longer picked from whichever phones their carrier offered, but signed on to whichever carrier they had to use in order to have an Apple iPhone.  Apple got to sell their shiny phones.  AT&T took a small percentage of the sales price and also got a lot of new customers with shiny new two year contracts. 

Most industry analysts saw how that turned the cell networks on their heads.  Instead of figuring what cheap phones they could offer to boost their bottom line while still attracting customers or retaining their old customers, suddenly they all want new and shiny cool phones.  They realized the public wants great phones and will pay for them ... if they are good enough.

A complete turn around, right?  Customers no longer picking phones based on plans, but picking plans based on what phone they want.

Thinking about it all tonight, I have one issue with it all:  Somewhere in that new equation, the plan price and contract requirements haven't changed.  

If the carriers are no longer needing to make up the cost of the phone they gave away in the beginning of the relationship, why aren't the monthly costs reduced by that $10 - $20 a month?The customer still pays the higher rates charged by the companies that supposedly had to have those rates to not lose money on the promotional phone give-ways, yet those customers are also now buying a phone and paying full price.

Also, if the carriers do not need the one or two year commitment to pay for the phone discounts, they are making a profit right from Day One, correct?  We were told that the long term contract was because of the phone costs and they needed that commitment to make their costs back - if you terminated the contract early, you had to pay them monies toward the phone.  We all thought that fair as it was obvious you couldn't get their 'free' (or heavily discounted) phone and then not let them make the money back by using them for a certain period of time, right?

But if they are making money from Day One and do not need to make back monies over time, why do we still have to sign a long term contract?  We don't do that for home phones.  We don't do that for any other service where the service provider is not providing equipment or trying to get back up front costs.

So for the public, we have the same monthly fees and the same long term requirement to use a service we aren't sure we'll like, yet have higher up front costs.

Sounds like the companies are making more profit and the public is getting screwed.

And what is new about that?