The wireless industry in America runs on a two-year system. When customers sign up, they typically agree to a two-year contract, with penalties of up to $200 for early termination. In exchange for this commitment, customers receive a discount, sometimes steep, on a mobile phone. Carriers base this format on the theory that a customer’s monthly payments will eventually cover the cost of the phone.
For years the system worked well enough. Customers would sign a new contract every two years, trading in their flip or candybar phones for newer models. Sure, some phones were a bit cooler looking than others, but there wasn’t a huge difference among them. Smartphones, however, changed the environment. Why, then, haven’t carriers changed the way they sell phones and plans?
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