Things have come a long way since Bell and Rogers formerly Cantel, were the only two cell phone companies on the block and airtime cost $1 per minute.
Technology is meant to simplify our lives but the explosion of the cell phone business with new carriers popping up everywhere, iPhone, blackberry and Androids systems, three year contracts, no contracts and $0 phones is enough to make you want to hang up on the subject.
This month we want to clarify what it really means when you sign on with a carrier that offers you a no long term contact plan.
We have all heard the statement before “You shouldn’t judge a book by its cover”. This statement is absolutely the case when you jump on board with a cellular carrier who offers you service that promotes no long term contracts.
No “long term contract” does not mean there are not costs to pay if you decide to cancel or transfer to another carrier. What cellular companies offer, in large print, are things like $0 for a phone or $169 for a phone that is normally priced at $599. What they don’t tell you is the cost of the phone is buried in the cost of the monthly service. If you sign on for $29 per month there is a good chance the actual cost of the service is less and part of your monthly bill is to pay for your phone.
For those who sign on and cancel early you may not have to pay a cancelation fee for the service but you are likely to have to pay out the remaining balance of the phone. Here is an example of how it works.
You sign on with a no contract carrier who offers you service for a fixed cost of $29 per month for the first 12 months. After 12 months the monthly costs are subject to change. The service provider offers you the latest Blackberry phone for $169 that retails for $565. You just saved $396 right? Wrong. From the $29 monthly service fee $11 is used to reduce the outstanding balance of the cost of the phone. If you cancel your contract after 12 months only $131 has been credited to your phone account and the cellular carrier will be looking to you to pay the remaining $265. You may also need to pay to have your old phone programmed to be compatible with your new service. Carriers who still offer longer term contracts also use this method of back loading the cost of equipment to entice customers to buy now.
The best defence to preventing a nasty surprise is to ask your carrier to explain all the terms and conditions for both the cellular service and equipment, especially what happens should you want to change suppliers. Take 5 to 10 minutes and read the fine print or take it home and read it first before you sign on the bottom line. It could save you hundreds of dollars in surprise charges when you decide to disconnect. It is like a divorce, it is always costs you more to leave than you expect.