Longer Contracts Could Hurt Handset Upgrades

US carriers are increasingly locking subscribers into two year contract to reduce churn. The downside to these long contracts is subscribers can’t upgrade handsets for 24 months. No wonder carriers are being so low-key about rolling out next generation networks, few current subscribers probably qualify for new handsets. If carriers were smarter they would see data as an opportunity to get away from handset subsidies. Subsidies incent users to shop and upgrade on price rather than features. Data devices should be sold on value-add features and less on price. Of course this might not be possible till the next wave of devices comes out and prices have dropped to affordable levels. But these two year contracts and rigid upgrade policies are only working against carriers’ desire to sell more data. Maybe they really don’t want to sell data?

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