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Why Are Carriers Suddenly Offering Frequent Upgrade Plans? It Might Not Be What You Think

Sections: Cellular Providers

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Major smartphones So T-Mobile, AT&T and Verizon have all announced their new phone pricing options. And they seem great for the carriers and not so great for consumers. Which comes as no surprise, but I think there’s more to this.

All three carriers are focusing on early upgrade options. AT&T and Verizon basically make you pay at least half the retail price of a phone before you can upgrade to a new phone, after trading in the old phone. T-Mobile’s plan allows you to upgrade more frequently and runs the pricing differently. Lifehacker did a fantastic pricing breakdown between the AT&T and T-Mobile plans and concluded neither of them were that great.

But hey, if you want to get the latest and greatest phone, you have to pay for it, right? Well, yes, but let’s look at something else that was reported recently.

Let me point you to this article, which is about app development, but is also relevant to the carrier’s decisions to offer different upgrade options. Here’s the quote I want you to pay attention to:

…smart phone penetration is hurtling towards 70% in the US. True saturation has occurred in certain segments: 87% of 30 to 49 year olds with income greater than $75k own a smart phone.

See what’s really going on here? As smart phone penetration reaches a saturation point, the only way to sell new phones is to get existing phone users to upgrade sooner. Hence, I think it’s no accident these new pricing plans have been announced recently. Both carriers and devices manufacturers have realized they are getting close to a problem, and they are attempting to extend their business model a bit longer by waving “Hey! Buy a new phone sooner!” options at us.

Tech folks who simple must have the latest device will undoubtedly take advantage of the new plans. But will they be enough to keep the mobile phone beast fed?

I’m not convinced they will be. It’ll be interesting to watch the industry over the next couple of years as everyone is forced to deal with a saturated market.

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