We’ve talked at length about contracts, discounts, upgrades, and phone pricing until we got blue in the face.  But there’s one phrase in this business that we have yet to spend much time on:  the “free” upgrade.

Everyone hates them, but most people sign them: contracts.  And in the wireless business, contracts are part of standard everyday business for most service providers.  Prepay plans aren’t always what they seem - there’s often a sacrifice to be made for not signing a contract.  Carriers give few incentives for going without a contract (even though more money can be made on non-contract plans).  And we haven’t even talked about phone discounts yet!

How did we get into this mess?  Is there a way out?

Come with us as we explore the past, present, and future of those stinkin’ phone contracts, and why you really CAN do without them.

These past few years have seen a lot of change in the wireless market.  But possibly the biggest changes have come to the smartphone segment of the business.

In 2006, if you were looking for a smartphone - often referred to as “PDA phones” at that time - you were a niche customer.  You were a business person in need of mobile email and scheduling.  Or you were a tech guru just interested in doing something with your phone that would make others slack-jawed in awe.  Or, you just had to have the latest and best thing, even if you had few plans on utilizing the device to a portion of it’s potential.

You were the type that didn’t mind side pouches and belt holsters, nor the size of your phone.  You were perfectly fine with constant charging and carrying spare batteries.  A stylus was your best friend, and that docking station at the store seemed to want to join you.

And functionality wasn’t as important as portability.  You knew you could barely get onto your favorite web sites, but if you tweaked some settings you could at least read the text.  Email was good for reading, and gave you lots of time to think about a response on the way back to the computer - unless, of course, it was something important you needed to reply to.  Or something you could reply back to in less than ten words.

You were willing to pay $300 to $500 for a phone on contract, and add a $44.99 monthly Internet plan on top of your existing voice plan.

Yes, PDA phone afficionado, you were all about sacrifice.  From the battery to your wallet, you knew what you wanted, and you bought into it.

Then, everything changed.