Breaking Free of the Cellphone Carrier Conspiracy

When you buy a cellphone — an iPhone or Android phone, let’s say — you pay $200. Now, the real price for that sophisticated piece of electronics is around $600. But Verizon, AT&T and Sprint are very thoughtful. They subsidize the phone. Your $200 is a down payment. You pay off the remaining $400 over the course of your two-year contract. It’s just like buying a house or a car: you put some cash down and pay the rest in installments. Right? Wrong. Here’s the difference: Once you’ve finished paying off your handset, your monthly bill doesn’t go down. You keep reimbursing the cellphone company as though you still owed it. Forever.

And speaking of the two-year contract, why aren’t you outraged about that? What other service in modern life locks you in for two years? Home phone service? Cable TV service? Internet? Magazine subscriptions? Baby sitter? Lawn maintenance? In any other industry, you can switch to a rival if you ever become unhappy. Companies have to work for your loyalty. But not in the cellphone industry. If you try to leave your cellphone carrier before two years are up, you’re slapped with a penalty of hundreds of dollars. If you’re not outraged by those rip-offs, maybe it’s because you think you’re helpless. All of the Big Four carriers follow the same rules, so, you know — what are you gonna do?

Last week, the landscape changed. T-Mobile violated the unwritten conspiracy code of cellphone carriers. It admitted that the emperors have no clothes. John J. Legere, T-Mobile’s chief executive, took to the stage not only to expose the usurious schemes, but to announce that it wouldn’t be playing those games anymore.