Here we go again. Another Rogers ‘experience’ in the bag and another decision to avoid using Rogers. I mentioned in my last rant about Rogers (iPhone Unlocking Policy) that I would very likely be buying my next phone outright simply to avoid being forced to keep Rogers as my carrier. Well that time is here and despite really wanting to buy my new iPhone 4S from Rogers (I like to save money as long as I’m provided good incentive to do so), their hardware upgrade policy has made the decision for me to buy the phone outright instead. Here’s why.
These are my options:
- Factory Unlocked – I can take it with me to Mexico and anywhere else in the world and use a local carrier for cheap. Great!
- $749 for the 32GB iPhone 4S – OUCH! That’s pricey.
- Only 1 year left on my contract with Rogers, then I’m free to re-negotiate and (probably) switch carriers
- Locked to Rogers for the full three (3!) years from today
$269$429 ($319 + $75 Hardware Upgrade fee + $35 Administration fee) for the 32GB iPhone 4S.
- Add another two years to my contract, putting me back to three years down the road until my next phone.
Can you tell why I refuse to renew my contract? Before I get into the details of my comparison, let me first say that I paid $199 for my iPhone 3GS two years ago and that my 3GS is unbearably slow to the extent that I am unable to do most of my work on my phone. The 4S will resolve this problem.
If I were in the US, my contract would be done and I wouldn’t be paying any penalties – I would be free and clear to pay the regular $299 for the 32GB iPhone 4S and enter into a new 2-year contract. Yes it would be $30 more in the US – $30 more for 1 less year on contract? I’ll take it! Oh wait, I can’t; not an option in the great white north. 2 years is reasonable, 3 is not. As of 5 years ago, three year contracts made sense since phone technology was advancing at a roughly equivalent pace. Every three years a new slew of phones would tide you over until three years after that. But it’s a new decade: phone technology is advancing so fast that 3 years is pretty much two lifetimes for a cellphone. 3 year contracts simply don’t make any sense anymore.
Wait, why is it so much more expensive than the new contract price of $269?
Good question. I filled out a bunch of inormation on Rogers’ website and it came back with the magic number of $429. Which means it’s marked up 63% above the normal 3-year contract price even though I’m getting exactly the same thing a brand new customer of Rogers would get. AND the phone remains locked.
For an additional $320 I get the wonderful ability to renegotiate my contract in a year (or change providers) and the ability to head anywhere in the world and make use of my phone at a decent rate. By the time I’m paying $429, what’s another $320?
The results of this analysis are that Rogers is failing to recognize a few key facts:
- 3-year contracts no longer match with the pace of innovation in the mobile device market
- I’m more than willing to pay a reasonable premium to do an early hardware upgrade. $160 on top of the regular price for the phone is not reasonable.
- When your upgrade premium brings the price of the phone to more than 50% of the outright purchase price, it begins to tilt the scales in favour of buying outright. This is especially true because there are two major benefits to buying outright: factory unlocked condition and the ability to negotiate a new contract with retentions (or simply walk away).
Rogers should be doing a better job keeping their customers around. It’s in their best interest to keep you upgrading your phone and renewing your contract, yet these new upgrade policies are not accomplishing that. How can they do this? Here’s a few ways.
- Come up with a better hardware upgrade policy – especially for those at the two year mark. I would be willing to pay $50 to do the upgrade a year early. Maybe as much as $75 – but no more than that. You’ll note that $75 brings the price to only 46% of the outright purchase price – keeping the balance below that precious 50% mark.
- Do what they did a few years ago when the iPhone 3GS came out a year after the 3G. Upgrading to the 3GS (2 years early no less) from the 3G cost only $100 on top of the phone price. That also falls perfectly into line with my $50 at year 2 suggestion above ($50 / year early).
- Reduce the benefits of buying outright. Allow customers to unlock their phones after a few months of their contract (or immediately after the return policy is over). If I didn’t have to wait until the end of the 3 year contract to unlock my phone, I would absolutely lock-in for another 3 year contract with Rogers and save the $320.