How much cheaper must a 2-year agreement be for a cell phone user to sacrifice the flexibility of not having a contract?
I believe a lot of people sign a contract with the carrier not because they are not aware of the price difference, but rather the fact that a lot of the consumers are reluctant to spend a lump sum of cash in advance to pay for the phones. For example, for a family plan for a household of four, the price to purchase phones without a contract would cost around $2880 (two parents and two kids multiply by $720 per smartphone). This is a pretty big investment, considering that you still have to pay for the services in the long run. Another factor to consider is that the majority of consumers don't switch their carriers because of the price, but mainly because of the customer service, and/or network quality. So if the customers know a certain carrier can provide these qualifications, they wouldn't mind being bound with a two year contract. All in all, I don't think “how much cheaper” is what consumers are mainly concerned with when deciding to sign a two year contract or not.
To what extent does the secondary market for cell phones (e.g. eBay) alter the price comparison for no-contract plans?
Price-wise, I think the secondary market usually marks up by about 100 to 300 dollars depending on the sellers. That is the equivalent of a 20%-50% increase. But what comes with the high price is the flexibility of switching carriers with no extra costs.
To what extent do major carriers differ in terms of the breadth and strength of their wireless networks? Are there any differences in terms of security?
In terms of coverage and data speed:
Verizon: largest network in the U.S. (over 115 million subscribers), covers 497 markets with an average speed of 9.9Mbps.
AT&T: offers extensive international roaming (GSM), 2nd largest carrier (over 106 million subscribers), provides 4G/LTE in 291 markets in the US, with an average speed of 11.5Mbps.
Sprint: international CDMA (smaller than GSM), 3rd largest in the US, with a coverage of 110 markets.
T-Mobile: extensive international roaming, 4th largest US network (over 34 million subscribers) with an average speed of 14.1Mbps.
Not sure about the security.
What does the FCC’s bill-shock agreement mean for consumers?
I think the FCC's bill-shock agreement is definitely solid protection for consumers. Even though it is the customers' responsibility to monitor and manage their service usage, this bill-shock agreement serves as a friendly reminder to the users and a detection method to extreme cases where users were billed thousands or even millions of dollars without their awareness.
How popular do you think Apple's "new iPhone every year" plan will be among consumers? To what extent will it impact the installment plans offered by carriers themselves?
I think Apple's annual event is definitely exciting to the Apple fans. To this group of people, iPhone is not just a phone, but a luxury, fashionable accessory to have. They want to be the trend setters in technology in their social network. By constantly updating their phones, they can be further distinguished from the crowd. So instead of just saying I have an iPhone to your friends, you can brag about your newest iPhone 6s to those who may only have an iPhone 6 or 5s.
In terms of how it will impact the installment plans for iPhones, I think there are two types of people. One group of people, the innovators, who are able to afford new phones every year or those who are willing to spend a lot on Apple products will tend to pay off the phones in advance or choose payment plans with shorter periods like 12 months. The other group of people, the early adopters or the early majority, will respond to the new products slower, meaning they will prefer to wait for more than one generation to come out. So instead of buying iPhone 5, which only lengthened the screen, these consumers will want to see what the next generation will offer before they upgrade, leaving them content with the two year contract.