Smartphones may soon get more expensive as companies do away with subsidies. (Source: CNN)
(CNN) – If you want a new smartphone, you may want to buy it soon. Experts say carriers could gradually start charging more for smartphones sometime over the next two to three years.
Some international smartphone carriers are already subsidizing. Here in the U.S., only T-Mobile has gotten rid of subsidies.
When you purchase a phone at T-Mobile, you pay full price, but don't get locked in a contract.
That plan is beginning to generate interest.
AT&T, Verizon and Sprint have all said they're watching to see how successful T-Mobile is.
Just last month, Sprint's CEO told analysts that carriers can't keep discounting phones, especially since people upgrade so often.
That's because the price discounts cost the phone companies a lot of money. For example, the 16 gigabyte iPhone 5 without a contract costs $649, which is a lot more expensive than the $199 you'd pay for a subsidized contract phone.
That $450 difference is paid for by the phone company, so when new phones come out, wireless carriers' profit margins usually plunge.
Getting rid of the subsidy-model could be a tough sell, because not everyone may be keen on paying $650 for a smartphone.