No-Contract Cell Phone Plans Gaining Speed in the US

ZTE has experienced significant growth as a result of its no-contract smartphone plans. ZTE achieved an increased growth rate of 85.7 percent in the U.S. market in the first quarter of 2013. 

The company’s core products are wireless, optical transmission and data telecommunications gear; mobile phones; and telecommunications software. ZTE also offers products such as video on demand and streaming media. Primarily, the company sells products under its own name but it is also an OEM to companies such as AT&T, Boost Mobile/Sprint, T-Mobile, MetroPCS, Cricket Wireless and Tracfone.

While ZTE does not have the hottest or most talked about products like the iPhone, it has recently announced that launch of a smartphone, feature phone and tablet with Aio Wireless, an up-and-coming no-contract brand in the U.S. market. In the first quarter of 2013, ZTE was ranked the third largest smartphone manufacturer with 17 percent market share in the U.S. no-contract market.

No-contract plans have always been the dream in the U.S., while in Europe and elsewhere no contracts are quite common. Yet most U.S. Customers want that latest smartphone and this comes at a price in the form of a contract. The reduced price of the latest Android or iPhone is not really a discount at all but more of a subsidy that the carrier has to be paid back for. 

While there has been little confirmation from carriers on the makeup of the monthly cell phone fee, it has been estimated to take 18 months before carriers make their money back on the subsidy for the newest phones. This explains the two-year contract as well as the difference in cell phones when buying direct versus a carrier. For example: an iPhone 5 can be $299 with a contract from any one of the major carriers, or unlocked, direct from Apple, can be approximately $800.