Expert: DebiN - 11/5/2009

Question
When buying a new cell phone from my existing cell phone carrier after my old contract has expired. I have always been told that I "MUST" sign a contract extension agreement to activate the new phone...

Is this a "MUST" or requirement to continue to use the service?

Answer
You must sign a new contract if you are buying a new phone from your carrier and you are getting the 2 year contract pricing. If you want to pay full price for the phone without the 2 year pricing, you do not have to sign a new contract, but if you want to get the advertised 2 year pricing, the way you get that pricing is to sign up for another 2 years of service. The cost of a BlackBerry for example, without a contract, is roughly $400 to $600 and that is not a joke. It is the honest, true price that the device costs. And remember, your carrier is not the manufacturer of phones. They have to buy the phones from the manufacturer and then sell it to their customers. They are able to give them away or sell them for a very low cost because their customers sign up for a 2 year agreement, thereby guaranteeing the carrier revenue for the next 2 years. If the customer breaks the contract term, they pay an early termination fee, which helps the carrier recoup the cost of the phone that they subsidized when the customer started service.

So, if you want to pay full price for your phone, just ask your carrier the cost without a 2 year agreement and if you are willing to pay that price, they will not require you to sign a new 2 year agreement. But if you want to pay the 2 year price or get the device for free with a 2 year agreement, be aware that you do have to sign a new 2 year agreement (it's not really an extension, it's actually a new 2 year agreement). I hope this helps clarify things for you. Thanks. DebiN