Cell phone pricing

My first update of the year may be old news to some of you, but may be new or very surprising to other friends in computer land.
So the big buzz in the cell phone world right now is — which phone is the best? The Apple iPhone or the Motorola Droid — known as The Droid.
One runs on AT&T and the other runs on Verizon. I’m not making this post to compare carriers or phones. Depending on your preference, they are both great.
Both phones roughly cost $199 — sounds pretty fair, right? Only $199 for a quasi-handheld computer…..
If you want a simple cell phone, you may be able to get one for $20 or $50. Fifty bucks — what a deal!!!
Well, be careful in how you read the price. Caution: the price isn’t really the price, in most cases.
Unless you are buying a phone clearly marked as pre-paid, usually found in some sort of plastic packaging, that $199 cost or $29 cost for a basic phone entails more than meets the eye.
That seemingly reasonable price tag is the SUBSIDIZED PRICE!! Huh, subsidized by whom? The housing authority, the federal government, the state?? No, by the cellular carrier — ie. AT&T, Verizon, T-Mobile or possibly the store you are buying from (ie. Best Buy, WalMart). Really? Yes, really.
The full cost of the iPhone or the Motorola Droid is $500 or more. On a basic phone, it may be $150 to $200 or more.
The low price you are paying, is being subsidized by the fact that YOU ARE COMMITTING TO A 2 YEAR CONTRACT — at a guaranteed monthly minimum. The carrier will make their money one way or another. If you choose to jump ship to another provider, you may pay a hefty cancellation fee.
So are you saying that we should all have pre-paid service? No. Generally speaking, prepaid cellular is good for kids who need to learn the value of a dollar or for those adults among us who place a very limited number of cell phone calls.