Even if you could simply swap your SIM card to swap providers in the US, the majority of customers would not suddenly become portable; people don't want to pay $500 up front for a phone, even though they're paying more down the line.
A lot of people I know don’t want to pay $500 up front for a phone, but I think there is a lot of path dependency in this. It’s a lot more common in Europe to pay $500 or even more for a smartphone. When I lived in Denmark I did that at least twice. Americans are willing to pay $500 or more for an iPad. A non-trivial number paid $600 for the first generation iPhone, although not enough for Apple to continue with that model in the US.
Even if iPads or other tablets become subsidized by carriers, my guess is that a lot of tablets will still be sold without subsidy simply because people are used to it.
Another effect of being able to simply swap SIM cards is that there will be a larger population of useful old unlocked/unlockable phones out there with expired contracts. A lot of early GSM competition in Europe was driven by smaller carriers or MVNOs who could simply send you a SIM card to put in your old phone.
> people don't want to pay $500 up front for a phone, even though they're paying more down the line.
As far as I can tell, T-Mobile is (was?) the only major US carrier to even offer the option of buying a phone up front and then getting a month-to-month plan that costs less than the equivalent 2-year contract. That is what I use and all told it is going to save me about $200 over two years vs. a subsidy based plan. But if hypothetically my monthly rate were the same as what it would be on a 2-year contract, as it would be on AT&T, why wouldn't I take advantage of the subsidized phones (apart from lock-in)?
OK, there are prepaid plans, but the choice of phones (especially smartphones) is limited compared to what's available on postpaid.
Prepaid plans don't necessarily restrict your choice of phone. I have an iPhone on T-mobile prepaid. That requires unlocking, of course, but most other smart phones wouldn't even require that (and would have 3G)
Smartphones are only getting cheaper. My smartphone is an LG Optimus V, which was $150 without a contract (but it's bound to Virgin Mobile, a prepaid carrier). By my estimation the phone is all-around better than a 3G iPhone. Obviously I probably got the phone somewhere near at-cost (considering how hard the RadioShack employees push you against buying it) but smartphones will be dirt cheap soon enough.
I've been having problems with my Optimus V through Virgin Mobile.
It crashes in call (total power off); data availability hasn't been stable (I would say about once a week I have significant issues where I won't be able to use email, a browser, etc. for the entire day); maps/GPS is iffy; I think there are some interface design flaws.*
I used to have an iPhone 3G. I thought it was great.
I switched to VM for the plan -- $25/month for 300 minutes, unlimited text and data ($40/month for 1200 minutes).
Honestly, though, these problems haven't really bothered me too much. I've found that for $25 or $40 a month it's fine with me if the experience isn't "perfect".
I have Optimus V running AOSP Android 2.3( custom rom ) and it runs amazingly, underclocks when not in use , overclocks when using, great battery life and responsiveness. For the value of the phone and not being on a contract its an amazing deal.
I also have the VM Optimus V and the main issue I see is losing data connectivity occasionally then the phone not being able to get back onto the data network. However, turning airplane mode on then off usually gets things working again.
that's my phone as well. no problems so far. $150 up-front cost is great. but mostly i like the $25/month no-contract with unlimited data/text/web. i really wanted the Dell Streak, but that was a $75/month MINIMUM contract
By my estimation the phone is all-around better than a 3G iPhone.
The Optimus V is a late 2010 phone. My iPhone 3G is from 2008 and hasn't been sold by Apple for a full generation. Your comparison doesn't really make sense.
Not that they're that expensive new. But if portability was easy there would even be an omnipresent resale market for used phones, so even boring phones retain resale value, as is common in other countries.
If you don't want to pay upfront for your TV or laptop, you just use a credit card. And what is even more important here, if you can pay upfront for your TV or laptop, you don't have to pay any interest. There's no reason whatsoever your network provider should provide you a mandatory loan for your phone with completely non-transparent conditions.
I think the point that is trying to be made is that the $500 price tag is influenced by the fact that most people buy the phone subsidized, and never see that price tag. I.e. if there was no phone subsidization, then there would be more competition on the actual price of the phone rather than just on the subsidized price of the phone.
