Why is everyone offering free smartphones?

Rogers, Bell, Telus, and now even SaskTel are offering smartphones for $0. Conditions vary, but the standard is a two or three year contract and a minimum monthly rate plan of about $50. 

While the deals don't include iPhones, they still do include some sweet devices, including RIM's BlackBerry Torch.

So what's with this, anyway? Is it National Free Phone Month? No, although that would be cool.

There are two primary forces driving this: the domino effect spurred by oligopolies, and the power of a long term contract.

First, if one company offers a significant deal, in this case Rogers, it's very likely the others will follow, in this case Telus then Bell then SaskTel. Sort of like gas pumps, where there are unwritten rules about staying in line. Even though these companies are in direct competition with each other, it's mutually beneficial to keep the playing field even (for them). If true competitive measures were to be taken, prices would plummet and their profit margins wouldn't look so rosy.

Second, a three-year contract is immensely profitable and a guaranteed source of income for a generous length of time - so really, these telcos are happy to toss you a free device for signing your name in ink on the dotted line.

In the end, if you actually need a new phone and can commit to a contract, you are saving $100 to $200. But if you're anything less than 100% certain, pass on the temptation - deals like these will always be around.

Telus Corp.
Vancouver, British Columbia, Canada

Technology is a key enabler for TELUS and our customers, providing advantage and differentiation in the marketplace. By managing the life cycle of current technologies and the timely introduction of new technologies we deliver superior service value to our customers and long-term growth oriented investment performance to our shareholders. For investors, TELUS is succeeding in managing... more

Rogers Communications
Toronto, Ontario, Canada

We are a diversified Canadian communications and media company. We are engaged in wireless voice and data communications services through Wireless, Canada's largest wireless provider and the operator of the country's only national Global System for Mobile Communications ("GSM") based network. Through Cable we are one of Canada's largest providers of cable television services as well as... more

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Knowlton Thomas

Knowlton Thomas

Knowlton is the managing editor of Techvibes and author of Tempest Bound. Based in Vancouver, Knowlton has been published in national publications and has also appeared on television and radio. Previously he was an editor for New Westminster weekly The Other Press and served on its board of directors. When not working, Knowlton enjoys hiking, tennis, and martial arts. more

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