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Cell Phones,…… You Can’t Live Without Them,……Right?

Updated: Sep 17, 2021

Right! Cell phones have become part of the cultural norm. Current statistics indicate that 5.27 billion people in the world have mobile devices. That means 67% of the world’s population has a cell phone! In Canada 32 million people have cell phones, equating to 87% of the total population. In the USA, the numbers are even more staggering. 97% of the American population (332 million people) have a mobile phone! Nobody can contest that these devices have a foothold in modern-day society as a necessity? We are all more connected than we have ever have been, and there’s no turning back now.

What still surprises me is how many people still own and pay for both a landline and a cell phone. There are many aged seniors living in our complex who maintain both landlines and cell phones, or just landlines, citing they don’t trust a cell phone in an emergency. These are the same people who line up every month at the bank to pay their bills, because they don’t trust computer banking, even though they all own computers and tablets. I assume some people in the world don’t own these devices out of affordability or connection issues, but the majority don’t own them out of distrust or habit.

The cell phone industry was a $401.1 billion USD industry in 2020, and expected to grow to $1,351.8 billion USD by 2026. This is based on an estimated CAGR (compound annual growth rate) of 11.2%. With numbers and projections like this, you can see why this industry and the associated providers are doing so well! And they definitely have a handle on consumer behaviors and know all the tricks to keep people buying and paying. From offering a better phone series every year, to locking people into 2 year, zero interest contracts where they can upgrade any time they want, people are literally throwing their money away at this industry. If you would have bought $1000 worth of Apple Inc stock back in 2000 it would be worth $500k today just 21 years later! Just over 50% of Apple revenue is generated by iphones, and the rest comes from their mac, ipad, and iwatch sales. The whole technology flywheel started speeding up in 2010 and has hit lofty heights lately, especially with Covid restrictions demanding more from technology during the stay-at-home and work-from-home phase post-March 2020. Things like virtual meetings and online shopping increased the technolgy momentum. Now that they are putting cellular servcies into iwatches, and prices are starting to come down, this could be the next big consumer shift?

There are lots of providers of cell phones and cell coverage in Canada. Basically, you can get any cell phone you want here, then must pick a cell service provider for coverage. The big parent names for cell coverage are Telus, Bell, Rogers, and Shaw mobile. Their discounted versions are Koodo, Virgin, Fido, and Freedom mobile, respectively. Now there are even cheaper subsidieries of the parent companies like CHatr (another spin-off from Rogers), that are targeting entry-level mobile consumers on smaller budgets. Personally, I advocate a BYOP (bring-your-own-phone) plan, and use a Koodo $45/mo plan that gets me 4MB (we typically use less than half of this a month) + unlimited texts + Canada-wide calling. It’s not the cheapest plan out there, but it serves our needs and I like Koodo’s online platform that allows you to add on and take off features as you need them like international coverage (others do the same). They are also have good service, reliable and wider coverage (towers), and I’m a Telus share holder, a few more good reasons to stick with Koodo. Furthermore, I’m not a fan of contracts (with anything) and prefer to stay on the open market, which has given me good negotiating power and better deals when better plans or promotions come up. If you are shopping for a plan, planhub is a good place to start. There you can get an idea of coverage in your area and Canada-wide, service, and costs. Arguably, Telus/Koodo and Bell/Virgin are the big players in Canada, and appear to have the widest coverage.]

My wife and I both just purchased new iphone 12’s in retirement, so I don’t expect to have to upgrade our phones again for 5-10 years. The longer you keep your phones the more diluted your overall costs are. I believe in buying your phones up front and avoiding contracts, if you can afford them. This breaks the psychological trap of wanting to upgrade your phone every 2 years on a contract. In fact, I portray the exact opposite behavior, wanting to keep my phone as long as possible and search for ways to drive my rates down. If we keep our phones for 10 years before the next upgrade each phone will have only cost us $10/mo. You also need to watch how you use your data, as this comes at a premium. If you can limit your data use to when you have free wifi, and keep this usage low, you’d be surprised how low you can keep your phone costs. The cell phone industry is sneaky though, and usually after approximately 10 years they tend to stop updating or supporting older products, forcing you to buy something new unless you want the pain of apps and other features not working.

I recently saved $20/mo total on our two phone plans utilizing the negotiating power of a no-contract plan, awareness of our usage over last two years, and knowledge of better deals in the market. We got the exact same plan with a bit more data, because competitors were offering better deals. That’s money we can put to use elsewhere. In retirement, you should continuously hone in on your needs, and never get too comfortable with your costs. And, if you have both a landline and a cell phone, step into the future and get rid of the landline!

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