I have to assume that you ultimately pay more in the UK then, because what prevents users from stopping paying after the first month, and switching to a cheaper plan with another provider, and keeping the phone?
Companies aren't going to repossess your phone the way it's worth it to repossess your car or house if you stop repaying your loan.
So it raises the overall price because the companies charge more in order to offset the losses of people who effectively steal the phones they never finished paying for.
> because what prevents users from stopping paying after the first month, and switching to a cheaper plan with another provider, and keeping the phone?
Same as what stops you breaking a contract and not paying any other debt: They'll start the collections process on you.
Yep, same in Canada. A phone contract shows up on your credit report (since you pay at the end of the month for the service received during the month) and if you were to not pay the penalty, the outstanding debt would show up there.
But the reality is that people who don't pay their phone contract tend to be the kinds of people who just ignore collections anyways and have a bad credit score to begin with.
That's the problem with small debts, and why phone locking was a clever solution -- if the phone becomes useless when you stop paying, people will actually pay it off when they wouldn't have before.
If they already have a bad credit score, then the carrier giving them an expensive phone without upfront payment is kinda on the carrier.
I think there's probably a significant net benefit to society from forcing carriers to unlock phones by default. If you're overseas, or need to temporarily use another carrier - you can.
If a carrier is not willing to carry the risk that someone who has bad credit might break the contract for an expensive phone - then I think perhaps that's not such a bad thing.
Companies aren't going to repossess your phone the way it's worth it to repossess your car or house if you stop repaying your loan.
So it raises the overall price because the companies charge more in order to offset the losses of people who effectively steal the phones they never finished paying for.