Motorola is shaking up the way we buy smartphones, but before I get into that, a little background.
Most Americans who buy cellphones take advantage of a carrier subsidy to get their phone at a reduced price or for free. For example, an iPhone 5S actually costs $650. But if you are willing to sign-up for a two-year contract, you can get one for $200 or, sometimes, as little as $100. A Samsung Galaxy S5 costs $600 from Verizon. But the company is "selling" them for only $100 with a two-year commitment,
I put "selling" in quotes because your "ownership" of that phone comes with restrictions. In addition to the buyer being locked into a contract, the phone itself is locked, which means it can't be used on another carrier's network unless the buyer or the cellular company unlock it.
As I found out when I arrived in London last week, the unlocking process isn't always perfect. I brought three phones with me. Two were Google Nexus phones that had never been locked. They're sold by Google at full retail price, and can be used on any carrier with a compatible GSM network. The other phone was my wife's Galaxy S4 from Sprint. Before we left, I called Sprint and, after navigating my way through a long and complicated string of automated options, finally reached a person who then transferred me to the international desk. Ultimately, the phone was unlocked over the network and I was given instructions on how to finish the process by punching in numbers on the phone.
When I got to London, my first stop was the Vodafone shop at Victoria Station, where they sold me two United Kingdom SIM cards and service for 10 pounds ($17) each. The installation in my Nexus phones went perfectly and minutes later I was able to make calls, access data and exchange text messages. But the clerk wasn't able to get data on my wife's previously unlocked Galaxy S4, so I handed him the other never-locked Nexus phone and everything worked fine
That's not the first time I had that problem with U.S. phones that were purchased locked and later unlocked. When I got to Turkey a few weeks ago, my supposedly unlocked AT&T Galaxy S5 wouldn't work at all. In the United States, if you try to use an AT&T locked phone on another GSM carrier, like T-Mobile, you're completely out of luck.
We've always been able to buy unlocked phones but usually at a very steep price. T-Mobile, which calls itself the "uncarrier," was the first to shake things up by introducing a contract-free plan where you pay for your phone monthly in what amounts to an interest-free loan. But by the time it's paid for you're out the full amount of the phone, which can set you back $600 or more.
But Motorola, which is still owned by Google but about to become part of PC maker Lenovo, is changing the equation. A few months ago, it introduced the unlocked Moto G Android phone for $180 and last week, here in London, they introduced the Moto E, which sells for $129 unlocked and without a contract.
I attended Motorola's press event and tried out the new phone. While it's not the slickest phone on the market, it's quite good. The 4.3-inch screen is very readable, it felt good in my hand and seemed responsive enough when I used it to access the Web, make a call and send texts. It comes with only 4 GB of storage but allows you to insert a micro SD card, which gives you up to 32 additional GB. So if you add $20 for a 32 GB card, you have a $149 phone that has 4 GB more storage than a $750 iPhone 5S, at one-fifth the price.
My only major complaint about the Moto E is the lack of a front-facing camera. You can't easily use it for selfies or video conferencing. That seems like a silly thing to leave out on a phone that's priced to appeal to younger users who typically love to take selfies.
I'm hoping that other companies will follow Motorola's lead by introducing high-quality phones for under $200 without a contract. Personally, I'm tired of being locked into a long-term relationship with my cellphone carrier. A few months ago my contract expired and rather than re-upping, I got a relatively low-cost Nexus 5 phone for $350 and a $60 pay-as-you-go plan from AT&T that gives me unlimited text and voice and 2.5 of GB data, and the right to cancel the plan or switch carriers without a termination fee. There are even cheaper plans out there from AIO Wireless, Walmart and others.
So, to summarize my new situation and borrow from those MasterCard commercials: Phone: $350. Service: $60 a month. Freedom: Priceless.
Contact Larry Magid at firstname.lastname@example.org. Listen for his technology chats on KCBS-AM (740) weekdays at 3:50 p.m.