COLOMBIA NEWS – When news came from the Commission for Communications Regulation (CRC), that as of July 1 contracts for cellular phone service would no longer be required, many customers rejoiced, now that they would no longer be tied down to a two year contract if they received poor service.
The July 1 change had other good news. The sale of cell phones would not longer be a monopoly of cellular operators. Stores like Jumbo, Exito, Falabella, Alkosto and Ktronix could sell on a mass scale and unleash a price war, in which consumers would benefit.
The price of smartphones it was expected would drop considerably.
But the reality is different.
According to Cell Net, a distributor with marketing points in Bogota, Medellin, Cali and Popaya, since March cell phones prices have increased 30%, increasing gradually leading up to July 1. Cell Net’s Javier Urrutia said “this so the consumer would not feel a high difference (in prices).”
Since 2002 consumers in Colombia could buy a cell phone without a contract. The difference was price. Cell operators would subsidize the price of cell phones to entice customers who signed contracts. A consumer, on signing a contract, could buy a cell phone at a fraction of the cost without a contract.
The elimination of the contract, and in turn the subsidies, means cell phones will be more expensive as consumers have to now pay the full cost.
The change means that although consumers now have a choice of operator and without a contract, the cost of a cell phone has increased. For example, a Samsung Galaxy S5 sold three months for COP$1.200.000, depending on the contract, today it sells for more than COP$1.800.000.
Sector experts are believe that cell phone theft will skyrocket as they become more attractive to the black market.
Distributors also say there will be a drop in employment. Currently there some 430 direct distributors with 13.000 points of sale nationwide. With the July 1 change, an increase in contraband is expected, that could result in layoffs. An estimate is 20% or 150.000 people losing their jobs.
Source: El Espectador