A mobile device obtained under a service agreement involves a financial commitment between a customer and a telecommunications provider. The customer receives a handset, often at a subsidized initial cost, in exchange for a promise to pay a recurring fee for a specified period, typically one to three years. This fee covers cellular service, including voice calls, text messaging, and data access. The agreement stipulates the terms of service, including data allowances, overage charges, and early termination fees.
This arrangement offers a predictable monthly expense for cellular communication, which can be advantageous for budgeting. It also provides access to newer handsets that might otherwise be unaffordable upfront. Historically, these contracts were the primary method of mobile phone acquisition, allowing widespread adoption of mobile technology. The service provider benefits by securing a long-term revenue stream, fostering customer loyalty, and facilitating network infrastructure investment.