Telecommunications companies, specifically cellular phone service providers, often offer cellular phones for free. Most of the free cell phones, however, come with a two-year contract which tie the user to the carrier. Users are also asked to pay exorbitant penalties if they decide to terminate their ties with the service providers before the end of the contract; this would cover for the heavily subsidized cell phone costs. The higher priced handsets actually come with higher priced penalties if the contract that accompanies it requires a two-year contract that is terminated too early.

Prepaid cell phones are quite harder to get for free since using one does not require applications or contracts. In fact, prepaid plans are not really advised for those who would like fancy cellular phones. The selection of prepaid handsets are actually very limited ranging from the most basic units to only the moderately featured ones. Prepaid cell phones may be bought for as little as $40.00 to as much as $150.00. Nevertheless, users who prefer prepaid cell phone plans over postpaid plans but favor fancier phones may always get their cellular phones from other sources. But they have to check their supposed carriers if these companies can configure their cell phones to match their services.

There are some carriers who offer free prepaid cell phones but these phones usually are the most basic types, even if would-be users intend to buy the most expensive prepaid credits offered by the carrier. Further, the free prepaid cell phones are actually units which are no longer as demanded by consumers. These phones were often acquired earlier on by the carriers, and they can no longer return to the manufacturers. Thusly, they are older models that are generally undesirable to customers.

Cellular phone companies are able to give free phones either online or in retail stores because they do receive commissions whenever consumers activate cell phone services. Carriers are the ones who pay these companies the commissions which they can get when they get a cellular phone plan. This is why carriers offer better deals in offering free cellular phones to monthly subscribers since they are assured of better returns by doing so.