Soon, there will be new cell phone regulations in Canada. One of the changes will be that three year contracts will be rendered pointless - there will be no penalty for getting out of a contract after two years. The debate now centers around whether or not this is actually a good idea.
The reason for long contracts is that phones are expensive, particularly smart phones with their high feature content, powerful processors and top end cameras. Since these happen to be the phones many people want, the cell phone companies have incentive to get people buying the more costlier models. The solution has been to subsidize the cost of the phone over a contract, and the phone is slowly paid off as people pay their bills. The three year term is accepted because it makes the phone cheaper.
This is a short-sighted approach on the consumer end, which is likely why the CRTC has stepped in to get rid of the three year contract. What seems like a good idea in the short term, to avoid putting down a large chunk of money on a new phone, winds up being a pain as people are tied into their provider for a long period of time. Getting out of that contract means handing over a bunch of money, since you still technically have not actually paid off that phone.
Now, given the changes, the initial cost of entry for any new phone is going to go up. It likely will not change drastically for any two-year contract, but the absence of the longer alternative means that the two-year price will be as low as you can go, and that might price certain models out of the hands of people who would otherwise be able to buy them.
Whether or not this is a bad thing depends on the consumer. Personally, I'm not a big fan of a long contract and my own phone was essentially the cheapest one in the store. As a result, I'm not going to be hurting very much, but some will find themselves limited in their alternatives and unable to pick out the phone they really want.
What this will not change is the price of phones overall. Canada remains a minor player in the cell phone industry, and phone design is dictated by what people and providers are willing to pay. The three year contract system was an anomaly in the world market, but no matter where you go some form of contract is typical. The phone companies can charge whatever they want, and the providers will offer discounts to ensure people can afford them, as well as keep people tied to their service for a period of time.
The only way to really change any of this is to stop placing a priority on the feature content of a phone and go back to buying simpler models. That's not going to happen, people have become familiar with their content-rich devices and are unwilling to step backwards. As a result, phone manufacturers have no incentive to stop making expensive, complicated models, and service providers will keep up because that is how they keep customers.
So are the shorter contracts positive or negative? It depends on the consumer above all, but personally I don't think it will make a big impact. Some people will get a less powerful phone as a result, but some people will no longer be in over their head with a too-long contract. Overall, we will not see a big change in the way the industry works.
