SALT LAKE CITY — If you are someone who has lived in another country or traveled the world, you likely noticed the cellular phone industry works much differently in other places than it does in the United States. Cellphones are only sold at full retail value in most of the world and there is no such thing as contracts.

The monthly rate plans are much less expensive than in this country, as well. Many years ago the carriers in the US decided that rapid growth of the industry could only occur if the phones themselves were as inexpensive as possible. If up-front costs were low, the carriers decided, more and more people would have phones.

If you're a parent, ask yourself if your teenager would have a smartphone if it cost you $650 up front. Would a business owner be able to justify all of her employees having a phone at that cost?

Under the contract model, U.S. carriers have subsidized the cost of cellphones and turned that $650 smartphone into $200 or less. Big difference. Nothing is free, however, and that remaining $450 has been made up for by contracting that individual to maintain service for two years and by hiding some of the $450 subsidy in the monthly rate plan.

The new programs

If you've purchased a cellphone in the past year or so you know that things have changed. You've heard your T-Mobile rep tell you that their JUMP program is now a better deal than the contracts of old. AT&T calls their program NEXT and Verizon EDGE.

Essentially the US carriers have decided that incentivizing new customers no longer makes much sense. Very few people who could have a cellphone don't already have one. In addition, the customer wars in the US have been won by Verizon and AT&T. The two largest US carriers have more customers individually than T-Mobile and Sprint combined.

Many customers are not convinced, however, that the new programs are truly a good deal and many can't wrap their head around the idea of leasing a cellphone. Add the fact that monthly cellphone bills are increasing as customers sign on to the new programs and some are still confused.

The math

Are the new programs truly saving you money on your cellphone service? The answer is, simply enough, yes. We'll use AT&T's NEXT program as an example and do the math. The savings will be similar with Verizon, T-Mobile and Sprint.

For starters, if you contract with AT&T on their MobileShare Value plan the monthly cost of one line, after the cost of your shared group data plan, would be $40 per month. Multiply that over 24 months and your cost of service for that individual line is $960. On contracted lines there is also a $40 upgrade or activation fee, bringing the total to $1,000.

We'll assume you've just purchased a new Samsung Galaxy S6 with 32GB of memory, one of the more expensive flagship phone options. The contracted price would normally be $200 before sales tax. The total, therefore, of your contracted phone and monthly service is $1,200 over two years.

Using NEXT to purchase your phone, interest free spread out over 24 months, would cost you $28.55 per month before sales tax. Over 24 months the phone now costs you $685. So, you ask, where are the savings?

First, your upgrade/activation fee is waived since NEXT requires no contract. That saves $40 up front. Next, AT&T will lower your monthly cost of service for that one line of service by $20 per month. Since there is no longer a phone subsidy to make up for, your $40 line now costs $20 per month, or $480 over two years. The total cost of service, if you pay the phone off in 24 months, is now $1,165 instead of $1,200 when you contract. Not much, but there are other benefits and another cost model all together.

You have the option to lease your phone for only 18 months and trade it in at that time for a new phone. AT&T forgives your last six phone payments in this case and your total cost of service is now only $994 over 18 months.

In addition, these new programs offer flexibility that contracting doesn't. You have the option to pay for your phone, in full, up front like most in the world are accustomed to and save the $28.55 monthly phone installments on your bill. I recommend using the interest free installment plan knowing you can pay the phone off at any time along the way and make your line immediately eligible for a new phone when the latest and greatest model arrives.

Business customers save an additional $5 per month, or $120 in total, using NEXT. As you can see from the math above your carrier is not sticking it to you with these new plans. Your cost of service will now also include your phone, something we are all used to paying for out of pocket beyond our monthly bill.

On the contrary, the customer has more flexibility than the old new-phone-every-two-years model (the carriers offer options other than 24 month financing, as well, so phones can be obtained more or less often) and it will be cheaper over time. The more phones on your plan, the more money there is to be saved every two years.

Mike Stapley is a father of two, is Business Sales Manager for a telecom company and is an aspiring novelist living in Salt Lake City. Contact him at mstapley4@gmail.com

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