In a survey performed by major US cell phone carriers, contract plans still dominate market with steady 90% and no contract cell phones plans take the remaining 10%. While this seems like very small percentage, it has shown large increase compared to survey results from previous years.
Compared to customers with monthly plans, no contract users made fewer calls and rarely use data services. While this can be explained with simpler needs or lower expectation, lets keep in mind that no contract service providers usually have rather steep prices for high speed data services or messaging plans compared to customers with monthly plans or customers with long term ties. Overall data shows that no contract users are more satisfied with the service compared to users who have monthly plans or have long term agreements.
This service is more suitable for lighter use, but survey shows that no contract cell phone options are expanding rapidly and new services and options become available more frequently. No contract data services along with the phone is a good example, becoming more popular. Carriers that specialize in no contract services - Virgin Mobile and Boost Mobile are offering more smartphone models that can be purchased without signing a long term contract. Verizon and T-Mobile are also following these footsteps and offering to their customers almost all their smartphone range with the no contract option. Many big name cellular network carriers offer their no contract cell phones under different brands, for example Sprint's Boost and Virgin.
No contract phones usually cost full price because there is no subsidy from the cell network carrier, but with the contract a portion of the fees are a lease payment for the phone itself and, in case of breakup, there are usually substantial fees. This is not the case with no contract option and users can expect lower monthly bills because of that.
Editors note
While survey shows that 90% of the US market is still dominated by contract phone plans, there is no doubt that no contract plans will become more popular in US and will take up a big chunk from existing market. I have reason to believe this because of the market tendencies in Europe, which is, by no secret, slightly ahead of US in cellular communications both with cheaper prices and wider options to choose from. European cell phone market shows that no contract cell phone is a popular choice for kids, elderly people and is often used as a tool to protect privacy.