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T-Mobile Exec Calls For End To Cell Phone Subsidies
MojoKid writes "T-Mobile's Chief Marketing Officer Cole Brodman has an interesting idea for revamping the mobile industry, and it involves killing the subsidy plans that have driven smartphone adoption over the past five years. Asked what one thing he'd change if he had the power to do so, Brodman pointed to subsidy programs. 'It [device subsidies] actually distorts what devices actually cost and it causes OEMs, carriers — everybody to compete on different playing fields ...' Brodman isn't kidding about an irregular playing field. The HTC Titan is the most subsidized device in the chart seen here (unsubsidized at $549, $0.01 on contract). Microsoft is obviously desperate to gain market share in mobile but both the iPhone 4S and the Galaxy Note carry $400+ discounts too. The cheapest smartphone AT&T offers without a subsidy is the thoroughly mediocre HTC Status, for $349. To add insult to injury, it's only available in mauve. It's an interesting idea, but practically unworkable as far as the mass market is concerned. Carriers have built a market structure in which consumers gladly accept a new bauble every 18 months in exchange for paying for text messaging (which literally costs carriers nothing) and overage charges in which 300MB of data for $20 is a fair market value."
It works seamlessly to those using an iPhone. To everyone else, it seems really stupid that you are sending text messages that show up as multimedia files. To anyone on an android phone, you are sending a picture of your text message. It is typical that an iPhone user would not know that though.
There is the key that people gloss over. "No extra cost". You forget the (literally) billions of dollar it takes to put the infrastructure in place. It's illogical to think that money came from no where, and doesn't' have a value that should be properly compensated. While $20 may be on the high side, it gets really old to hear the "no extra cost" argument. Companies invest in infrastructure to make profit, news at 11. AT&T made $3.5 billion last year. Apple made $26 billion. If you are going to harp on someone for charging to much for too little, pick a different target.