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The Days of Cheap, Subsidized Phones May Be Numbered
In the U.S., subsidized phones are the norm: for post-paid, long-term contract use, getting a low up-front price on a phone is one of the few upsides. New submitter Apptopia writes "After T Mobile mostly did away with subsidized phone plans, the other major carriers (Verizon, AT&T, Sprint) are paying attention. Carriers lose money with phone subsidies for high-end smartphones (particularly Apple's iPhone). If they do away with the subsidy, you will have to pay full retail price for phones, but your monthly bill will be lower." If people had a better idea what they were paying for, though, manufacturers might fight harder on price. There are lots of well-reviewed, multi-band, unlocked phones on Amazon and DealExtreme from lesser-known companies, and Nokia's new Asha 501 (though limited in many ways, including availability, having just launched in India) shows that the "smartphone" label can apply even to a sub- $100 phone.
It's always been cheaper to buy a phone outright and not have a contract
good, because cellphones suck hugely.. and in many, many ways.
lets all hope it was just a passing phase and we've all seen the light.
like sports, there's far too much attention placed on these damn things,
Who gets a new phone every month? I still have a Blackberry 9700 and that does everything that I need.
liberare massarum ex ignorantia, clausa descendit molestie.
...but bizarrely distorted from reality.
telcos and their allegedly-"subsidised" phones are the reason why phones are still so ridiculously expensive. they remove the normal effects of competition in the tech market-place, so we're still paying $600-$1000 for a current gen phone just as we were 10 or 15 years ago.
every other tech device - including extremely similar devices, tablets - have come down in price at least four-fold if not ten-fold over the same time period.
phones remain expensive to buy outright because the customers that the phone manufacturers are targetting are their largest customers, the telcos. if new phones were cheap to buy outright, people would be far less inclined to sign up for abusive two year contracts to get a hire-purchase phone (not "free" and not "subsidised" - the price is embedded in your contract)
they haven't been cheap. you've been fucked over them. look, if you want to buy something on partial payment: FUCKING DO IT! you don't need the phone company for it - and shouldn't, because you should see how much your service costs and how much your phone costs separately.
world was created 5 seconds before this post as it is.
As long as I can remember from the late 90's living in Europe
The US phone market is just going the way of the European phone market. You'll still be able to get a contract and subsidised handset if you want, but you can also get a SIM only deal and bring your own handset.
Not everyone can afford to drop £500 on a phone outright so there are many people who still go down the contract route.
The SIM only deals will be split into two. Either you top up the SIM at the beginning of the month and get a bunch of texts and data - or you can get a contract for your SIM which gives you a load of minutes, data and texts for a monthly fee.
Last time I had access to a network operators stats (4 years ago), customers on contract were about 51% of the total base. I wouldn't be surprised if SIM only is now the majority.
Avantslash - View Slashdot cleanly on your mobile phone.
Ubuntu And Firefox phones are coming soon to the same market segment as Nokia 501. Sub-$100 will get many "smartphones" soon.
You think AT&T and Verizon will lower their monthly payments? That is cute. They will just remove the subsidy and absorb the extra profit for their CEO^D^D^D shareholders.
What are you going to do? Not have a cell phone?
Can you show your calculations?
Current smart-phones cost half the price of my 5-year old laptop at its time (granted, it was a bit on the expensive side at its time) at twice the performance (twice as may cores, twice as much RAM, 4 times as many pixels on the screen, and 20 times the battery life).
That's a bargain.
People are willing to pay. Phones don't get cheaper. Competition isn't on price, it takes place on the hardware provided for the price. Like for any other computer.
howdy y'all,
so, when did the article title writer ever look over a contract? or set up a budget? or compare the actual costs of an item from multiple sources?
as others have pointed out subsidized DOES NOT necessarily equal cheap. it frequently equals really expensive when you include all of the costs.
what a dingleberry ... [*sigh ...*]
take care,
lee
Speculation presented as fact... and it's not even a sentiment that's supported by the history of the carriers. Yeah, they might do away with subsidies, but does anyone really think the monthly fees will go down? They don't go down now when you've gone out of contact and more than paid for the cost of your phone. Or you can outright buy a phone that's prepaid and in return for less risk on the carriers part, you'll pay a higher price per minute.
... but I'm not expecting more honest telcos out of the deal. Whenever I see phones sold outright by the carriers or their affiliates, the phone is locked to the service provider. Whenever I look at the service plans offered by carriers, the monthly fee is the same whether you're on contract or not (the big difference is that you're not locked into a contract, so you can change plans or carriers down the road).
There are upsides. If carriers start refusing phone subsidies altogether, the price of phones should go down. Maybe you'll see more independent phone retailers popping up too. But I'm not expecting this to be a quick fix and it will take proactive attitudes from consumers.
4 Line mobile share on AT&T i pay $266 with taxes for 10gb data and unlimited minutes And texts
T mobile it's $100 plus $40 for the 2gb data add on for each phone plus $80 for the phone payments plus taxes which are almost $10 per line per month
And t mobile I have to wait 2 years to upgrade. AT&T gives me a discount on iPhone upgrades after 6 months and a full subsidy after 18
Part of the reason for subsidies is the disjointed, non-standardized nature of the US cellular network. Paying full price for a phone is much more tolerable to me if I can jump ship to any other carrier that I want, like I could in most countries.
But, today, if I bought an unlocked GSM phone, to use on AT&T, and then a year from now wanted to switch carriers, my choices are hampered by that lack of standardization. That phone is -- essentially -- worth only half as much because it only works on half the carriers (the GSM carriers, as opposed to the CDMA carriers).
IMHO, that problem needs to be resolved before this works as a next step.
Are people really that stupid? There are plenty of comparisons showing how much money you save by going prepaid vs subsidized phone.
That means the extra money is going into the carriers' pocket.
That extra money means they're losing money...?! [shakes head at state of math among reporters]
If they do away with the subsidy, you will have to pay full retail price for phones, but your monthly bill will be lower.
It's cute that you think that monthly bills will be lower if people are required to pay full price for their phones...
Hello. I am living in a country where cellphone network providers are regulated by the state. They must offer sim cards without phone contracts. I get 100% coverage in my country with all carriers and pay 69$ a month for unlimited text, speech and internet. The phone i bought (Galaxy Nexus) has cost me $380 and will last for 2 years.
Before we had this regulations I payed at least twice the price per year. I took about 2 years for the market to adjust and priced dropped significantly. Our telcos are still reporting huge profits every year so the must have made much more before.
Basically because most f the people here started buying the phones, the cellphone providers became just another data provider (utility). Subsidized phones have kept the prices artificially high in the past.
Best
-S
I'm too cheap. Feature phone on prepaid - under $17 a month. Plenty of minutes + text for me. Yea a smart phone would be nice, but I can wait until I get home, like I've done all my life, to web surf/calendar/etc...
The biggest thing I miss is not having an excuse to stare into my hands in public... and a contract....
Never, ever. If anything, now you're going to be stuck paying $649 in $20 monthly installments and your voice bill will be the same.
I've always wondered why I can get a tablet like my Nexus 7 for $249, yet the phone version with 1/4 of the screen size that differs only in having a cel phone radio installed is ~$500.
Is a cel phone radio transceiver really a $300 chip?
Here in the UK, we often get ripped off for computers, software and electronics (usually priced as $1=£1*) so its nice to know that there are some things where we have it better than the USA.
Currently paying £13 per month for 200 minutes of voice, 5000 texts and pseudo-unlimited data (HSPA+ in most places). One-month rolling contract, bring-your-own phone. (I don't use much voice - it would be another £12/month for 2000 minutes). Bundled phone contracts are still the norm (at the end of the contract you can usually keep the phone and negotiate a reduced rate) but all the carriers offer SIM-only plans.
(* some of which is down to sales tax, but not all).
In a survey of 100 programmers, 111111 thought that duck-typing was a good idea.
Pay for what you want. And the providers have no more leverage to keep phones SIM/Netlocked.
I fired Verizon when they refused to lower my bill after my contract was up and the phone paid for. Telcos never leave money on the table.
Submission claims they "lose money"
They might make less money but they NEVER lose.
Only the customers lose money.
Is it just me or does everyone hate their cell carrier?
Nokia's new Asha 501 isn't a smartphone, it's a featurephone with a touch screen. Apps for it are written in J2ME with a bunch of Nokia-proprietary extensions - basically a slightly improved descendant of what your old Nokia 3330 supported. Apparently it doesn't even support 3G unlike newer featurephones.
Obviously it won't be a solution for the general consumer population until more people become aware of the unlocked phone market. But am I correct in saying that you can avoid data plans/contracts/etc. altogether by buying an unlocked phone and just using wifi?
In 2006, I switched from a monthly plan to a t-mobile pay-as-you-go plan for my personal phones.
It was $30 for some minutes and a cheap flip phone. I paid $100 to become a "gold member" so any minutes would last 365 days. Every year, I add $10 to the phone to keep the existing minutes alive another 365 days. I've swapped phones 3 times.
* flip phone ($30)
* Galaxy S (free - a friend upgraded)
* Nexus4 ($370)
Last fall, when my minutes were expiring, I added up all the costs for the plan and it worked out to less than $2.50/month.
When I switched to the Nexus4, a new microSIM was needed. T-mobile shipped a replacement for $1 and migrated my old plan over in about 5 minutes.
Sure, the up-front costs were higher than with other plans, but all this time it has been much, much cheaper than any monthly plan possible.
Even if I needed the cell phone more, it would be cheaper to pay for more minutes - a few months of $300 extra costs would be nothing and well worth it. t-mobile will let me by data for 1 day or a 1 week at a time. Perfect when traveling around the USA.
The Nexus4 is unlocked, so going overseas I can swap in a local SIM if the pricing is right. Otherwise, wifi-only network access is just fine. I'm used to it and have apps designed for disconnected use.
Stop wasting so much money on convenience folks. I have a phone at home and a phone at work. the 30 minute commute hardly means I need to talk to anyone. It isn't safe anyway. If I lived in a big city where my living room was the entire city, I'd happily buy more minutes - even $100/yr would be cheaper than any monthly plan. Heck - $300/yr would be cheaper than any monthly plans.
This removes the phone from being buried in the cost of the contract and brings us in line with the rest of the world for cell phone standards. Now if only we can get unlocked cell phones and the ability to simply have our service tied to our SIM card instead of our phone and we'd be golden. This country desperately needs competition and this is a great first step in that direction and a very consumer friendly move.
I had a choice of prepaid plans when I joined t-mobile, $30/mo unlimited talk/text and small (256meg?)data, or the one I went with: unlimited data (5gig @ 4g) and text, and 100mins/month talk (10cents/minute after, have never hit it) My phone (Galaxy Nexus) cost $400 new, but I'm saving $55/month over what Sprint's minimum plan was for it, with a $200 subsidized phone. Have had this phone 15 months now, which works out to a savings of almost $600. Over then length of a two year contract that will be over $1100. If I decide to buy another phone at that point, I'll be in the green no matter which I decide to get.
Granted this is just anecdotal evidence, I just wanted to provide a counter story to yours. I know most all of my friends have all switched to prepaid plans.
Current smart-phones cost half the price of my 5-year old laptop at its time (granted, it was a bit on the expensive side at its time) at twice the performance (twice as may cores, twice as much RAM, 4 times as many pixels on the screen, and 20 times the battery life).
That's a bargain.
People are willing to pay. Phones don't get cheaper. Competition isn't on price, it takes place on the hardware provided for the price. Like for any other computer.
you fail badly. it being cheap or expensive isn't just a dollar number. there's another number to it, and that is the retailers margin. this is where americans have been getting fucked in the ass by operators - you've been paying the operators huge retailing profits while the operators have been telling you guys that they've been covering the cost of the phone :D. and sure they have, with huge money extracted from the consumers who had been unable to price shop due to the arrangement.
there's price competition. wherever people can see the prices. the "100 dollars for galaxy s4" deals were price competition as well - with one major difference, the difference that you didn't really know the whole price, so it was price competition with fake prices - sweet, eh? well, not so sweet for the consumer.
but when you really have a 100 dollar android phone and a 500 dollar top range android phone next to each other, then hell yeah - people are going to think twice about getting five cheaper ones and there is real competition then.
world was created 5 seconds before this post as it is.
There aren't that many people who are going to want to repeatedly shell out $600 for a phone that they lose or break in a year. It's about price points not about the phones. People will spend "X" dollars and give or take, no more. That translates in about $250 as the top end of the price scale people are generally willing to spend.
Is anyone actually selling unlocked CDMA phones, so that you can flip-flop between say Sprint and VZW if you so choose? I wasn't even of the belief that that was "a thing".
It is, or was, a thing.
Unlike GSM phones, CDMA phones have never been locked by firmware to the carrier who sold the device. With CDMA phones it has always been the carriers procedurally locking out the device by refusing to register it to your account. If the device was of a type which the carrier never sold then the lock out is implemented by the registration software but if the device was of a type that the carrier sold then with help from a knowledgeable insider you could force it into the carrier's registration DB and use it. Most people never knew about the possibility, but it used to be done in the days of the Motorola V60c phones.
This removes the phone from being buried in the cost of the contract and brings us in line with the rest of the world for cell phone standards. Now if only we can get unlocked cell phones and the ability to simply have our service tied to our SIM card instead of our phone and we'd be golden. This country desperately needs competition and this is a great first step in that direction and a very consumer friendly move.
Not gonna happen. In the US, and elsewhere, spectrum auctions by national airwaves regulators like the FCC force different carrier services to fragment into different LTE frequencies. Limited in-phone antenna capabilities will continue to lock phones to the carriers whom they were initially sold for use with.
T-Mobile was only able to get out of that slow-speed portable device jail because the AT&T breakup contract gave them some of that other carrier's frequencies.
A few years ago I bought a cheap ($80) mobile dumbphone, mostly because I was going on a vacation where it was expected we'd need text alot, and voice occasionally. I then spent $100 for a 1 year (10 hr?) contract.
In my time with that phone I received 5 texts, and sent 3. About 6 months later I used it to make a phone call. I was informed by a robot that I had '2 minutes remaining' and partway through I was informed I had '1 minute remaining'.
I quickly finished the phone call and threw it in the bin.
Phone companies are liars and thieves (which is well known). I don't know how anyone can complain.
Never again!
" If they do away with the subsidy, you will have to pay full retail price for phones, but your monthly bill will be lower."
Really? then why is my AT&T bill the same price per month if I buy a phone outright and use it or if I give them $99.00 and get the phone from them?
AT&T rapes, utterly rapes it's customers. And anyone thinks that that will change is a complete fool.
Do not look at laser with remaining good eye.
I'm a QA analyst for a software company. My workplace is saturated with WiFi. My wife has a cheap-but-has-everything-she-wants HTC One V (Android ICS) with prepaid Virgin Moble. I live 0.75 miles from my home, which is also saturated with WiFi. I get by on just an iPod Touch 4, with vTok for calls between me and my wife. We have $7/mo voip service at home for a pseudo-landline, but I bet I could put a client on the iPod if I wanted to.
Of course a possible side effect (and a good one from an e-waste point of view) is that people would hold onto their old phones longer. I see this as a good thing.
There are 9k different unlocked quad-band android phones for sale direct from China, most $100 and even $50.
I bought my wife an iphone 5 for christmas to use on straight talk. Compared to a $75 per month subsidized plan, the payback period was 14months. There have been some hassles with MMS (which has been a bit of a big deal), and no LTE (yet), but that's fine because it turns the telco into a commodity (which is what we want).
Additionally, if you watch the deal sites, you'll sometimes see 6 month refill cards for $220. That takes the monthly cost down to $36, which is right where I am willing to pay.
That means Samsung is better positioned for this than Apple is due to their price point, Apple is still trying to push their iPhone products as premium when really they have become commodities, everyone has a black smart phone and no one cares what the new one does any more, it lost it's cachet and so Apple will continue to bleed.
"If any question why we died, Tell them because our fathers lied."
Firefox is getting into the cellphone market with a $50 phone. In a year all this arguing over $600 phones may be over. http://www.zdnet.com/firefox-os-puts-a-good-50-smartphone-within-reach-7000015212/
Wfi is everywhere.
Not on city buses yet. At least not without paying $600 per year for a mobile hotspot.
Funny how paper maps
Without a smartphone or other means of Internet access, where can I find where to buy a paper map for a particular city that I will be visiting?
it's a good idea to have a simple phone with you in case you've got an emergency.
I thought that's what payphones were for. Even dumbphones have a $80 to $100 per year minimum buy-in to keep your service active (source: Virgin Mobile and T-Mobile); payphones do not.
First, you buy a new phone up front, and your bill is significantly lower. Next, your bill goes up to what it was before. Finally, you pay full price for the phone and full price for the phone bill.
you should see how much your service costs and how much your phone costs separately.
Carriers that aren't T-Mobile have historically refused to itemize those. They have been particularly unwilling to reduce the monthly bill after the subsidy is paid off.
point me to the cheaper device from Asia which runs iOS?
It's not a smartphone, but Nintendo's Wii game console is a device that runs (a different) iOS. Cisco routers run (yet another) iOS too, and many of those appear to be made in China. Even Apple smartphones, which are "designed by Apple in California" and run the iOS you're thinking of, are still put together in China.
It looks like you're accusing these manufacturers of loading PRC spyware. If it's pre-rooted, you should be able to flash CyanogenMod and get rid of the PRC spyware.
as if 700 euros for a phone wasn't a lot of money for a phone that runs the exact same apps as the 150 euro one.
Apps, plural, or app, singular? I was under the impression that the ability to split an Android device's screen into two smaller windows was exclusive to the latest Samsung products. Even most Android tablets won't let the user split the screen to run multiple phone-sized applications because Android apps are allowed to assume that the screen size won't change after an application is installed, and Android doesn't yet provide a standard way to specify in an application's manifest that an application doesn't make that assumption.
I am not a heavy user, so I top up perhaps once every two or three months for 25 EUR. Some people do with even less.
A lot of U.S. carriers will only let you do that with a dumbphone. If you try topping up a smartphone on Virgin Mobile with 35 USD (27 EUR), you'll lose service after a month. And no, you can't take the SIM out of a U.S. CDMA2000 phone because U.S. CDMA2000 phones don't use a CSIM; instead, they program the subscriber identity directly into the handset.
Rich people can just pay the full price for the phone.
Poor people can just get the free Obama Smart Phone.
The middle class, as usual, gets fucked.
You seem to expect metropolitan-area cell phone service and coverage in a rural area with metropolitan-area competition and pricing
What about a city of 200,000 people, such as Fort Wayne, Indiana? It's neither "metropolitan" in the sense of Boston or Seattle nor especially "rural". Where do cities with a minor league team fit into the mobile communications service pecking order?
I doubt that subsidies really hurt the carries bottom line. About 3 years ago when I was last switching carriers, T-Mobile used to have two plans that provided the same minutes/text/data; one plan provided a discount on the phone but were required a two year contract while the other had no subsidy and no contract. In addition the plan with the subsidy cost $20 more a month for smartphones with dataplans. The typical discount on the smart phone was $250-$350. But the extra fees you paid over the life of the contract was $480. So over the life of the contract, you paid an extra $130-$230 to the carrier in exchange for a low start up cost.
(And T-Mobile had a similar thing with regular phones; charged an extra $10 a month / $240 over the life of the contract for a discount of $100-$150).
I highly doubt that any of the other carriers don't also make back the subsidy by higher per-month fees. Of course, I also wonder now that those carriers have gotten people used to a certain monthly fee, will they really lower them after taking away the subsidy.
One of the reasons I liked T-Mobile was that they gave me the option.
The idea that the cellular providers are losing money with the current arrangement is laughable. It is a spectacular rip-off of consumers. They say they subsidize the cost of the phones through monthly bill payments, but do your bill payments get smaller once the phone is paid for? Of course not. You continue to pay the inflated phone subsidy whether you owe them money for your phone or not. I am using an extremely old Verozon phone now that was paid for several years ago and have ignored their blandishments to upgrade to a new one so that I can be free of the two-year contract that would shackle me if I took the new phone. Yet, I still pay the same high rates I paid when I had a new phone. My next phone will be purchased outright and linked to a carrier like T-Mobile who does not squeeze a hardware subsidy out of me.
I'd be very interested to have the exact part of the parent comment quoted to demonstrate why it was moderated troll. Anyone?
sure it will.....
I'm getting the same deal when my contract runs out in a few months.
Total cost of my S2 contract was £25 x 24 months, £600.
They're still over £300 brand new, £200 second hand. Add in £13 over 24 months, and that's another £300.
Contracts still make a lot of sense.
Of course it is cheaper to find the cheapest carrier and buy your phone outright, but then you are forced to suffer with worse service. I use Verizon as my carrier not because of the phones they offer, but because I have tried US Cellular, Sprint, and AT&T (well, my fiance has AT&T) and Verizon simply offers the best service. US Cellular had the best voice network (in my area at least) but Verizon's data access is simply unparalleled. No other network has as good of 4G coverage in the chicagoland area, and that is basically all I use my phone for.
I have never tried the cheaper carriers, but if Sprint and AT&T can't keep up with Verizon then I doubt the smaller carriers like Cricket Wireless can. So comparing the No Contract Cell Plans with the larger carrier's plans is like comparing a Lexus with a Ford Focus. Obviously the Focus is cheaper, and it is even a great car IMHO, but if you desire a Lexus level of quality then it is no substitution.
-- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
Plenty of sub $100 androids already available, but don't let that stop you from plugging Nokia. http://www.pacebutler.com/blog/android-mobile-phones-under-100/
Any gas station.
What kind of selection of different cities' maps does a gas station carry? One would have to buy several maps: a national highway map to get to a gas station in each destination city, and then a map at that gas station.
Any book store.
That depends on finding a book store in the appropriate town.
Yea, right! Call me when AT&T or Verizon get rid of subsidies and lower their plan prices. More likely they will get rid of subsidies and pocket the difference.
I browse on +1 so AC's need not respond, I won't see it.
Thanks Slashdot, now I've got a brimful of Asha in my head and it won't leave.
Contracts still make a lot of sense.
...provided you don't mind a ball and chain for 24 months. If a sexy new phone comes out, another carrier starts offering a better deal (as Three did with the £13/mo deal) or you have a financial crisis, then that contract could cost you.
When I priced up my Note II, contract vs. purchase, there was not much overall difference to the total cost (of course, the deliberately convoluted tariffs make it almost impossible to compare).
What really put me off another contract was that, with my previous on-contract HTC phone, whenever there was an Android update, you first had to wait for HTC to implement it, then you had to wait for T-Mobile to implement it. Also, I wanted to give the Three network a go for a few months to see what it was like (conclusion: works for me).
In a survey of 100 programmers, 111111 thought that duck-typing was a good idea.
Smartphones are vastly overpriced. I can buy a tablet that will do everything a smartphone will do (except make phone calls) and has a larger and higher resolution (re more expensive) screen for $125.00 or less. Granted its not an iDevice, its better made than they are. I can buy a phone that only does calls and texts for $50 or less. So what makes a smartphone worth $400.00 or more!?!?
Maybe you are paying for the brand name, and not whats inside.
Not only are subsidies why service is so expensive in the USA, they're why many phones don't do simple things that consumers want. Since the consumer is not the customer- the phone company is- features which matter to some consumers but which don't make the carrier any profits are left out. Carrier control is the name of the game.
As one example, cell phones in the late 90s/early 00s often had decent computer connectivity, allowing you to transfer your text messages to pc, synchronize things, etc over a serial cable. Sometimes you could install trivial programs on your phone that way too. But carriers realized that if they cut that stuff they could retain more control and squeeze a few more cents out of their customers. Want an extremely basic application on your phone? Sure, that'll be a $5/mo subscription. Want to transfer text messages to PC? Sure, buy our more expensive phone that requires a data plan. In Europe, where phones are normally unlocked and unsubsidized, that didn't happen as much.
Smartphones esp. Android have succeeded in returning some control to consumers. But the situation is still awful for feature phones and not great for non-Cyanogen smartphones. Making the consumer the MFR's customer will change things.
T-mobile does this because they benefit by having a lower load on their data network by keeping most people on low-cost, crappy phones that are undesirable to use. They have to do this because their rate plans are so cheap.
Verizon and AT&T, on the other hand, sell expensive data plans and want you to go above the plan limits in order to bump you up to more expensive plans or pay overages. Therefore, they need to keep you constantly updated with the latest data-hungry gizmo that's desirable to use such that you are tapping away at all hours of the day; ergo the subsidized phones. Additionally the subsidy keeps the consumer locked into their high-priced contract.
Both of these models "work" and can coexist, as evidenced in markets around the world. They cater to different types of consumers. The market shake-up that would occur if the larger carriers tried to become low-cost competitors to the also-rans would be dangerous for all the players and has little long-term benefit for companies already charging high premiums. You don't see Maserati making significant changes to their business just because they can't get people to upgrade from a Honda.
I think the carriers should be required to eliminate termination fees, and structure the payment situation differently
Instead of being allowed to have a 2 year contract, you pay for: (1) Financing charges on your phone. You have an option of either paying up front for the phone, fair market value. Or financing the phone; instead of a "$200 termination fee"; you have a principal balance on your loan for the phone.
Instead of having a subsidy hidden within the monthly fee, you have: (1) a monthly subscription fee, and (2) a monthly installment on the financing for your smart phone.
Then if you leave providers, you don't pay a $200 termination fee. You have the option to continue to make the repayment on your financing, and you have a right to unlock your phone and take it to the competitor, instead of having to get a new smartphone, and a new financing agreement.
Furthermore, once the financing is paid off, your monthly price decreases, since the providers are required to keep the subscription fee separate in that case;
That differs from the current situation, where you continue to pay the same high price, whether the carrier is currently financing your smart phone, or you chose to purchase it outright, or got a cheaper phone subsidized, or a more expensive one....
Despite all the acronyms you throw about, the fundamental difference between gross margin and net margin is that the former essentially applies to direct per-unit costs and the latter takes into account stuff like overheads.
For example, if you run a bar your gross margin on bottled beer might be 300%. But to calculate the net margin you need to factor in things like rent, electricity, staff...
P.S. The fact that you try to make comparisons between different industries that have vastly different cost structures just proves that you don't know what you're talking about.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Wouldn't it be simpler to get a smartphone and put the dumbphone's SIM in it?
U.S. CDMA2000 phones don't use a CSIM; instead, the carrier programs the subscriber identity directly into the handset. Even on GSM, some AT&T customers have reported that putting a dumbphone SIM into a device with a smartphone IMEI causes the carrier to upgrade that SIM's plan to a smartphone plan.
I use quickbar to toggle data to avoid accidentally using the data connection from my smartphone. How are you saving money as compared to using a smartphone?
On Virgin Mobile, payLo dumbphone service has rates as low as $7 per month, while Beyond Talk smartphone service starts at $35 per month. Virgin Mobile refuses to activate payLo service on a smartphone.
If they stop subsidizing phones, they can't hold you with a long contract anymore. That is why the biggest (At&T) will be the last to do it and the smallest are the first. The biggest have more customers and have more sake in retaining their customer and more to loose with carrier mobility.
How do they write their contract?
Where I live, you have a contract if you take a subsidized phone. That means you get the phone for free and pay it over 2 years or so, therefore you have a 2 year contract and if you leave before the 2 years you have to pay for the full price of the phone and less after 1 year or so. They hold you because you rent a phone and have to pay it if you leave before you've paid it full.
But if you bring your own phone you can switch to another carrier whenever you want. What happens in the US when you leave? I can't understand how they can hold you. You have your phone. What do you have to pay if you leave?
Just thought I'd leave this here - T-Mobile doesn't get rid of the subsidies, they just are more up front about it. I am paying $75/month for unlimited everything and my phone subsidy. Now when the 20 months is up and I'm done paying off my phone (contract is 24 months), I get $20 off my bill, bringing it to $55 with taxes. You can opt to go month to month with these services and pay the same as contract, but you have to get a contract to get the discount.
99% of Indians have to buy phones at full price, the concept of career subsidies is unheard of (except one carrier 5-10 years ago that decided to rip people off, thus destroying the very concept in people's minds. [Yes Reliance, I am looking at you]). Again 75-80% consumers are on Prepaid SIMs. Not because they have bad credit (though many do), but because due to some twist of fate, prepaid was always cheaper. This is what I pay for my Mobile access (I don't make many calls): $4 every 3 months. This is a minimum recharge to keep my connection alive. It costs $0.02-$0.04 to talk anywhere in India, per minute. But my plan charges it per-second so if I talk for 6s (I reached safely, got to run, bye), I get charged $0.002. This was only possible, because a previous government, decided to throw open the sector to competition. I have 3 Major and 3 minor players who are ready to hand me a mobile connection. i.e 6 players in every region. Until a few years ago, they were slitting each other's throats for getting customers. We as a democracy, decided to throw out that government. Brought in a bunch of corrupt people (who promised us the moon) and those 6 players will soon turn to 2-3 players via mergers. The ONLY WAY the US can have better mobile telephony, is to increase competition. Simple. Nothing beats competition.
Currently a large part of the mobile phones is bought by the operators. And those are terribly conservative. That's why for many years you couldn't get mobile phones capable of VoIP or IM or so few makers made dual-sim phones.
Maybe now we will see devices which are not just the same device over and over again.
I'd love to get a subsidized phone. 'Subsidized' means I'm not paying full price for the phone, not now, not ever.
If the operator reduces the upfront cost but then makes me pay the rest during the remainder of the contract, then I'm still paying the full amount or more; so the phone is not subsidized. Subsidized means someone else (The government? A charity? The not-for-pofit operator?) pays part of the phone. I have unfortunaly never found a case where the phone was subsidized. Where can I find such fabled deals?
Carriers lose money with phone subsidies for high-end smartphones (particularly Apple's iPhone).
This is a lie. They make less money than they do with lower-end phones, but they do not lose money. This quote exposes the source as a carrier shill.
had to post Anon as logged in the page wouldn't let me post (from a windows PC not the android)
I got a Kyocera Event for $50 new from Amazon ($75 new on virgin mobile usa). It's a proper android with a single core CPU, touchscreen does all I want it to.
Some complain in reviews of the phone because the rear camera is only 3 megapixel and there is no front facing camera for skype and such but it's worked well for taking a picture and sending it attached to a text message, no one I've texted has complained about the quality of the pictures I've sent.
It's only a 3.5" screen and sure I'd rather have a 5" screen but it still beats the snot out of any phone I've used up to this point and there is no contract so I'm not sure why the surprise about a "smartphone" that costs less than $100.
http://www.amazon.com/Kyocera-Event-Prepaid-Android-Virgin/dp/B00B9K6ESC/ref=cm_cr_pr_product_top
There is a huge market of truly subsidized phones and I don't mean contracts. The only way I could get one originally was with a contract. That ran out and I've had a number of phone since, none on contract. My phones don't seem to last long. However, the government gives away "Millions" of cell phones and even smart phones all of which are a truly subsidized phone with subsidized calling. These give the dealer full price "as I under stand" and the phone company gets paid.
I'm in NL. I pay 6,75 euro for a 275 minutes/SMS/MB plan. Because everywhere I spend a lot of time has wifi (home, train, university, friends, scouts). So I only use my data when I'm on the go and not in public transit. It's SIM only, and any minutes/SMS/MB I do not use carries over into the next month for 3 months and is used first.
The summary says: "If they do away with the subsidy, you will have to pay full retail price for phones, but your monthly bill will be lower."
Try again! You'll have to pay full retail for the phone, but the monthly bill will be the same. They'll come up with some excuse for not reducing it. Maybe they'll double your putative "minutes".
...will no longer have US subsidy-based business model to hide behind...the days of 40%+ profit on an iPhone are numbered
I have a smartphone, and I have never paid for data on it.
Whether that's practical depends on where one lives. Based on your journal, it appears you live in Great Britain. I, on the other hand, live in the United States, whose carriers are Verizon Wireless (CDMA2000), Sprint (CDMA2000), AT&T (GSM), T-Mobile (GSM), and various prepaid MVNOs that lease their networks. U.S. CDMA2000 carriers don't use a CSIM, and they tend to refuse to activate a smartphone on a dumbphone plan. If you're referring to using a GSM carrier and buying the phone and plan separately, some carriers have been known to tack on a data plan when the carrier discovers that the SIM has been used in a device whose IMEI is that of a smartphone. What U.S. carrier guarantees that it won't do this?
I already buy my own unlocked devices. I spend around $260, that includes my shipping costs and SIM costs for a domestic to China name brand device, and I have them shipped from China and I can use pretty much any GSM carrier I want. So lets see me spending $40 a month for unlimited everything, plus if you want to break down the costs of my phone over 24 months add $11, on my cell phone bill or paying out the rear for both the phone and the plan seems to be a no brainer.