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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
...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)
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.
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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.
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...
I would say, only an idiot would spend $300+ on a china unknown brand without any kind of warranty and not even any test. Most devices like the one you describe won't ever get any OS upgrade anytime soon (or even CM), and generally have pretty low end components, like a very low response touchscreen, weak battery, etc...
$300+ for a chinese unknown device when you can get a Google Nexus 4 for $299, who's the idiot there...
I gave up with the idea of an useful sig...
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.