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If the 4 major carriers drop iphone/android phone subsidies, would consumers benefit?

If the 4 major carriers drop iphone/android phone subsidies, would consumers benefit?

  • Yes, consumers benefit

    Votes: 34 49.3%

  • No, consumers won't benefit

    Votes: 35 50.7%
  • Total voters
    69
E

EbookReader

macrumors 65816
Original poster
Apr 3, 2012
1,190
1
If AT&T, Verizon, Sprint and T-Mobile drop iphone/android phone subsidies, would consumers benefit?

You will have 2 ways to pay off your smartphone

1) pay it all off upfront
2) pay it off in installment

Your monthly phone bill will now have 2 components

1) Your phone hardware ($0 if you pay it all off upfront)
2) Your wireless service
 
E

EbookReader

macrumors 65816
Original poster
Apr 3, 2012
1,190
1
http://www.citeworld.com/mobile/21191/t-mobile-subsidy-cut-will-be-disaster-telefonica-exec-says
T-Mobile subsidy cut will be a "disaster," Telefonica exec says

As the smallest nationwide operator in the U.S. and the last to get the iPhone, T-Mobile needs to make some bold changes. But eliminating phone subsidies, like it said it plans to do, will only make matters worse for the operator.

Take it from someone with experience. "It was a disaster," said Tracy Isacke, director of Telefonica Digital.

Earlier this year Telefonica and Vodafone both decided to get rid of subsidies in Spain. The customer hemorrhaging hasn't stopped. In September alone, Telefonica lost 253,520 mobile users. Vodafone has similarly been losing customers and in July brought back subsidies for what it said was a limited time.

If all operators in a market were to get rid of subsidies, the shift could work, said Omar Javaid, managing director of BBO Global and until a couple months ago a Motorola Mobility executive. But when one operator like T-Mobile makes such a dramatic change, it's an invitation for the competitors to actually increase their subsidies to try to win more customers. "If someone wants to drop subsidies, that's an opportunity [for the competition] to go for the jugular," he said.

In Spain, Orange, which retained subsidies, has been happily gaining market share at the expense of Telefonica and Vodafone.
Click to expand...
 
maflynn

maflynn

macrumors Haswell
May 3, 2009
73,447
43,358
If my carrier dropped the subsidy, I'd find a carrier that gave me one. I'd rather buy an iPhone for 199 and pay a little more a month then dropping 600 upfront
 
B

BigMcGuire

Cancelled
Jan 10, 2012
9,832
14,025
Pay $800 for an adware infused locked down Android phone? No thanks. Pay $800 for an iPhone? Well... I think at that point I'd look elsewhere - iPod with WiFi and Skype before I paid that much for a damn cellphone. I mean my Samsung Series 5 Ultrabook was $600. I'd be looking at a Wifi Hotspot and an iPod Touch before paying THAT MUCH for a damn cellphone +$100/mo with carrier.
 
B

barkomatic

macrumors 601
Aug 8, 2008
4,519
2,821
Manhattan
It would only benefit consumers if you got a significant discount off your monthly bill for buying your phone up front. I haven't upgraded my iPhone 4 yet on AT&T and the contract expired -- yet I'm still paying the *same* amount on my bill when I was under contract.

If phone companies dump the subsidy, you have to know that they will look at the situation in a way that makes the most money for them. They would dump the subsidy, NOT offer a discount on your plan and then to make the phone affordable offer to happily charge you an *additional* $30 a month to "pay off" the phone.
 
E

EbookReader

macrumors 65816
Original poster
Apr 3, 2012
1,190
1
barkomatic said:
It would only benefit consumers if you got a significant discount off your monthly bill for buying your phone up front. I haven't upgraded my iPhone 4 yet on AT&T and the contract expired -- yet I'm still paying the *same* amount on my bill when I was under contract.
Click to expand...

If you are on T-Mobile who no longer offer phone subsidy and your 2 years contract expire, would you benefit as a consumer?
 
sviato

sviato

macrumors 68020
Oct 27, 2010
2,426
378
HR 9038 A
I'd say no because knowing major carriers they would still charge ridiculous monthly fees.

Sales of phones would also decrease as not everyone can always afford the unsubsidized cost upfront.
 
M

Mr Hill

macrumors 6502a
Apr 28, 2012
500
1
Charlotte, NC
T-Mobile drops your bill by $20 per month on their no subsidy Value plans (with the option to pay $20 per month for your device if you don't want to cough up $700 upfront). If the other carriers dropped subsidies but still charged the high monthly rates then consumers would not benefit. If they offered a monthly rate plan discount then we would benefit.
 
B

barkomatic

macrumors 601
Aug 8, 2008
4,519
2,821
Manhattan
Mr Hill said:
T-Mobile drops your bill by $20 per month on their no subsidy Value plans (with the option to pay $20 per month for your device if you don't want to cough up $700 upfront). If the other carriers dropped subsidies but still charged the high monthly rates then consumers would not benefit. If they offered a monthly rate plan discount then we would benefit.
Click to expand...

Do you really think AT&T and Verizon would do that? I certainly don't. Perhaps I'm just a pessimist, but I always assume that these companies are more inclined to raise prices.
 
B

BigMcGuire

Cancelled
Jan 10, 2012
9,832
14,025
barkomatic said:
Do you really think AT&T and Verizon would do that? I certainly don't. Perhaps I'm just a pessimist, but I always assume that these companies are more inclined to raise prices.
Click to expand...

Exactly. USA Cell carriers are making so much $$$$ there's no way they would do this. I could save $1,550 a year if I would just use iPod touch with Skype. But nooo, me and my wife must have iPhones. lol. That's not even counting the cost of new iPhones every 2 years ($300x2).
 
2

2298754

Cancelled
Jun 21, 2010
4,890
941
No, because most people can't afford to pay so much upfront, such as the $649 for a new iPhone 5
 
E

Ericcc

macrumors member
Nov 2, 2012
74
0
Montreal
Only if it offered consumers more choice and make carriers compete harder. In North America, I can see this working in Canada but not in the United States.

In Canada, the big carriers have all migrated to GSM and use similar network bands. So if every phone sold were unlocked with no strings attached, a consumer would be able to easily switch carriers every time a better rate comes along. Eventually, competition between the big 3 and smaller cheaper carriers will bring down prices.

In USA however, CDMA negates whatever advantage in owning an unlocked phone. Buying a Verizon phone up-front grants you no leverage if you're threatening to switch to Sprint, much less other GSM carriers.

BigMcGuire said:
Pay $800 for an adware infused locked down Android phone? No thanks. Pay $800 for an iPhone? Well... I think at that point I'd look elsewhere - iPod with WiFi and Skype before I paid that much for a damn cellphone. I mean my Samsung Series 5 Ultrabook was $600. I'd be looking at a Wifi Hotspot and an iPod Touch before paying THAT MUCH for a damn cellphone +$100/mo with carrier.
Click to expand...

The idea is in dropping the hardware subsidies, your monthly bill would also go down. Right now, you're basically financing your phone with your monthly fees. What the OP is alluding to is no monthly financing option on your phone.

I buy all my phones unlocked, full-price. I'm not going to be tied to a 3-year (the norm in Canada) contract when rates are continually dropping. Plus there are no switching issues when traveling to foreign countries.
 
H

has.marvel

macrumors member
Jan 13, 2012
68
5
I would be happy to see them drop the subsidy. I would rather buy my phones when I want like I buy my ipads. If I want the newest, I buy it and sell my old one. If I would rather wait, I will do that also. Just give me a phone rate that reflects the real network costs and does not include the cost of a new phone every two years.
 
M

Mrbobb

macrumors 603
Aug 27, 2012
5,009
209
U.S. carriers have near-monopoly. Even newcomers piggy-back onto the 2 major carriers so u know they have their hands in cookie jar no matter.

We Yanks are truly special. When I go overseas I buy a sim card at the airport, pop it in, am in business. Incoming text are free BTW. Overseas people coming in the U.S. tear their hairs out trying to get temporary cell service. We are special all right.

This subsidy argument is moot. The major carriers and their lobbyists got your wallets no matter what.
 
2

2298754

Cancelled
Jun 21, 2010
4,890
941
dingster1 said:
I agree with this, which is why Verizon is seeing folks change to SE plans without too much fuss.
Click to expand...

In fact, I feel like this will screw over TMobile because the average consumer who doesn't know anything will notice how the iPhone is only $199 on AT&T/VZW and wonder why it is $649 at T-Mobile. Not to mention, T-Mobile's network is complete junk as well.
 
E

EbookReader

macrumors 65816
Original poster
Apr 3, 2012
1,190
1
AutoUnion39 said:
In fact, I feel like this will screw over TMobile because the average consumer who doesn't know anything will notice how the iPhone is only $199 on AT&T/VZW and wonder why it is $649 at T-Mobile. Not to mention, T-Mobile's network is complete junk as well.
Click to expand...

that's why many analysts are saying dropping subsidy will do T-Mobile more harm than good.
 
Marrakas

Marrakas

macrumors 6502
May 23, 2012
420
122
Back in europe I paid $30 a month for 600min/600sms/1000mb data, no commitment. For subsidized phones it's usually another $50 a month for 1 year, then it's paid off and you're back at $30 a month. During the downpayment period you can even quit your line and pay just on the downpayment part.

I think the US carriers are overcharging like crazy, especially for data.
 
sracer

sracer

macrumors G4
Apr 9, 2010
10,284
13,017
where hip is spoken
AutoUnion39 said:
In fact, I feel like this will screw over TMobile because the average consumer who doesn't know anything will notice how the iPhone is only $199 on AT&T/VZW and wonder why it is $649 at T-Mobile. Not to mention, T-Mobile's network is complete junk as well.
Click to expand...
Setting aside the quality of T-Mobile's network for a moment, I believe that this move COULD help T-Mobile to compete.

With the economy being as flat as it has been, people are looking beyond initial out-of-pocket costs to the monthly outlay. That is causing many people that I know to switch from contract plans to prepaid plans.

The one to be most fearful about an end to phone subsidies is Apple. It should not be a surprise that the one major company who does not offer the iPhone is the one considering this move.

There are many quality middle-level Android-based smartphones that can be purchased outright for $200 and less. (Quality low-spec'ed smartphones for $100 or less) The $200 price point is something that people are accustomed to paying for a phone on contract, so that won't be a hurdle.

But tell people that they'll pay the same $200 upfront for a phone but pay LESS each month for their service (the true reason for having a cell phone in the first place), and THAT will get their attention.

Stores are already selling Samsung Galaxy SII no-contract smartphones for $250-$300. Many here many not agree that it is an excellent phone, but there are many others who do.

In that environment, Apple can't sell $600 unsubsidized iPhones. Believe it or not, there are people who will forego purchasing an iPhone to buy an equally (or better) spec'ed Android phone and save $300+ in the process.
 
upnorth85

upnorth85

macrumors 6502a
Oct 2, 2011
629
202
MN, USA
I have been on T-mobile for 10+ years and before was on AT&T. T-mobiles HSPA+ network ("4G") is decent in cities and pathetic in rural areas where it is mainly Edge. I am on their "value" plan where I buy my own phone for a reduce monthly payment and benefit from this over the long term. They also do an interest free installment plan for those can't pay upfront cash.
The US market is the most concentrated one; 80% of the market is between a duopoly of AT&T and Verizon wireless. In such a condition what ever they rule will work. Moreover, Americans do not understand the "value plan" concept and prefer to pay $199 cash down and then high monthly payments. Most of the world, it is buy your phone and then look for a competitive phone company. The 2 year contract system in the US is a way to lock customers for 2 years. Even if you buy your phone AT&T will force you for data plan and contract.
 
0

0000757

macrumors 68040
Dec 16, 2011
3,894
850
Only if they offered prepaid-esque plans (60$ for unlimited everything, or 45$ for unlimited text/data and 1200 minutes, etc.)
 
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