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

[Mr Hill]

Originally Posted by upnorth85

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.

You're right. T-Mobile's biggest challenge is going to be educating consumers on how the Value Plans work. By the responses in this thread you can already see that most people think T-Mobile will be forcing people to pay $649 out the door to get an iPhone when in fact the upfront price to get out the door is likely going to be $99/$199 just like the other carriers.

[chambone]

I voted yes, but I could have voted no just as easily. The 50/50 up till now isn't surprising in the least. It just depends on how you look at it. I assume the rest of the yes votes are from US citizens. Or at least they should be.

But the 'not everyone can afford to buy outright' comments do strike me as a bit odd though. If you can't afford to lay out 700 bucks, you can't really afford to pay 70 bucks a month in carrier fees either.

Or at least you shouldn't.

[EbookReader]

Yes, consumers benefit 26 50.98%
No, consumers won't benefit 25 49.02%

[Sherifftruman]

I would be completely fine with no subsidy or with the combo model it seems Tmo wants to try, as long as I get a discount for bring my phone and no lock in. More likely is they try to keep the price the same or maybe only give you half of it off and still want a 24 month contract.

[SnowLeopard2008]

Customers don't benefit. Why? Sure, the total cost of contract + phone may be less but the upfront cost would be much higher. It's a similar situation with the housing market in the US. If banks did not give out home loans, do you think more people would benefit? No. Yes, there are adverse effects like the housing crisis of 2007 (or 2008?) but fewer people would own homes.

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Originally Posted by chambone

I voted yes, but I could have voted no just as easily. The 50/50 up till now isn't surprising in the least. It just depends on how you look at it. I assume the rest of the yes votes are from US citizens. Or at least they should be.

But the 'not everyone can afford to buy outright' comments do strike me as a bit odd though. If you can't afford to lay out 700 bucks, you can't really afford to pay 70 bucks a month in carrier fees either.

Or at least you shouldn't.

Terribly flawed argument. Your logic says if a person can't afford to lay out $30 to eat out at a sit down restaurant, then that person can't really afford to pay $3 for a burger at McDonald's. Or at least that person shouldn't. Does that sound right to you? No. Some people can only afford $100 per month for cellphones(i.e. family plan) but un-subsidized would mean slightly less payment per month (i.e. $80) but $500+ per phone upfront. If I had a small family of 3 people, that would be $1500+ for just the handsets upfront. It's akin to taking out a loan and probably fits in the micro-loan category. Loans sometimes can be the better way to finance a purchase and other times the exact opposite. But your argument says loans don't work at all but I beg to differ.

A logical argument for "no" would be that in some countries where cellphone contracts aren't widespread, carriers have a different business model and service costs. I know that in China, people pay something like $0.01 per text message and the rate changes negatively exponentially as the number of sent text messages increases. As for minutes, it's pay per use with very low rates.

In the US, subsidized models are viable because of the service costs and how it differs from foreign countries (my example was China). So the OP should have stated a specific country. Otherwise, we're all arguing with different contexts.

[Applejuiced]

People just see the $199 price tag and go for that.
What they dont realize is if you buy the phone and pay $30-50 less month for your service you will make out better in the long run.
But most US consumers are about what can I get cheaper right now and dont look at it that way.
So not sure how it will play but the well educated customers that do the math will realize that is better and cheaper for them in the long run.

[SnowLeopard2008]

Originally Posted by Applejuiced

People just see the $199 price tag and go for that.
What they dont realize is if you buy the phone and pay $30-50 less month for your service you will make out better in the long run.
But most US consumers are about what can I get cheaper right now and dont look at it that way.
So not sure how it will play but the well educated customers that do the math will realize that is better and cheaper for them in the long run.

Some people can't shell out $700 for an iPhone upfront. It's not so much about "long run". There are financing options for big ticket purchases like homes, cars, etc. for a reason. Subsidizing the cost of a smartphone is like a financing option. It's not perfect and sometimes it can go wrong but the main purpose is to drive adoption.

I agree that in the long run, un-subsidized is cheaper. No doubt.

[Applejuiced]

Originally Posted by SnowLeopard2008

Some people can't shell out $700 for an iPhone upfront. It's not so much about "long run". There are financing options for big ticket purchases like homes, cars, etc. for a reason. Subsidizing the cost of a smartphone is like a financing option. It's not perfect and sometimes it can go wrong but the main purpose is to drive adoption.

True, but the option of paying $150-200 upfront and the rest on monthly payments on your phone bill will still be there.
So why not?

[SnowLeopard2008]

Originally Posted by Applejuiced

True, but the option of paying $150-200 upfront and the rest on monthly payments on your phone bill will still be there.
So why not?

I doubt US carriers will allow both subsidized and un-subsidized plans at the same time. Look at Verizon and their shared data plans. All new contracts including renewals must be changed to a shared data plan. It's the biggest ripoff ever. Not only is AT&T's network better (faster, more robust, less dropped calls, etc.), AT&T is also more than 30% cheaper. If both subsidized and un-subsidized options exist in the US, no one would go for the un-subsidized. It would complicate things tremendously though.

[AFDoc]

All these people that pay outright for their phones and THEN stay with their carrier for two years are being stupid and wasting money. IF you move carriers a lot (more than every 2 years) sure, if not you're just giving money to apple for free.

For those of you saying unsubsidized is cheaper in the long run how so? I wont be leaving att and my phone bill doesn't drop one penny if I buy my phone outright so how is it cheaper for me?

[Applejuiced]

Originally Posted by SnowLeopard2008

I doubt US carriers will allow both subsidized and un-subsidized plans at the same time. Look at Verizon and their shared data plans. All new contracts including renewals must be changed to a shared data plan. It's the biggest ripoff ever. Not only is AT&T's network better (faster, more robust, less dropped calls, etc.), AT&T is also more than 30% cheaper. If both subsidized and un-subsidized options exist in the US, no one would go for the un-subsidized. It would complicate things tremendously though.

I don't know.
I don't expect the 2 big networks to go for it either.
It's all about the Benjamin's with them and keeping people locked in contracts.
This idea is the complete opposite so they will hate it.

[darster]

No. Verizon and AT&T will not reduce your monthly bill. I paid full price and get no discount for doing that. If they were truly fair, I would pay $20 to $30 less per month than a person who got a subsidized phone. That doesn't happen now, and I see no reason for it to happen in the future. What they will likely do is charge you the same for your current plan and then add another $20 to $40 a month if you buy the phone on installment. In other words, they will screw us even more.

[SnowLeopard OSX]

Dropping phone subsidies =/= paying for the entire device upfront.

[smithrh]

Originally Posted by SnowLeopard2008

Not only is AT&T's network better (faster, more robust, less dropped calls, etc.),

Ha.

Ha ha ha.

Hahahahahahahaha!

*drops to floor clutching midsection*

Dude, stop, you're killing me!

[Mr Hill]

It actually works out well for the carriers as well. For example on tmobile if you leave they hit you with the ETFs and the remaining balance owed on the phone. Their etf is only $200 though.

[SnowLeopard2008]

Originally Posted by smithrh

Ha.

Ha ha ha.

Hahahahahahahaha!

*drops to floor clutching midsection*

Dude, stop, you're killing me!

Yea, ignorance is bliss right? AT&T's network is a lot better than it used to be. Faster LTE, faster 3G, faster 4G (HSDPA+), more robust network. They were slower than Verizon to deploy LTE because they first beefed up their 3G/3.5G networks. Verizon has a terrible 3G network. It's more reliable by a small margin but it's significantly slower. On average, AT&T wins.

[EbookReader]

If AT&T and Verizon and Sprint drop subsidies and allow customers to pay in installment instead, wouldn't the customers who have paid off the device benefit? or those who bring their own device? or those who buy a used device?

Example:

$100 (with subsides) per month for 24 months wireless contract = $2,400

$80 (with no subsidies) per month for 24 months wireless contract = $1,920
$20 installment for 24 months to pay off the device - device contract = $480
----------------------------------------------------------------$2,400

The two options are the same for the first 2 years but now that you have paid off the device and want to continue to use it, wouldn't you be better off?

[boomhower]

With what the major carriers have showed so far I don't think they would drop the bill any significant amount. They'd just pocket most of the difference. If it was $30/month cheaper I'd jump at it.

[EbookReader]

Originally Posted by boomhower

With what the major carriers have showed so far I don't think they would drop the bill any significant amount. They'd just pocket most of the difference. If it was $30/month cheaper I'd jump at it.

they will pocket the difference if there is no competition (or an illegal agreement among the carriers to not compete).