Will rate of production drive away carrier subsidized offers?

The USA public is not ready for full price phones. The carriers have done an incredible job convincing Joe public that a $199 subsidized iPhone 5 along with a $90-100 phone/data plan is cheaper than paying full price ($650) and going prepaid $45/month option.

It's very confusing to the public. But the other side is 60% of USA customers are on some type of family plan with offers cost savings. Plus the vast majority of them have 15-25% monthly discounts with postpaid subsidized plans.

mdlooker said:

But if they make a mandatory purchase of full price for each smart phone, a lot of customers may just hold on a lot longer than if they had that subsidized price.

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This is a very interesting point.

The carriers don't care if you upgrade your phone or not. In fact, they prefer that you don't as it means you are more likely to continue to use their service.

The subsidy game has become like the financial aid. Charge more tuition fees and increase financial aid. 9 out of ten times, the student will prefer a college that "gives" more aid. Same here. The focus is on comparing carriers with cash down amount, not the total payout that takes in to consideration, the cash down and monthly payout over two years. If Americans did that carriers would follow the Tmobile Value plan model. I do not see "subsidies" end any time soon. The American consumer has one of the lowest savings rate and the economy runs on more debt and minimum cash down with a long contract.

upnorth85 said:

The subsidy game has become like the financial aid. Charge more tuition fees and increase financial aid. 9 out of ten times, the student will prefer a college that "gives" more aid. Same here. The focus is on comparing carriers with cash down amount, not the total payout that takes in to consideration, the cash down and monthly payout over two years. If Americans did that carriers would follow the Tmobile Value plan model. I do not see "subsidies" end any time soon. The American consumer has one of the lowest savings rate and the economy runs on more debt and minimum cash down with a long contract.

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I feel you are trying to tie a phone subsidy to some type of irresponsible buying behavior and the U.S. savings rate. If the major carriers lower the monthly charges(like T-mobile does) if a consumer pays full retail for their phone then I'd be on board with that.

As it stands, AT&T and Verizon offer no discount whether you take a subsidized phone or not--so it makes no sense to *not* take the subsidized phone if you can afford it. It's essentially a give away in that sense. Since I need service anyway, a two year contract doesn't bother me at all.

If the major carriers drop the subsidy, I'm skeptical that AT&T and Verizon would offer any type of discount if you buy the phone out right. What they'd do is charge you the *same* monthly price and then add a $25 *repayment* amount.

They are within their rights to do so of course, but the first carrier to make this change will certainly suffer a hit until the other follows suit.

aneftp said:

The USA public is not ready for full price phones. The carriers have done an incredible job convincing Joe public that a $199 subsidized iPhone 5 along with a $90-100 phone/data plan is cheaper than paying full price ($650) and going prepaid $45/month option.

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If carriers actually priced their plans cheaper for buying full priced phones, I'd switch in an instant. Instead, with our oligopolistic carriers, we'll soon be paying the same monthly rate we are now, and having to pay full price for phones. I'm certain of it.

I (and hopefully, most of the informed smartphone-using public) will be more than happy to see subsidies go, IF it means that carriers drop their monthly service fees significantly. Right now, I'm not so sure it'll happen... I'm pretty sure we'll start paying full price for our phones and still not see reductions in what we pay month to month.

Note that right now, the difference between what people off-contract pay vs. what people on-contract (and supposedly paying off a subsidy) pay month-to-month is zero.

chrfr said:

If carriers actually priced their plans cheaper for buying full priced phones, I'd switch in an instant. Instead, with our oligopolistic carriers, we'll soon be paying the same monthly rate we are now, and having to pay full price for phones. I'm certain of it.

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Correct, and this is what those calling for an end to subsidies don't seem to fathom. Of course the major carriers will keep their monthly charges the same while at the same time ending the subsidy.

mdlooker said:

I think there are two types of buyers..

Those that buy for their needs w/o the desire of having the latest and greatest

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This is me.

T-Mobile does offer cheaper monthly plans (called value plans) for those that bring their own phones or buy for full price. Those going for the traditional discounted plans pay a higher monthly fees under the "classic plan". This works fine for their AWS frequency 4G. But because the iPhone does not have the 1700/2100 frequency, T-mobile is now refarming their 3G on the 1900 Mhz frequency. Their network is not quite ready for prime time, even though they claim that they now cover 100 million pops in 40 cities. But when their network will be ready by year end, they will give the other carriers a run for their money. It will change the face of competition. It is a good beginning but a long ways to go. When consumers understand what a value plan is, they go for it. Unfortunately even some T-mobile sales rep can not explain how a value plan is better over 2 years compared to a classic plan.

I agree the other 2 majors are for now hoping to stop subsidies with no change in monthly rates. Verizon is continuing the unlimited plans for those that buy phones for full price. So they are putting a "discount" to the plan that some are finding good enough to make them go out and buy full priced iPhone 5's.

chrfr said:

If carriers actually priced their plans cheaper for buying full priced phones, I'd switch in an instant. Instead, with our oligopolistic carriers, we'll soon be paying the same monthly rate we are now, and having to pay full price for phones. I'm certain of it.

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I agree with everyone above me. You all make great points.

The only thing I'll add is this. If the carriers end the subsidized phones and make you buy at full price, then ALL phones should be factory unlocked. Period. You don't like AT&T or it turns out to not work well for you? Then you should be able to take your phone that YOU purchased at full price and move to another carrier that works better for you.

Of course, this isn't what will happen. They'll make you buy a phone at full price, keep the contract prices exactly the same, and still lock you in to their service for 2 years. It's a crap system that only works for the carriers and they have the market cornered.

Until we, as consumers, demand fairer business practices, they'll just keep doing more of the same.

Then there are the phone manufacturers. Someone would have to force them to make every phone compatible with every carrier. While they're able to do this now, they won't, only because they have lucrative contracts with the carriers.

In the end, folks, it's always going to be us getting the short end of the stick.