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AT&T CEO: Carriers Can't Afford Big Subsidies for Devices Any Longer

I find it shocking how screwed over the US gets from the Telco's. Before I moved to New Zealand I too was paying $80+ a month for the cheapest plan I could get on my iPhone ( back then it was AT&T or nobody ).

In NZ we:

- Don't pay for incoming calls or texts ( you pay only for outgoing )
- Never get throttled speeds ( you get less but all of it is 100% full speed never throttled )
- Pay a ton less.

For $15 USD a mo ( 15% tax included ) I get 100 minutes, 5000 texts and 500mb of 4G data.

For data hungry users you can get another 1-3GB extra for $18-40 USD a month more.

I suppose if you truly need unlimited data you're screwed because the providers here don't sell plans with hidden cheats.

If this ruins smartphone subsidies Apple will be best off, they have the highest profit margin and the most room to wiggle if they need to reduce prices to keep consumers coming. Every other Android manufacturer except Samsung is already taking a loss and Samsung's top end phones are similar price as the iPhone with lower margins.
 
People tend to freak out when they hear "Omg no more subsidies". Whether or not it will hurt Apple depends on how it's implemented.

For example T-Mobile no longer has subsidies, but they do offer financing so that people don't have to walk in and pay $649 upfront for an iPhone.

At launch they were charging a mere $99 upfront for the iPhone 5S while the other carriers were charging $199. Since the rate plans are significantly lower than what they were back when T-Mobile still did subsidies, the upfront price and total monthly rate is almost a wash for the consumer when you include the financing of the phone. Even today I can walk into a T-Mobile store and pay less upfront for a 5S than I would at AT&T. So in other words, as long as AT&T can come up with a type of handset financing that keeps the upfront cost of the device low, then it doesn't matter. They could probably get away with making the iPhone 5S $149 upfront + $35/mo on top of your rate plan and people would gladly pay it. Americans have shown that they don't mind paying $100 or $150 per month for service if they don't have to pay a high upfront cost for the phone.

So if done in this model it would have virtually no effect on Apple device sales on the front end. The only thing that comes into question is in 2 years once the device is paid off how many people will keep their old iPhone in order to enjoy the lower monthly rate and how many will choose to upgrade and finance another iPhone?

On another note, I'm glad to see the competition is pressuring AT&T into reactionary mode. At this rate they will eventually be forced to make more pro-consumer moves.
 
Apple could cut the price of the iPhone in half and our monthly bills still wouldn't go down a penny.

**** AT&T.
 
michalm21 said:
How many minutes do you need to use? Are you a 14yo girl?

But seriously, in big cities t-mobile is the plan as their network is solid. The only problem I've ha traveling is data as it's usually 2g outside major cities. Voice is just fine, it also roams to ... Att in those poor t-mobile coverage areas (only for voice though)
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14 year old girl? You do realize adults talk on the phone, right? Businesses don't run on text messages.

And in (some) big cities....sure, T-Mobile is fine. But leave a metro area for a little bit and tell us how well that reception holds up. Bash AT&T and Verizon all you want for their high prices, but their networks are rock solid for the most part.
 
AppleScruff1 said:
Android owns the market in the non subsidized countries.
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If by "owns the market" you mean those markets are flooded with cheap, almost disposable, semi-smart feature phones running multiple variations of Android for their 90 day warranty period of existence, and on which the manufacturer made little if any profit, sure.
 
wow! People on these forums have become more whiney by the day.
Let's see I bought my first car phone in 1992 It cost around$700 my phone bill
was around $100/month This allowed me 60min of talk time/ month every min over that
was around $2.50. The phone was anchored in my car like all phones at that time, of course all it could do is make phone calls. Cut to the present. I still pay $100 a month. My phone fits in my front pocket of my jeans, I have unlimited talk time, unlimited data Long distance is free. My phone is a full fledged computer that has more memory and processing power than my desktop had a few years ago, I can watch tv, have face to face conversations, listen to my entire music library, edit movies, take hd movies with greater resolution and quality than my home video camera 5 years ago could do. I can surf the web, check my email, get information about any subject, the phone can talk with me and set up appointments with just my voice. etc. So basically the cost has remained the same for 20 years yet the capabilities have exponentially increased! unfortunately
all this freedom and capabilities have created more time for peoples to troll
on these forums to complain and whine.
 
ugahairydawgs said:
14 year old girl? You do realize adults talk on the phone, right? Businesses don't run on text messages.

And in (some) big cities....sure, T-Mobile is fine. But leave a metro area for a little bit and tell us how well that reception holds up. Bash AT&T and Verizon all you want for their high prices, but their networks are rock solid for the most part.
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We get it! You like the big 2! But the reality is T-Mobile service is rock solid for 220 million people
 
Perhaps AT&T should make those who sign 2-year contracts to get a subsidized phone live out said contracts. Start there.

This BS that AT&T cannot afford it though is just that, BS. They're doing just fine. VZW and AT&T are over-charging for data while pushing people on plans that are inferior to what was once offered. The tech that brings us mobile data is only getting cheaper, I would think. Why continue to increase pricing?

Greed.

portishead said:
Go ahead and stop giving me a subsidy. I'll go to Verizon or Sprint.
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All others will follow suit or at the very least, VZW. You're merely buying time, not solving a problem.

JRomero said:
I'm not going to shell out $700 for a new phone every few years. Are they crazy?
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Talk to Apple. The price tag is not AT&T's doing.

Michael Scrip said:
Dear carriers,

What are you doing with the $2,400 that I pay you over 2 years?

After you pay the subsidy of $450... you still have $1,950

And that's not enough?!?
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Nope, evidently it is not.

I don't care, kill subsidies but what makes it hard is to shell out $700 for the phone of my choice only to pay the exact same amount on my bill as the yahoos who pay $200. Makes me look like I have more money than sense, which I do not.
 
rpulfer said:
According to my studies (*coughGoogle) it costs Bayer $0.0015 to make one pill. Let's not forget what costs are before manufacturing.
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Yeah, I am sure that's why, let's say Apple, charges you $100 extra for each 16GB memory you add to the phone, when in reality, the cost is around $17 for each 16 GB bump.
 
Zimmy68 said:
This is probably more of a shot at Apple then consumers.

Let's face it, iPhone probably cost Apple about $10-$20 then an iPod Touch to make, yet they charge $400 more.
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I can entertain that idea.

Can you provide a source to that?

And since Samsung makes many of the components for their own devices, I would expect their phones to cost $5 - $10 in hardware, using your logic.
 
Mackan said:
Yeah, I am sure that's why, let's say Apple, charges you $100 extra for each 16GB memory you add to the phone, when in reality, the cost is around $17 for each 16 GB bump.
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they have the right to charge what they want. If you can't afford don't buy! Or buy used
 
EbookReader said:
It's a bad thing that carriers are separating the cost of the phone from the cost of the wireless service.
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Why?


T-Mobile USA also did this. Not sure if it is successful. People usually flee when carriers abandon subsidy.
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T-Mobile has in actuality offered this option for about 4 years; I forget exactly when it started. It was already the cheapest of the big four, and, has the best customer service as well. Not to mention unlimited text plans when the other carriers were using texts to mint money. I switched and haven't looked back. Overall cost has been much less than AT&T was. A few months ago, they made "no contract" the standard. I can't imagine why anyone would choose another way if they have an option.

I can't tell you how successful T-Mobile has been financially, but, it sure doesn't look like people are fleeing.

Here is a useful site with actual data for what is happening:

http://www.fiercewireless.com/special-reports/grading-top-us-carriers-third-quarter-2013


Why pay $600 for a phone when you can just pay $199?
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Why pay $900 for a $600 phone? The phone "subsidy" is just an installment plan that is costing you a bundle long-term.
 
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Can't afford subsidies? What is this BS, they get it back many fold due to contracts. Maybe they should look at how they run their company instead.
 
Before, the cost of subsidizing was built into the monthly plan. Now it's a bit more transparent and gives customers some choice.

ATT Next + monthly plan discount = exact same as current phone subsidy model.

I used to pay $80/month at ATT (450 minutes, 2GB data) and had the option to purchase the "subsidized" 5S for $200.

Last month I switched to Virgin(Sprint) instead, $30/month, 300 minutes, 2.5GB 4G, unlimited 3G. The 5S cost me $550. In 7 months, I will have made up for the price difference and start saving $50 a month by not opting for ATT's "subsidized" model.

Customers have to do the math, and project all costs over 2 years if they really want to compare carriers and pick what's best for them. Looking only at the upfront cost of the phone itself is shortsighted.
 
Walked into an AT&T store to open a 5 line business account all with smart phones and unlimited talk, text, and web. The smug sales associate who I was obviously distracting from a day of screwing around told me to go to the AT&T website and then went back to laying on his phone.

Waked into T-Mobile, got a better plan at a lower prices, closed that day with great service.

Maybe AT&T should focus on their core business before trying to change the market.
 
ugahairydawgs said:
Don't worry....you won't be able to use too many minute with T-Mobile on the back of their crappy network alone.
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I think it depends on each customer's unique usage patterns and situation - so no need to be so disparaging. Let the free market decide.

FWIW, I'm taking my 4 lines from AT&T to T-mobile next year. Dropping from over $220 monthly to $100 is a no brainer, even if I have to bump up the data on a couple of handsets, it's still going to be cost-effective.

And if it doesn't work out I can go elsewhere since there's no contract. I have nothing to lose.

I do admire T-mobile for trying hard to win business right now. For a customer that's a good thing. And as a long-time customer of AT&T, I feel they gave up trying years ago.
 

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Easy solution

Don't subsidize any phone. But then they'd have to cut their ridiculously high monthly plans back a good bit to a normal level. But they dont want to do that either because right now their ARPU is over $100, that looks good to Wall St.
 
TsMkLg068426 said:
Well if AT&T offered unlimited data plans it would be a no problem another better idea is having more hotspots so we do not hear the bitching of AT&T acting like they are poor.
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Every AT&T hotspot I've ever used has had a crappy ADSL connection as backhaul and thus is a lot slower than LTE.

They really need to get on the ball and improve their hotspots. I don't even bother joining Wi-Fi at McDonalds, Starbucks etc. anymore when I have LTE coverage because I know it will be worse.
 
Yinmay said:
Before, the cost of subsidizing was built into the monthly plan. Now it's a bit more transparent and gives customers some choice.

ATT Next + monthly plan discount = exact same as current phone subsidy model.

I used to pay $80/month at ATT (450 minutes, 2GB data) and had the option to purchase the "subsidized" 5S for $200.

Last month I switched to Virgin(Sprint) instead, $30/month, 300 minutes, 2.5GB 4G, unlimited 3G. The 5S cost me $550. In 7 months, I will have made up for the price difference and start saving $50 a month by not opting for ATT's "subsidized" model.

Customers have to do the math, and project all costs over 2 years if they really want to compare carriers and pick what's best for them. Looking only at the upfront cost of the phone itself is shortsighted.
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Yea, but you're on Sprint's ridiculously terrible network. Where I live they never even built out Wimax 4G. All we have is EVDO 3G and its as slow as dialup...about 56kpbs. I used to have sprint about 6 years ago and it sucked. If you happen to live where you can get Sprint service, kudos to you, the Virgin Mobile is a great deal.
 
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