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

[davidbrummy]

Interesting they are calling them subsidies. Trying to make out you aren't really paying the cost of the phone when you are as part of your contract.

If they want to drop subsidies then drop my monthly bill by the correct amount and no contracts.

Sounds to me like AT&T are trying some politics to see if they can increase their already healthy profits.

 

[bawbac]

Entitlement is alive and well.

 

[JeffiJers]

In in the bandwagon that wants to pay for the device and give me a normal monthly access rate.


Or.. as soon as tmobile have better coverage in my area I will go that route.

 

[osofast240sx]

$199 gets you a bag of parts. $.50/hr gets you a kid in china to assemble your phone for you.

If you believe that you believe anything. Only children working adults just a home and relax yeah okay. I guess you never been to China

 

[iHEARTcartoons]

T-Mobile envy?

 

[lazard]

If you believe that you believe anything. Only children working adults just a home and relax yeah okay. I guess you never been to China

I'm from China bro.

 

[thekeyring]

Have I missed something? Surly the price of the phone is divided by the number of months in a contract and added. So you're really paying £15.00 for your Data and £30 a month for the phone.

How can this be unsustainable?

Had I bought my phone outright, then paid for a SIM-only contract, I'd pay less over two years than I am now.

The downside of this would be having to find £600+ to pay for the phone, which is why I went for my current contract.

 

[skellener]

Carriers can't afford...

Excuse me.....

AT&T's Q3 profit inches up to $3.8B, tops expectations

Sounds to me like carriers CAN afford quite a bit.

 

[lazard]

Interesting they are calling them subsidies. Trying to make out you aren't really paying the cost of the phone when you are as part of your contract.

If they want to drop subsidies then drop my monthly bill by the correct amount and no contracts.

Sounds to me like AT&T are trying some politics to see if they can increase their already healthy profits.

Apple profit margin 21.67%

AT&T profit margin 5.84%

 

[unplugme71]

Apple and others will be hurt with sales with this model. No way I'm buying a 32GB iPhone every year, or even 2 years at full retail and paying the same monthly for my service.

I'll get rid of AT&T in a heartbeat.

 

[Rafterman]

I find it funny how when Apple reports a quarterly profit of $7.5B everyone on here cheers. AT&T reports a quarterly profit of $3.8B and everyone calling them greedy bastards.

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$199 gets you a bag of parts. $.50/hr gets you a kid in china to assemble your phone for you.

I don't. Apple are greedy bastards too. Profits have to be weighed with customer sustainability. Keep charging higher and higher costs, and you will lose those paying customers eventually.

Apparently, "kid" is right. A new story came out about a 15 year old dying at a iPhone 5C plant in Shanghai.

 

[lazard]

Apple and others will be hurt with sales with this model. No way I'm buying a 32GB iPhone every year, or even 2 years at full retail and paying the same monthly for my service.

I'll get rid of AT&T in a heartbeat.

just like in the airline industry, you know Verizon will follow suit if AT&T does decide to remove subsidies.

 

[sundragon]

Absurd

If you're not gonna subsidize my phone then don't lock me in with a contract!

I get the contract allows you to recoup the subsidy over two years but if you're gonna make us pay full price up front then you're ******** mad if you think we'll sign up for two years for a measly $15 dollar discount.

There needs to be a shake up. Unlocked phone means no 2 year plan, it's month to month and if your service sucks, we'll switch. It's called Capitalism - May the best product/service win.

 

[Rafterman]

Apple profit margin 21.67%

AT&T profit margin 5.84%

According to this: http://ycharts.com/companies/T/profit_margin

ATT's profit margin is currently 11.86 percent and about 7.5B dollars.

 

[bigwig]

I use less than 30 minutes a month, I use 100MB to 500MB data a month. I don't text. So why am I paying $60-70 for?

AT&T MVNO H2O Wireless has a killer $30/month plan: unlimited talk/text and 500MB of HSPA+ data. If you consistently use closer to 100MB than 500MB of data, Airvoice has a great $10/month plan. 2c/min for talk and 6.6c/MB for data.

 

[akm3]

Go ahead and stop giving me a subsidy. I'll go to Verizon or Sprint.

They do these things together, cartel style. If one of the majors is doing it the others will be doing the same thing.

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I'm not going to shell out $700 for a new phone every few years. Are they crazy?

This is exactly what the carriers are saying, to you.

 

[grigby1]

From AT&T's 3rd qtr earnings report:

-Wireless revenues up 5.1 percent, service revenues up 3.7 percent versus the year-ago quarter
-Wireless data revenues up 17.6 percent versus the year-earlier period
-Wireless operating income margin of 26.4 percent; wireless EBITDA service margin of 42.0 percent with record third-quarter smartphone sales of 6.7 million

Seems like the subsidy model has been working well so far.

 

[NoneOfYourB]

$199 gets you a bag of parts. $.50/hr gets you a kid in china to assemble your phone for you.

No you pay the kid's boss - who is a billionaire himself.

 

[FirstNTenderbit]

With a $7.2billion profit last year it's obvious AT&T can't afford it. :-/

I hate these companies... All of them.

I know right?. Rumor has it there's one company that pulled down $41 billion in profit last year. How can they live with themselves?

Way to be sarcastic about something that really is a problem but apparently you're too stupid to understand it. It would be one thing if these companies were trying to make more money by being competitive but they aren't... They are taking advantage of subscribers not having many choices and squeezing every dime out of them that they can. This country has one of the worst internet and cell phone reputations in the world, literally, and it is because of this.

My sarcastic quote was a direct response to your sarcastic quote regarding AT&T's profits. With that being said, I am not sure what I am too stupid to understand.
Could it be:
1. AT&T realizes the subsidy model is a dead end street and this annoucement is forward looking. With T-Mo and the MVNO's offering unsubsidized phones consumers see there are viable alternatives to that 2 year ball and chain.

2. Without subsidy there COULD be downward pressure on the price of phones; benefiting consumers. iP5's and S4's sound great at $200. Not so much at $6-800.

3. AT&T, like all companies want to maintain and grow their profit. Of course they are going to try to build in ways to keep the money flowing. The question to ask is, "Does this affect me positively or negatively?"

4. Your original quote conveyed none of your intent mentioned in your response to mine. Maybe all of that was between the lines? I checked, nothing was there.

Too stupid not I am this but sentence here is credence lending comment to yours regarding stupid I

 

[Macboy Pro]

Go ahead and stop giving me a subsidy. I'll go to Verizon or Sprint.

LOL, you don't think Verizon will follow? If you think Verizon is better, go for it. I love these ridiculous comments about leaving AT&T. Just go!!! and good luck on the antiquated network

 

[PsychoLogicXen]

Stephenson noted that carriers have largely solved their data capacity issues because of LTE...

Ok AT&T, prove it by bringing back unlimited data plans with no throttling at a reasonable price.

 

[TallManNY]

Was switching to T-Mobile with my unlocked and paid off iPhone. AT&T just saved itself a customer by giving me a more affordable option. Though I think I also just cut my monthly bill in half.

 

[nt5672]

Att gets payback in 2 years on $700 smartphone. Lets see, that equates to $29.17 per month, but they are going to give you a $15 per month credit. That means they just pocketed $14.17 per month (on average, based on the assumptions above.)

Not bad if they can get away with it.

And they can only get away with it, if no one complains and a lot of folks just accept it. "Stupid gets what stupid wants." I guess is the best way to look at this.

 

[mabhatter]

Everyone seems to be forgetting that Phone Tech is designed to be disposable. All Manufacturers are on a 1 year or less product cycle. The overblown full price of phones needs to come down to reality for this to work.

Apple charges $130 to upgrade to an iPad with cellular data support, it should be the same for phones.

iPod Touch $299 + $130 for cellular capability = $430 for a phone. Makes sense.

That's how much a "free" iPhone 4S costs ... With $450 subsidy. iPhone 5c and 5s start at just another $100 for each upgrade. That's why my 32GB iPad w/cell was $729 new, just a shade lower than new iPhone prices for slightly older tech.

 

[zaphon]

I specifically went to T-Mobile because this is the only plan that makes sense. I buy the phone, and then I don't have to pay some stupid subsidy for the rest of my life (which really sucks if you don't upgrade your phone every 2 years, as you still pay the subsidy even though you have long since paid off the phone).

I'm glad to see AT&T going down the same path, and Verizon will follow (though honestly, even if you took out the subsidy from AT&T and Verizon prices, I still couldn't afford them, they're so overly priced in comparison to T-Mobile. I am saving well over $100 a month on my 4 phones versus what I was paying AT&T (even including the amount I pay monthly to finance the phones)). I don't see Sprint doing it, as right now the only thing keeping them alive is by not doing what all the other carriers are doing.

But either way, it cracks me up to read all the people saying they would never go for something like this. It's already what you're doing, you buy the phone, pay a little down, then the carrier bakes the rest of the phone's price into the plan for the next 2 years. All they're doing is breaking out the monthly phone piece into a separate bill (if you choose to finance it, or you can just pay up front and be done with it), and once it's paid off you no longer pay it (it's actually going to cost them money on people who don't upgrade every 2 years).