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AT&T CEO: Carriers Can't Afford Big Subsidies for Devices Any Longer
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Give me more than $15/mth off and I'd happily buy my device outright (and keep my unlimited data plan).
The 16GB Nexus 4 I bought a few months ago from Google was $250 unlocked. Granted it's no iPhone 5 but it is significantly cheaper.
Actually, you're contributing to the uninformed thread. AT&T's new value plans aren't directly comparable to the old plans, and the $15 off bit is only valid when comparing value plan to value plan, not old mobile share to new value plan.
Let's do some math for a high data family plan like I use. 10GB shared across 4 iPhones is $120 + $30 per phone. $240/mo. Thanks to the ease of Apple in-store trade-ins, all four of these iPhones can be upgraded every two years for $0 out of pocket, but there's still AT&T's $36 activation fee. Let's roll that into the monthly cost: $246/mo gets 10GB shared data and four brand new iPhones every two years. Of course there was also an initial investment of $400-800 to buy four iPhones, but that's only one time ever.
On the new value plans, 10GB is only $100, and if you already own the phones, they're only $25 each. Monthly cost $200. Note that's only $10 cheaper per phone compared to the old plan. But cheaper nonetheless. However, the upfront cost was around $2400. If you elect to upgrade four phones every two years, your average monthly cost on the new value plans is about $290 (with 2 yr trade-in value factored in too).
The first two years on the old mobile share, with upfront costs rolled in, was $271, and then it's only $246/mo each year thereafter. Even if you upgrade those four phones only every four years, on the new value plans, that still averages to $256/mo. That's about the break-even point on total comparing old mobile share to new value plan, except one ensures your phone is never more than 2 years old while the other leaves you with a device that's lost all its trade-in value.
So, math indisputably proves that the new plans are more costly to the customer, at least the high data family users, in every way. And AT&T knows this. The move is one designed purely to increase their profits while placating customers with a slight of hand marketing show.
HAHA im on a 10 dollar a month plan via airvoice wireless, they dont love me I was just using the following as a sample.
They'd be smart to drop their monthly plans even more than they are currently offering (the $15 deal), otherwise people will have no incentive to stay. I can see droves of people leaving for T-Mobile or any one of the MVNOs (including AT&T's own AIO) for much more reasonable pricing.
The used phone market is already strong, and this will make it stronger. There will also be a lot more people holding on to phones for more than two years.
And like a previous poster said - hopefully this will also lower the retail price of phones, since everyone will be going the full price route. Nobody wants to pay $750 for a new phone.
Also, I think there should be some sort of governmental requirement that any phone work on any network. Either Verizon and Sprint need to go GSM, or every phone should come with all the necessary antennas (like the Air). People should be free to take their phones to any network at any time, since they will no longer have any sort of obligation to the carriers in the form of subsidies. Perhaps a contract could lock you in to even lower prices than the non-contract people pay.
I think ending subsidies is a great idea, if it sets into motion lower phone bills, portability, and lower phone prices.
The used phone market is already strong, and this will make it stronger. There will also be a lot more people holding on to phones for more than two years.
And like a previous poster said - hopefully this will also lower the retail price of phones, since everyone will be going the full price route. Nobody wants to pay $750 for a new phone.
Also, I think there should be some sort of governmental requirement that any phone work on any network. Either Verizon and Sprint need to go GSM, or every phone should come with all the necessary antennas (like the Air). People should be free to take their phones to any network at any time, since they will no longer have any sort of obligation to the carriers in the form of subsidies. Perhaps a contract could lock you in to even lower prices than the non-contract people pay.
I think ending subsidies is a great idea, if it sets into motion lower phone bills, portability, and lower phone prices.
The subsidy is about $20/month, or $480 over the life of a 2-year contract. The alleged $15/month doesn't even cover that.
But, if you do a comparison of the "value plan" to the "non-value plan", you'll find that there is no benefit unless you have a very low monthly data allowance, or a very high data allowance. It also depends on the number of devices on your plan. AT&T changed the per-device cost to a fixed amount, instead of an amount that got smaller as you added more devices. This confounds a direct comparison.
I think that AT&T looked at the distribution of number of devices and amount of data, and set the prices of the "value plan" so that it was effectively unchanged for most family plans: 2-3 devices and 4-6 GB/month. If you are outside that "sweet spot", you get a price break -- and AT&T can claim they lowered prices. But, I think most family plans won't see a price break.
If you figure in the difference in the cost of the phones on-contract and off-contract, the "value plan" doesn't have any value.
I should have said families of 4 who want a new iPhone or Galaxy at $650+
If you read back a few post I said the Nexus5 & Moto are good options rather than spending $650 on a phone
My son has a Nexus5 and the TMo $30 plan(100m,5GB,Unlimited text)
I'm picking up me a Nexus and going the same route or I may just put the sim in my unlocked iPhone.
I don't think the $100 family plan is unlimited data unless you mean 500mb highspeed and then throttled. It's more if you want unlimited highspeed
Still Tmobile pricing plans are better. The only problem is coverage in some areas
As I understand it the carriers still pay Apple or whoever for the devices. Then THE CARRIER subsidize the cost for the consumer. So Apples bottom line would not be effected as they are still getting the $600 per device or whatever from the carrier. So in this new model people may slow down purchasing as often so in effect it would hurt the bottom line of the phone mfgs.
Giffgaff in the Uk recently started doing a similar thing. They started just doing cheap sim-only rolling contracts (piggybacking off O2) but now offer phones - either outright cost, or financed.
Sounds like a good idea - I'd rather own my device and choose the network than be locked in. So I have a Nexus 4 and do just that.
Sounds like a good idea - I'd rather own my device and choose the network than be locked in. So I have a Nexus 4 and do just that.
The sooner consumers are forced to buy a smartphone and know real pricing, the sooner they will realize iPhone's are overpriced. The amount they charge for more memory on them is ridiculous. How can Apple actually justify charging $849 for 64GB 5s?
they are really worth allot less than the price. these phones are high margin. Especially the ones with more ram.
See the revolting markup on the 64GB model, ouch.
http://www.zdnet.com/a-849-64gb-iphone-5s-only-costs-apple-218-to-build-7000021175/
Pointing to AT&T, it is ridiculous for him to say they can't afford to sell phones bundled with their plans. they probably found it more profitable to do it otherwise. and T-Mobile has been handily beating them for new consumers.
Also AT&T is back to monopoly status. with $32.3 Billion in revenues in 3rd quarter 2013 alone. Their wireless margin of profit runs 30-42% depending on the accounting method.
Yes, AT&T overcharges and is swimming in cash. Nuts.
http://www.att.com/gen/press-room?p...wsarticleid=37119&mapcode=corporate|financial
they are really worth allot less than the price. these phones are high margin. Especially the ones with more ram.
See the revolting markup on the 64GB model, ouch.
http://www.zdnet.com/a-849-64gb-iphone-5s-only-costs-apple-218-to-build-7000021175/
Pointing to AT&T, it is ridiculous for him to say they can't afford to sell phones bundled with their plans. they probably found it more profitable to do it otherwise. and T-Mobile has been handily beating them for new consumers.
Also AT&T is back to monopoly status. with $32.3 Billion in revenues in 3rd quarter 2013 alone. Their wireless margin of profit runs 30-42% depending on the accounting method.
Yes, AT&T overcharges and is swimming in cash. Nuts.
http://www.att.com/gen/press-room?p...wsarticleid=37119&mapcode=corporate|financial
Do you have any statistic for that, because latest number show that they have less than 10% share
This is only true if you replace your phones every two years. Even in this case it looks like you counted the remaining value of the phones after 2 years for scenario with subsidies but missed it for a new scheme (it's about $1200).
In addition, with new scheme if you do not upgrade your phones every two years your savings increase.
Airline industry is hurting and they are finding ways to bring more non-business passengers. The only time I fly is to visit my parents or for work. It's too expensive otherwise.
With the FAA approving devices, that helps somewhat but to pay $600 to travel 1200 miles within the US is just insane. Especially when it used to be 89-149 a few years ago. And I was traveling on bigger planes that were more comfortable then these tiny ones that hold maybe 30 people at most.
Good!
This is exceedingly good news. Subsidies have distorted the market and caused phone prices to be higher and rates to be higher. A couple of years ago I did a bit of research into several of the providers. Specifically I compared the cost of a "Subsidized" phone vs buying one outright and getting the same service Month to Month. What I found was that you are paying for the phone repeatedly, up to three times with one carrier if you kept the phone for more than three years. I decided then that buying a "subsidized" phone was a very stupid thing to do. The sooner the carriers drop that model the better it will be for consumers and the sooner rates in the US and Canada will drop to resemble those in the rest of the world.
Buy the phone you can afford and take care of it.
This is exceedingly good news. Subsidies have distorted the market and caused phone prices to be higher and rates to be higher. A couple of years ago I did a bit of research into several of the providers. Specifically I compared the cost of a "Subsidized" phone vs buying one outright and getting the same service Month to Month. What I found was that you are paying for the phone repeatedly, up to three times with one carrier if you kept the phone for more than three years. I decided then that buying a "subsidized" phone was a very stupid thing to do. The sooner the carriers drop that model the better it will be for consumers and the sooner rates in the US and Canada will drop to resemble those in the rest of the world.
Buy the phone you can afford and take care of it.
There is no eating of cost. No doubt AT&T Legal and Accounting spend thousands of man hours a year ensuring the cost of doing business is bundled into how the customer is billed.
My fear is this is a set up for Next only plans, where AT&T cuts the subsidy and forces everyone into pay inflated rates for service, and what would equate to full price for a device.
If the subsidy is cut, even if device cost is covered in one shot or over time, the rates for service plans need to drop $50 a month at least. Otherwise you are really paying like $1300 for an iPhone (device cost + cost intended to normally cover subsidy overhead).
And contracts would need to vanish as well. Like completely. No ETF. And since you are technically paying for the actual device, no more locked devices either.
exactly. its certainly getting there (i certainly hope its not at the expense of foreign workers) but apple needs to get with the times as well
AT&T already has a great plan for individuals who bring their own device. I pay $65 a month (including tax) for unlimited talk, text, and 2 GB of data. Each additional GB of data is $10, but that would only be an issue for those who spend a lot of time away from WiFi.
No contracts. Sure, I had to pay full retail for the phone, but I actually come out ahead considering I'm not paying an extra $70 per month for two years.
If you need a family plan though... Yeah, you're pretty much screwed.
No contracts. Sure, I had to pay full retail for the phone, but I actually come out ahead considering I'm not paying an extra $70 per month for two years.
If you need a family plan though... Yeah, you're pretty much screwed.
This is a wake up call for Tim Cook and his pricing model that's based on milking the US subsidies for all they're worth - the American cell-phone industry is a mess for consumers, inefficient and unsustainable. Time to think global, Apple.
This is good, phone makers will be forced to lower prices finally instead of marking them up because of a subsidy.