Abazigal
Contributor
Exactly. Unless a significant number of their customers are running away with their phones and defaulting on their monthly payments, they should eventually be turning a profit!
AT&T CEO: Carriers Can't Afford Big Subsidies for Devices Any Longer
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Exactly. Unless a significant number of their customers are running away with their phones and defaulting on their monthly payments, they should eventually be turning a profit!
osofast240sx
macrumors 68030
apple makes premium high end products, Google makes midrange stuff!
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garylapointe
macrumors 68000
I agree, that's going to hurt them WAY more, than help.
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rsocal
macrumors 6502a
You Pay either way
I like that I can won't be locked into 2yr contract and I get a new iPhone each year anyways.
So it just forces me to do it up front and I don't mind that especially when my bill goes down. I currently have 5 iPhone 5s's, any break in my monthly payment would be awesome!
I like that I can won't be locked into 2yr contract and I get a new iPhone each year anyways.
So it just forces me to do it up front and I don't mind that especially when my bill goes down. I currently have 5 iPhone 5s's, any break in my monthly payment would be awesome!
LordVic
Cancelled
I dont get it either.
Right now, the Carrier that carries the latest greatest phones, and gets them into the users hands the cheapest tend to do well.
If I'm forced to buy a phone up front at full payment value... I'm going to buy my phone unlocked and go month to month. There's little reason to get locked into 2 year contract if the TelCo isn't offering some significant incentive to do so!
Locking into a 2 or 3 year contract just cause it's there is silly today when they're changing prices on services almost monthly!
I think ATT is just trying to bully better deals from Apple and Samsung.
MacSince1990
macrumors 65816
Don't be silly. 3.7 billion of that goes to the CEO and his mistress. They need to be able to pay their employees, don't they?
I assume US carriers don't restrict device upgrade cycles like they do here. In which case, considering the frantic pace Apple updates its iPhones, one would have to shell out $50 to its carrier for the subsidy if he wants to upgrade each year, add a plan where the carrier could make a profit.
jasonbogen
macrumors member
Worst part is that they got rid of the data volume discount. For example, I have 5 phones on my plan at 10gb, so I pay $30/mo for each line. With the new plan it costs $40/mo no matter how many gb you have in your plan so for me that $15 discount is actually a $5 discount. Thanks a lot!
Given that, if I were to upgrade to a 5s 64gb, the cost with the 2yr contract would be $400 up front, $40/mo for the first 24 months then $25 if I were to go on the BYOP plan after that. If I were to do the Next 18 plan to upgrade to the same phone it would cost $57.69/mo for the phone and line charge for 26 months. Total for each, $1410 w/2year Contract, $1500 w/Next plan. Basically depends on whether or not you want a big up front cost, smaller monthly and smaller overall or have no up front cost, but larger monthly and overall cost.
That being said, with the plan I was just on, it would have cost the same $400 up front, but I was paying $30/month so the cost for me was $1180. Yep...those 2 years just cost me at least $230 more.
THANKS FOR NOTHING.
the subsidy was worth it when a lot of people didn't have cell phones or smartphones to get them to buy a phone
now that everyone has a phone, why subsidize new ones when people will still pay for your services?
apple and samsung will be the biggest losers here since phone prices will get hit by deflation like PC's a decade ago
AppleScruff1
macrumors G4
I think you bring up a good point. If all the US carriers stopped subsidizing phones, people aren't going to suddenly stop using cell phones. Many will be more prudent with how much they spend when they actually have to buy the phone outright. Now imagine if there was no carrier offered or interest free financing. Sales of high end phones would undoubtedly drop. By how much, that would be the key to how much Samsung and Apple got hurt by this.
i was in italy in the late 90's and the top end phones were also in the $600 to $700 range. people still bought them, but only because most people didn't have cell phones then. now that almost everyone has a phone, no reason to upgrade since there is not much difference every year
i have an iphone 5 and a S3 i carry daily and i'm thinking that both of them will be OK 3-5 years after the original release. very little out there except some games that you need the latest phone for
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which is why i'm going to t-mo in a year. i have a 4 line plan on AT&T and we use 3GB or so per month combined. i have an S3 from work and my wife just traded her BB for a 5C at work so the data usage will drop too. wifi everywhere. tired of paying $250 per month. at this point i'm starting to value home internet and cable TV more than cellular service
i have an iphone 5 and a S3 i carry daily and i'm thinking that both of them will be OK 3-5 years after the original release. very little out there except some games that you need the latest phone for
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which is why i'm going to t-mo in a year. i have a 4 line plan on AT&T and we use 3GB or so per month combined. i have an S3 from work and my wife just traded her BB for a 5C at work so the data usage will drop too. wifi everywhere. tired of paying $250 per month. at this point i'm starting to value home internet and cable TV more than cellular service
I agree that for the time being, phone innovation has slowed a bit.
Don't really see a need to upgrade every year.
I too am considering abandoning AT&T and moving to T-mobile.
Their new family plans are priced very reasonably however I have 2 concerns.
1. T-Mobile Coverage in the So Cal area and most major cities.
2. Loosing my AT&T unlimited data plan.
Thoughts?
Don't really see a need to upgrade every year.
I too am considering abandoning AT&T and moving to T-mobile.
Their new family plans are priced very reasonably however I have 2 concerns.
1. T-Mobile Coverage in the So Cal area and most major cities.
2. Loosing my AT&T unlimited data plan.
Thoughts?
I agree phone innovations isn't happening lately. I don't see much argument to get the latest phone. I still see alot of iPhone 4/4S around. The only main difference is the slightly larger screen and the touch ID. Those upgrades are rather trivial if you think about it; fun upgrades but not critical. iPhone 4/4S are still fast enough for most everyday tasks. The iPhone 5/5S is a nice upgrade, but it's nothing compelling.
Tmobile in my area is good, I get good 4G LTE coverage at home. I don't have a cell phone service with them but I use their free 200MB/month on my ipad. For their phone data, Tmobile gives you unlimited data. You pay for the initial alotment (first 500MB, etc.) at the 4G LTE speed. After that, you can still get all the unlimited data, but it's slower. For basic use, texting, browsing, GPS, etc., you won't notice the slowdown. If you don't stream alot of videos, you won't even really care.
http://www.t-mobile.com/cell-phone-plans/individual.html#lshop_plans_1
The iPhone 5 was my last iphone. I canceled it for a prepaid tracfone. It costs less than $9/month ($99 a year). Ever since I own my first iPad (1) and now the iPad Air, I found myself using the iPhone less and less, and only for phone calls. I prefer the bigger iPad screen. When I'm out or on vacation, I prefer to put the phone away. I hate it when "friends" (acquaintances) keeps staring at their phone every 30 seconds as if they are dying for that next text message. Less drama, less BS, more money in my wallet, enjoy life. Would I like to have an iPhone again? Sure, but I'm not willing to pay 10x the price I'm paying now just to maintain a phone. That's my personal preference though.
Tmobile in my area is good, I get good 4G LTE coverage at home. I don't have a cell phone service with them but I use their free 200MB/month on my ipad. For their phone data, Tmobile gives you unlimited data. You pay for the initial alotment (first 500MB, etc.) at the 4G LTE speed. After that, you can still get all the unlimited data, but it's slower. For basic use, texting, browsing, GPS, etc., you won't notice the slowdown. If you don't stream alot of videos, you won't even really care.
http://www.t-mobile.com/cell-phone-plans/individual.html#lshop_plans_1
The iPhone 5 was my last iphone. I canceled it for a prepaid tracfone. It costs less than $9/month ($99 a year). Ever since I own my first iPad (1) and now the iPad Air, I found myself using the iPhone less and less, and only for phone calls. I prefer the bigger iPad screen. When I'm out or on vacation, I prefer to put the phone away. I hate it when "friends" (acquaintances) keeps staring at their phone every 30 seconds as if they are dying for that next text message. Less drama, less BS, more money in my wallet, enjoy life. Would I like to have an iPhone again? Sure, but I'm not willing to pay 10x the price I'm paying now just to maintain a phone. That's my personal preference though.
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iphoneclassic
macrumors 6502
It is perfectly fine carrier not being able to offer subsidies. Now it is time for manufacturers to cut their profit margins from 70% to may be 25%.
Once contract model is out the window mfgs. loose the high volume orders from carriers and forced to compete in retail market.
Once contract model is out the window mfgs. loose the high volume orders from carriers and forced to compete in retail market.
LordVic
Cancelled
its a modern problem in today's corporate culture where the only defining way of being succesful is having an executive board that rakes in more personal income than the next company.
Even making millions at the executive level isnt' enough anymore. Corporations are looking for any cost cutting measures at the bottom in which to further maximize the gross profits into the shareholders hands.
This is unfortunately happening because of a few things over the last... 20 or so years.
in the 90's. We saw unprecendented growth in virtually every modern sector. Boomers were still the majority of the spending population and were still fully working. Fast Forward 20 years to the modern era. the boomers are dieing, Retiring and generally no longer being the prime focus of business needs.
However, Corporation got into the mindset that every year must be record profit and every year, executives need more.
With the shrinking purchasing power of retiring boomers, and a smaller population of Gen X and Gen Y. the Overall purchasing should have started to flatline. Record growth slow and come to a stop. Less people purchasing should mean less overall revenues (or at least a stop to the insane rampant growth everyone was experiencing in the 90s).
However, Corporate greed never abated. Those CEO's and Executives and boards of Directors still want to maintain increase to profits year after year.
So how do they do that? in many cases, Cost cutting.
But of course, they could never cut their multi million dollar salaries. So they cut every where else. Lower incomes for the employees. Less bonuses and benefits to the staff. Less discounts and incentives to the customer.
Long gone are the days of walking into a tech store for example and bargaining the price of something down. these days it's MSRP or minimal standardized discounts. its Billion dollar profitable companies scaling back offers. Apple is a perfect example of everything I've mentioned for example.
So while ATT could likely continue to offer discounts and subsidies on their devices, since the cost to cover those are included in your monthly bills, They probably hit some other wall, where profits weren't increasing fast enough. So, Cut out the subsidies, keep your monthly fees the same... More pure profit into the share holderes and board of directors pockets....
Unfortunately, this is a terrible way of operating business and does more harm to the economy overall than help. The Economy only works when money is being spread around, and being spent. Not hoarded by a few. the 99% aren't wrong. This reeks of corporate greed and too few people trying to hold onto too much money. as I've always said. the economy would fair better having 100 people by $20,000 cars, than 1 person buying a 2 Million dollar car.
I know, when I see corporations that treat their employees like garbage. and their customers even worse so that all the profits can be hoarded... I tend to avoid these companies like a plague and opt to give my money to places that treat everyone in the company as equals..
blackhand1001
macrumors 68030
Apple will suffer the most from this. Iphones don't sell nearly as well in countries that don't subsidize devices.
On a good note, maybe this will finally make apple consider more reasonable unsubsidized prices for their phones.
On a good note, maybe this will finally make apple consider more reasonable unsubsidized prices for their phones.
JackieInCo
Suspended
Just try it and see. i bought a T-Mobile 5S a few weeks ago mostly due to the fact that only T-Mobile seems to be able to get me LTE at my house.
I have been extremely pleased with the LTE coverage in my area and there is only one small area where I get edge. 90% of the area that I am in daily has LTE.
I have the $70 postpaid unlimited plan and unlike AT&T, it is truly unlimited. In the past on other phones, I have used on average, 26GB per month and they do not throttle for double or even triple that usage.
I also singed up for the deal where I can get a new phone twice a year. I do plan on paying off my iPhone in the next month or two so that I own the phone and can unlock it.
vartanarsen
macrumors 6502a
Can't BYOD?
I checked online, it won't allow you to bring your phone..
I checked online, it won't allow you to bring your phone..
kdarling
macrumors P6
Look at their cash on hand. They're not stashing away those billions.
Carrier profits go back to their shareholders and into updating their networks.
Also, we have to consider how many customers are involved. Together, the profits sound huge.
But when you break it down per customer, it's not. I once calculated that Verizon and AT&T were making about $3.90 in wireless data profit every week from each customer. That's very little money per customer to pay back subsidies.
The carriers have to pay cash upfront for the phones, and AT&T said it takes an average 20 months for a customer to repay the rest.
When the iPhone 5 came out, it was estimated that US carriers alone would have to carry $10 billion in subsidies, and that it would affect their profits for the next half year.
This profit hit drags down their stock value, and that costs them even more.
The iPhone is the worst offender. Sprint's CEO said that it cost them 40% more in subsidies than the average smartphone. The big carriers would like nothing more than to drop Apple subsidies like a hot rock. The trouble is, they'd all probably have to do it at the same time.
AppleScruff1
macrumors G4
And that is the key point in bold. If that actually happened, it would hurt Apple's US sales quite a bit.
That's a great idea. I will get a sim and see if T-Mo coverage is good in my area.
I gotta wait till 2015 for my contract to end though as I had a few upgrades this year.
I got a question about subsidiaries and inventory. Let's say AT&T bought the iPhone5s at $600 instead of $650 you and I would have to pay and next year when the new iphone comes out. Does AT&T sell back their unused iPhone inventory to Apple at a lost or just hold on to the inventory?
I can see why a company would want to get rid of subsidizing a phone as they have to physical tie up capitia
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scapegoat81
macrumors 6502a
Wow well put my friend