AT&T's CEO Stephenson indicates interest in handset financing

Discussion in 'iPhone' started by EbookReader, Jan 25, 2013.

  1. EbookReader, Jan 25, 2013
    Last edited: Jan 25, 2013

    EbookReader macrumors 65816

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    #1
    http://www.fiercewireless.com/story/atts-stephenson-indicates-interest-handset-financing/2013-01-25

    Stephenson made the comments Thursday on AT&T's fourth-quarter earnings conference call, and while he did not commit to any specific action or endorse any specific idea, his remarks indicate that AT&T is considering whether to follow its erstwhile acquisition target in changing how it sells phones.

    In discussing T-Mobile's proposed merger with MetroPCS (NYSE:pCS), he said, "we expect there to be some dynamics in the marketplace that--and we'll have to respond to some of it, we find interesting like the handset financing that they're doing."

    "That's something we've looked at on several occasions," Stephenson said, according to a Seeking Alpha transcript. "I kind of like the idea, commend them for trying it. It will be something we're going to [be] watching, how it is received in the market place. And in terms of other players, it's just--it's hard to say what the dynamic will be. But I think it will be just a little bit of open field running this year."

    Under T-Mobile's Value postpaid plans, which it is moving to exclusively in 2013, customers can pay the full cost of a device upfront in exchange for a lower monthly rate. Alternatively, customers can pay off the cost of their device in monthly installments over the course of 20 months. T-Mobile's move is a striking change for the industry, as all Tier 1 operators for many years have subsidized the cost of devices in exchange for customers agreeing to two-year contracts. Many handset makers have expressed support for T-Mobile's decision, which essentially uncouples the cost of devices from the cost of a rate plan.

    Other carriers have launched or are testing handset financing plans. Leap Wireless' (NASDAQ:LEAP) Cricket and MetroPCS (NYSE:pCS) both late last year launched handset financing options that will allow eligible customers to make a down payment on a smartphone and pay off the remainder in the future.

    Additionally, Sprint Nextel's (NYSE:S) prepaid brand Virgin Mobile and regional wireless carrier C Spire Wireless have been quietly testing handset financing programs. Both operators are using the startup BillFloat to support their pilot programs, which are ongoing but expected to end within the next few weeks.





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    For T-mobile, it's very simple.

    You pay $20 less each month on your contract if you get no subsidy. You also have the option to finance your phone purchase through 20 months installment.

    Before anyone come in and say "AT&T will make you pay the full cost and keep the same rate," I would say

    that would make AT&T $20 a month more expensive than it is now. AT&T would lose customers to Verizon, Sprint, T-Mobile.

    Basically, if AT&T feel it could be $20 more expensive TODAY, it would have already done it. If AT&T could get $20 extra each month from its 100 million subscribers, that would equate to an extra $12 billion in profits each year.

    It hasn't done it because AT&T subscribers would deflect.

    Likewise, AT&T won't make you pay the full price and keep the same rate. If AT&T goes the financing option, it will lower the monthly rate by around $20 like T-mobile is doing.
     
  2. Dwalls90 macrumors 601

    Dwalls90

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    #2
    I feel like that statement was released at least a few weeks ago.

    It's just typical CEO politics: "We will sit back and let them take the risks and modify our approach if it works for them"
     
  3. CEmajr macrumors 601

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    #3
    It works as long as they are willing to lower the monthly rate plan by $20. T-Mobile has been doing this for almost a year now and 80% of their customers are choosing the Value plan over the subsidized Classic plans.
     
  4. EbookReader thread starter macrumors 65816

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    http://news.cnet.com/8301-1035_3-57565740-94/at-t-ceo-says-he-likes-concept-of-handset-financing/
    AT&T CEO says he likes concept of handset financing


    A poster already commented that AT&T customers won't get a discount even with no subsidy.


    If AT&T could get away with charging more money, it would already done so right now by raising its rate by $20 per customer. No need to wait until "no subsidy" kick in. Even $10 price increase = $6 billion extra in profits each year.

    Of course, if AT&T has no competition, it could raise the price and everyone will pay up because there is no other choice.

    Even though the competition is weak, there is still competition. Some customers would leave if their rate increase by $20 a month. Why stay with AT&T ($100 that is increased to $120 a month) when T-Mobile (the competition) is only $70 a month?
     
  5. Wicked1, Jan 25, 2013
    Last edited: Jan 25, 2013

    Wicked1 macrumors 68040

    Wicked1

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    #5
    Ok, AT&T if you do this, fine by me, but lower my plan and costs and provide me an Unlocked Phone, I will be less likely to upgrade often and maybe upgrade like every 2-3 years then. It has to be worth it for me by the way of a much lower monthly cost though.

    One problem I see for me, is I like AT&T, it works well, so I would not switch to T-Mobile bc it is cheaper but there service is much worse.

    I would rather pay a bit more for good service voice and data, then save and always worry about speeds and if I have service.
     
  6. barkomatic macrumors 68040

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    #6
    If AT&T lowers my monthly bill by about $20 and does away with contracts and locked phones then I will welcome the change. I'll consider paying full retail worth it.

    I guess I'm just a little more skeptical then you OP over how it will actually play out. However, let's wait and see. I feel like its pretty much a done deal that carrier subsidies will end and I think when my contract expires I'll be paying 1K for my next smartphone.
     
  7. Mrbobb macrumors 601

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    #7
    With more Pre-paid competitors getting into the game, ATT wants to get ahead of the game.
     
  8. Applejuiced macrumors Westmere

    Applejuiced

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    #8
    I like this move by Tmobile. This will shake up the big 2 carriers a little.
    Giving more and better options to customers is always good.
     
  9. EbookReader thread starter macrumors 65816

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    If AT&T does this, there is a good chance that Verizon will too.

    The two goes step in step.
     
  10. BHP41 macrumors 6502a

    BHP41

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    #10
    If subsidies go away the right thing is for plan rates to drop. But we all know how greedy AT&T and VERIZON are. It won't happen.

    How do they plan on keeping customers with no contract. You can't expect me to be locked into a service contract without giving me something in return. That's what the phone subsidies are for.
     
  11. EbookReader thread starter macrumors 65816

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    #11
    How do you know it won't happen?

    If T-mobile is successful, they will be forced to compete.

    It won't look good if T-Mobile offer 4 lines for $100 while AT&T offer 4 lines for $200. Some people might be tempted to switch and save. Isn't that how free market is suppose to work? Competition keeps the price low for consumers?


    T-Mobile new Family Plan

    Line 1: unlimited talk, unlimited text and 500MB of data
    Line 2: unlimited talk, unlimited text and 500MB of data.
    Line 3: unlimited talk, unlimited text and 500MB of data
    Line 4: unlimited talk, unlimited text and 500MB of data

    $80 for line 1 and line 2 + $10 for 3rd line + $10 for 4th line = $100 for 4 lines.
     
  12. BHP41 macrumors 6502a

    BHP41

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    #12
    Do the math on something a little more realistic. 500MB is a joke, if it was 2GB per line then they would have a chance at changing the market.
     
  13. osofast240sx macrumors 68030

    osofast240sx

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    #13
    2Gb is $140, still $60 cheaper.
    Unlimited is $180 what would AT&T charge for 4 lines unlimited data?
     
  14. lordofthereef macrumors G4

    lordofthereef

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    #14
    That depends. There are a ton of people that view the data plan as simply the cost to own an iPhone and actually use very little, if any, data at all. The 500mb plan isn't meant for people who are really into getting their information on the go. It is meant for those always on wifi people who occasionally check email and such. And there are plenty of those people out there too.
     
  15. Menel macrumors 603

    Menel

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    #15
    500MB at 4G speed.
    Unlimited when capped after that.

    That's very adequate for the majority of users.

    Even power users, who have wifi at home, at work, at friend's homes, many stores and cafes. Most coworkers, engineers and nerds, do 100-200, I'm the outlier hitting 4-500 regularly.
     
  16. lordofthereef macrumors G4

    lordofthereef

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    #16
    Well, their current "unlimited" plan is $30/mo, but it is no longer available to new users. So, $30 plus whatever voice minutes are. On a family line, that is pretty comparable to what you just quoted (I'd say around $210-ish), but again, it isn't something they currently even offer, so it's hard to say what they would charge.

    What a lot of people overlook is that one cannot really compare the two networks side by side. Not REALLY. Sure, if you live in an area with great reception and you rarely move out of that reception area, this is great. Is that the majority of people? I don't know. A lot of the gripes about TMO reception that I had is that it would be great in some parts of the city, but crap out as soon as you go out to the fringes of said city.

    ----------

    I think we have reached a point where a lot of people are relying more on wifi than their mobile data plans. My mother is one such person; she is constantly using 100mb or fewer on her line, and only because she will get an email (which she doesn't necessarily care to read right when it comes through) or some such other alert pushed to her phone while out and about. I would LOVE to see a plan where one is not forced into using a data plan with an iPhone. AFAIK, in the states, the only way to achieve this is with a pre-paid line.
     
  17. osofast240sx macrumors 68030

    osofast240sx

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    #17
    Tmobile service is a lot better now night and day better. Plus we get to roam on AT&T service for free for the next 7 years( terms of the failed acquisition )
     
  18. BHP41 macrumors 6502a

    BHP41

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    #18
    Not sure what AT&T would be. You need to add the cost of the iPhone in at $20/month for each line.

    I'll agree with that. For them this is a great plan.

    It was much easier to stay in that range when it was just 3G. With LTE and "4G" it's much harder. Power users, I would say they have had a hard time of staying under 1GB for a while now.
     
  19. lordofthereef macrumors G4

    lordofthereef

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    #19
    So does this include data? I ask, because when you look at TMO new terms (for their new plans) it states unlimited data while on TMO network.
     
  20. osofast240sx macrumors 68030

    osofast240sx

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    #20
    It includes edge and 3G at 850mhz
     
  21. lordofthereef macrumors G4

    lordofthereef

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    #21
    So why is it specified in their terms that its only on tmobile network? Do you have this in writing somewhere? I'm actually thinking of grabbing a tmo sim and checking out the service in my area. If what you're saying is correct, I should get 3G, at minimum, everywhere.
     
  22. osofast240sx macrumors 68030

    osofast240sx

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    #22
    Yep
     

    Attached Files:

  23. lordofthereef macrumors G4

    lordofthereef

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    #23
    Awesome. Thanks!
     

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