Benefits for customers with the elimination of phone subsidies

EbookReader

macrumors 65816
Original poster
Apr 3, 2012
1,190
1
http://www.fiercewireless.com/story/long-term-effects-atts-next-verizons-edge-are-still-not-clear/2014-04-24

Handset upgrade programs--including T-Mobile US' Jump, AT&T Mobility's Next, Verizon Wireless' Edge and Sprint's Easy Pay--mostly benefit customers who really want to upgrade often to newer devices. However, they also benefit customers who want to keep their devices after two years, or customers who have paid off the full cost of their devices. That's because, in most cases, customers who stay on no-contract plans will see a permanent drop in their totally monthly service bill once their device has been fully paid off and they are no longer making monthly payments for their phones.



AK wrote this:

Elimination of subsidies has another benefit for consumers that has not been mentioned: pricing awareness. With subsidies removed, consumers now have an incentive to shop around for better deals instead of buying directly from their carrier, or large retailers (that are essentially just an extension of the carrier).

Examples of buying direct: Google Nexus 5 ($349), Moto X ($399), One Plus One ($299 to be released tomorrow).

Other retailers offer significant savings. HSN has been selling the Nokia Lumia 925 for $199 for a few weeks now. It is over $400 if purchased from T-Mobile and over $500 if purchased from the Microsoft Store.

Amazon and eBay is yet another option for consumers to save by buying used phones and also selling their old phones for better pricing than with trade-in offers.


1) those upgrade to newer devices
2) those who don't upgrade to newer devices after 2 years
3) shop around for the best price online
4) phone prices will decrease overtime (Apple might lower iphone prices in order to retain market share. Good news for iphone buyers.)
 

I7guy

macrumors Core
Nov 30, 2013
20,458
8,286
Gotta be in it to win it
I never saw car prices go down and I don't expect apple will lower their iPhone prices. Plus I doubt verizon will get rid of subsidies. You'll just pay in a different way.
 

EbookReader

macrumors 65816
Original poster
Apr 3, 2012
1,190
1
I never saw car prices go down and I don't expect apple will lower their iPhone prices. Plus I doubt verizon will get rid of subsidies. You'll just pay in a different way.
Apple might not lower iphone prices but other smartphone prices will go down. Apple might have to response.


Look at the prices of computers, HDTV, digital camera overtime.

Expensive at first but prices went down overtime.



AT&T, Verizon and Sprint won't likely get rid of subsidies anytime soon. They will offer both monthly installments and subsidies to customers.

T-Mobile won't likely go back to subsidies though.
 

maflynn

Moderator
Staff member
May 3, 2009
63,856
30,379
Boston
Overall I think choices and competition are good for the consumer. VZW is in reaction mode and T-Mo and ATT are pushing hard with the incentives. Not every plan fits all the consumers. Some like the subsidies, because they only upgrade every other year anyways and would rather pay 199 for a phone and use that. My wife is a great example of this.

For me, the Edge program for VZW is nice because I can trade in a phone and play with something new. I'm rocking with a Lumia right now, and once the iPhone 6 hits the streets I can trade that bad boy in and get that.

I'm looking forward to seeing how this plays out and hopefully it will mean a lower cost for us consumers.
 

I7guy

macrumors Core
Nov 30, 2013
20,458
8,286
Gotta be in it to win it
Apple might not lower iphone prices but other smartphone prices will go down. Apple might have to response.


Look at the prices of computers, HDTV, digital camera overtime.

Expensive at first but prices went down overtime.
All of the above, except digital cameras, have become somewhat commoditized. Efficiencies in manufacufacturing has contributed to lower prices. Digital cameras don't count because premium products like hassalblad(apple) cameras haven't gone down in price.

When in people's eyes apple becomes somewhat of a commodity manufacturer it will go down in price, but then so will the value of the company.

If and when the above occurs I don't know. Maybe people can read tea leaves for the answer.
 

rui no onna

macrumors 604
Oct 25, 2013
6,799
3,089
All of the above, except digital cameras, have become somewhat commoditized. Efficiencies in manufacufacturing has contributed to lower prices. Digital cameras don't count because premium products like hassalblad(apple) cameras haven't gone down in price.

When in people's eyes apple becomes somewhat of a commodity manufacturer it will go down in price, but then so will the value of the company.

If and when the above occurs I don't know. Maybe people can read tea leaves for the answer.
While Apple may be premium, it's not quite that premium. Just look at the existence of the Mac Mini and iPad mini. Besides, how many Apple iPhone owners got one because the price was just $199?
 

EbookReader

macrumors 65816
Original poster
Apr 3, 2012
1,190
1
With the elimination of subsidies, phones like this will have a fighting chance of succeeding



$299 for the 16GB unlocked/off-contract
$349 for the 64GB unlocked/off-contract

- 5.5" JDI 1080p display
- Snapdragon 801 (MSM8974AC - Quad-core at 2.5GHz)
- 3100+mAh battery (non-removable)
- Sony Exmor IMX214 6-Lens 13MP camera
- 5MP Front-Facing camera
- 3GB of RAM
- 16GB & 64GB Variants
- Stereo Speakers
- StyleSwap Covers - Multiple materials/textures
- Single-SIM card
- Global LTE
- GSM Only


It puts the highly rated Nexus 5 to shame.

Competition is always good for consumers who shop around.
 

I7guy

macrumors Core
Nov 30, 2013
20,458
8,286
Gotta be in it to win it
I don't see how that statement holds water. Verizon still doesn't have a proper BYOP unless it's Verizon certified.

AT this point I wouldn't buy it(android) anyway, no matter what the specs.
 

KUguardgrl13

macrumors 68020
May 16, 2013
2,485
109
Kansas, USA
I don't see how that statement holds water. Verizon still doesn't have a proper BYOP unless it's Verizon certified.

AT this point I wouldn't buy it(android) anyway, no matter what the specs.
Verizon does have BYOD discounts equal to AT&T. The issue is that they won't activate phones that weren't Verizon originally. I can somewhat understand it since we still don't have universal all-in-one GSM and CDMA phones. The 5c/5s is getting closer. A phone from a non-VZW network doesn't have the CDMA bands to fall back on. The Verizon network has no GSM bands except for LTE which can't support voice yet. VoLTE should fix this in the future and allow for any phone to be used on any carrier.

Personally I'm waiting to see if Big Red will discount lines that have expired contracts. This makes subsidies equal to payment plans. You just wouldn't be able to upgrade or leave the carrier without paying which you have to do with a payment plan anyway. T-Mobile doesn't just let you walk away without paying for the phone. They can make their money with data overages.
 

C DM

macrumors Sandy Bridge
Oct 17, 2011
47,538
16,044
Verizon does have BYOD discounts equal to AT&T. The issue is that they won't activate phones that weren't Verizon originally. I can somewhat understand it since we still don't have universal all-in-one GSM and CDMA phones. The 5c/5s is getting closer. A phone from a non-VZW network doesn't have the CDMA bands to fall back on. The Verizon network has no GSM bands except for LTE which can't support voice yet. VoLTE should fix this in the future and allow for any phone to be used on any carrier.

Personally I'm waiting to see if Big Red will discount lines that have expired contracts. This makes subsidies equal to payment plans. You just wouldn't be able to upgrade or leave the carrier without paying which you have to do with a payment plan anyway. T-Mobile doesn't just let you walk away without paying for the phone. They can make their money with data overages.
The 5C/5S are actually the universal all in one phones you are taking about--the AT&T or T-Mobile versions are the same as Verizon versions, the main difference is that Verizon still won't activate them despite the fact they are the same model and have the same hardware.
 

KUguardgrl13

macrumors 68020
May 16, 2013
2,485
109
Kansas, USA
The 5C/5S are actually the universal all in one phones you are taking about--the AT&T or T-Mobile versions are the same as Verizon versions, the main difference is that Verizon still won't activate them despite the fact they are the same model and have the same hardware.
Just an example of corporate policies not keeping up with technology. They'll probably continue to use the CDMA excuse until someone calls them out on it.

I'd like to see Big Red make some changes to keep up with the times, but they've treated my family well for probably almost 15 years. I have no reason to consider another carrier unless my parents decide I can pay for my own plan. Then it will either be convincing them to let me pay for my line or going to T-Mobile with my bf.
 

I7guy

macrumors Core
Nov 30, 2013
20,458
8,286
Gotta be in it to win it
Verizon does have BYOD discounts equal to AT&T. The issue is that they won't activate phones that weren't Verizon originally. I can somewhat understand it since we still don't have universal all-in-one GSM and CDMA phones. The 5c/5s is getting closer. A phone from a non-VZW network doesn't have the CDMA bands to fall back on. The Verizon network has no GSM bands except for LTE which can't support voice yet. VoLTE should fix this in the future and allow for any phone to be used on any carrier.

Personally I'm waiting to see if Big Red will discount lines that have expired contracts. This makes subsidies equal to payment plans. You just wouldn't be able to upgrade or leave the carrier without paying which you have to do with a payment plan anyway. T-Mobile doesn't just let you walk away without paying for the phone. They can make their money with data overages.
If your expired contracts are on unlimited data lines, my guess is the answer is no.
 

KUguardgrl13

macrumors 68020
May 16, 2013
2,485
109
Kansas, USA
If your expired contracts are on unlimited data lines, my guess is the answer is no.
Nope. More Everything with 6gb of data. One dumb phone off contract now, two iPhones expiring within the next year, and one iPhone with a year and a half left. Also an iPad 4th gen, but that's $10 regardless.
 

alphaod

macrumors Core
Feb 9, 2008
22,047
1,105
NYC
Well I haven't been on contract for ages, so the with the new plans, my monthly spend has been quietly dropping bit by bit. Overall very good.
 

zorinlynx

macrumors 603
May 31, 2007
5,549
6,514
Florida, USA
Just an example of corporate policies not keeping up with technology. They'll probably continue to use the CDMA excuse until someone calls them out on it.

I'd like to see Big Red make some changes to keep up with the times, but they've treated my family well for probably almost 15 years. I have no reason to consider another carrier unless my parents decide I can pay for my own plan. Then it will either be convincing them to let me pay for my line or going to T-Mobile with my bf.
I bet Verizon is missing out on a lot of potential customers: People who have existing devices and are deciding on a new carrier.

Right now, with my unlocked iPhone 5 I can switch from AT&T to T-Mobile or one of the pre-paid carriers. Verizon isn't an option for me because they won't activate my phone.

So yeah, dumb policy. You'd think they would want all the customers they could get.
 

maflynn

Moderator
Staff member
May 3, 2009
63,856
30,379
Boston
I bet Verizon is missing out on a lot of potential customers: People who have existing devices and are deciding on a new carrier.
VZW's latest numbers are bearing that out. They lost customers last quarter, so clearly ATT and T-Mo's marketing approach is striking a chord with consumers.
 

EbookReader

macrumors 65816
Original poster
Apr 3, 2012
1,190
1
VZW's latest numbers are bearing that out. They lost customers last quarter, so clearly ATT and T-Mo's marketing approach is striking a chord with consumers.
And Verizon reluctantly dropped its prices to match AT&T.

$160 for 4 lines for unlimited talk, text and 10GB of shared data.

AT&T did this in February. Verizon saw that its customers switched more than it expected and matched AT&T pricing in late April.
 

aneftp

macrumors 601
Jul 28, 2007
4,247
463
Most people in the USA don't understand the real reason subsidies are being eliminated. I see it (because I am a techie but also a verizon and att shareholder). So I follow both companies very closely.

The issue is family plans and subsidies. That's the real issue. In other parts of the world there are no such true savings as in the USA with family plans. In the USA upwards to 60% of customers are part of family plans.

Why is this significant? In the past the carriers liked to brag about the number of subscribers they had. But the real growth was the addition of the $9.99 extra line that really didn't generate much profit. This was fine during the old days when most people purchased cheaper flip phones on contract.

But since Apple changed the game by forcing att to sell iPhones at $199 subsidy price (and other carriers following with the magic $199 with other android and windows phones). It's put a significant pain on carriers bottom lines especially with family plans.

You see line 1 generates by far the most revenue. That's why in Europe where there are no true family plans you often see "free" top of the line iphone with contract which never happens in the USA.

The USA pricing model really rips off the user with only one line. That's why family lines because more attractive.

So carriers got caught with their pants done. They have to give the same $400-450 subsidy per line to lines 2-5 as they did for line 1. This killed their profit.
 

forcetactic

macrumors 6502
Jul 30, 2010
467
0
Next, Jump, and Edge are all way too overpriced. The only thing it offers is convenience in comparison to selling the phone and buying a new phone yourself outright. You're paying up to $200 more a year for convenience if you do yearly upgrades.

Also the prepaid market has gotten so competitive that it is cheaper than anything postpaid has to offer. The only reason I can think of staying postpaid is if you need/have truly unlimited data.

For example, cricket with 5 lines with unlimited talk/text/data 500MB fast is $22 per line with all fees included. With 2.5gb fast data, it's $32 per line.

T-mobile postpaid is pretty competitive with unlimited talk/text/data 1gb at $22 but not including fees/taxes.
 
Last edited:

rui no onna

macrumors 604
Oct 25, 2013
6,799
3,089
Next, Jump, and Edge are all way too overpriced. The only thing it offers is convenience in comparison to selling the phone and buying a new phone yourself outright. You're paying up to $200 more a year for convenience if you do yearly upgrades.
I fail to see how the Next, Jump or Edge programs are more expensive if you plan on keeping your phone for two years. Keep in mind, trading in the phone is optional under all three programs. If you want to sell the phone at month 12 via CL, ebay, etc and use the proceeds of the sale to buy a new device full price or pay off your remaining balance, then that's entirely up to you. An iPhone 5S 16GB bought under Next, Jump or Edge will cost you the same $650 as it would've done if you bought it full price from Apple. Next, Jump and Edge are basically just 0% interest loans with no down payment.

Also the prepaid market has gotten so competitive that it is cheaper than anything postpaid has to offer. The only reason I can think of staying postpaid is if you need/have truly unlimited data.

For example, cricket with 5 lines with unlimited talk/text/data 500MB fast is $22 per line with all fees included. With 2.5gb fast data, it's $32 per line.
I've looked into prepaid but with our usage, I've always found them to be the same or even more expensive than what I was paying AT&T. Tethering support is also a big requirement for me and at least when I looked before, the prepaid plans explicitly prohibit tethering. I don't really need unlimited data but I reckon I require more data than average.

We're currently on AT&T's Mobile Share Value 10GB plan so that's $160 for 4 lines or $40 per line.

Given the following monthly usage, how much would it cost on Cricket?

Line 1: ~4-5 GB (tethering required)
Line 2: ~2 GB
Line 3: ~1 GB
Line 4: ~100 MB