How much do carriers really "subsidize" each phone on contract

Discussion in 'Alternatives to iOS and iOS Devices' started by aneftp, Aug 26, 2013.

  1. aneftp macrumors 601

    Jul 28, 2007
    The only article I've ever seen is when Sprint CEO flat out admitted that Sprint subsidizes the iPhone 40% more than any other phone they carry.

    Considering the MSRP of the iPhone is $650 for the iPhone 4S (at the time of the article). And the MSRP for the Galaxy S2/3 (at the time of the article was around $550). And we all know carriers don't pay "full msrp" for phones purchased in bulk.

    My best guess is Sprint or any other USA carriers probably pays close to $600 per base iphone 5 these days. And Sprint probably gets a significant discount from Samsung and other manufactures over MSRP. I don't think Sprint is paying Samsung no more than $450-500 for their flagship S4 these days.

    What's everyone's take on this matter.

    The reason I wanted to post on this matter is I believe carriers are trying to decrease the subsidy model indirectly. The iPhone was such a game changer in 2008 because it forced the base $199 contract pricing. Before that carriers would routinely charge $299-399 on 2 year contract for smartphones.

    Now USA post paid carriers have their pants down and trying to raise prices in directly by stealthy trying to increase profit by lowering the subsidy (forcing users to wait 24 months instead of 18-21 months).

    I also believe Google/Motorola is giving significant discounts to the carriers over the $579 MSRP price of the Moto X. While carriers will never admit how much they actually pay for these phones. It is my belief all 4 major carriers are not paying more than $450 for the Moto X in bulk. In turn the carriers are trying to sell the Moto X for $199 plus ridiculous $30-36 upgrade/new activation fees.

    This is the carriers way of reducing subsidies. So in reality they probably aren't subsidizing the Moto X more than $200 on 2 year contract.

    And for those who say go prepaid etc. Most people in the USA are on family plans and or have significant corp discounts. Something like 60% of Americans are on family plans on post paid carriers and those family plans average about $50-55 per smartphone line. So most people who have 4-5 lines in the USA really aren't paying more than their prepaid counterparts.

    It's was the carriers strategy in the race to 100 million "subscribers" during the mid 2000-2010 era by promoting family plans that carriers find themselves now in a catch 22 situation with smartphone subsidies and family plans.
  2. Jessica Lares macrumors G3

    Jessica Lares

    Oct 31, 2009
    Near Dallas, Texas, USA
    Probably costs more because every iPhone has to be configured to work with Sprint/Verizon/T-Mobile/AT&T/Virgin Mobile/etc. If it was up to Apple, they'd probably still be on only AT&T.

    Again, if you can't afford to pay the costs of owning a smartphone, then you shouldn't have one. The general public just uses them for fun and games, but for the rest of us, they are tools.
  3. Dontazemebro macrumors 68020


    Jul 23, 2010
    I dunno, somewhere in West Texas
    Aren't all the carriers implementing more feasible plans to keep people with the latest & greatest? I thought the race was still ongoing.
  4. Sodner macrumors 68020


    Jan 12, 2011
    Pittsburgh, PA
    Ya and they are all rip-offs! Just another way for the carriers to make more money off us.
  5. Dontazemebro macrumors 68020


    Jul 23, 2010
    I dunno, somewhere in West Texas
    Yep can't disagree with you there. I would surely pay full price for my phone if they implemented the "Euro" business model that our neighbors overseas are enjoying.

Share This Page