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If AT&T and Verizon removed the subsidy option...what

D

DBZmusicboy01

macrumors 65816
Original poster
Sep 30, 2011
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Will we all do? I read somewhere that the CEO planned on taking that away because it's pricey for the company when in reality I know they can afford it but they are extremely greedy. All they want is profit.
Now I don't think the idea of paying over $650+ for a phone would be easy for anyone. Who knows maybe the iphone 6 will cost $700
 
We did just fine buying the original iPhone with no subsidy and many people on this board buy iPhones at full price all the time. Monthly payments would get cheaper as carriers won't have to make up the expense of partially covering the cost of the phone. I don't see what the problem is.
 
There will be (are) options to spread the full retail cost of the device out over the life of the plan. So your plan may come down by $20 a month, but you'll have to buy the device outright or pay $25 a month towards the device cost. On the other hand, the plan prices should come down because the telecoms don't have to recoup the cost of the subsidy.

Long story short, it wouldn't look very different to the consumer.
 
I know for me (a broke college student) I would probably never buy a brand new phone again. I'd probably start buying used or something like that. OR if they keep the whole upgrade after 6 months program, I may just upgrade through there. I honestly don't think they should get rid of the subsidized phones.
 
It is bad deal to the consumer no matter how they market it. AT&T is offering the unsubsidized option with reduced monthly plans ($15 reduction). If you do the math this does not fully cover the price of an unsubsidized iPhone (it may for other less expensive phones). One can argue that AT&T pays less for the iPhones wholesale. In that case all they are doing is shifting profits from carriers back to the phone manufacturers. What this means is carriers will find some other ways to gouge you, like move calls to voice over LTE and charge you overages on your data plan.
 
blarivee said:
It is bad deal to the consumer no matter how they market it.
Click to expand...
Perhaps, but that's how most of the world operates. At this point in the market maturation, the carriers want to drop the subsidy since they gain nothing by it.
 
JayLenochiniMac said:
We did just fine buying the original iPhone with no subsidy and many people on this board buy iPhones at full price all the time. Monthly payments would get cheaper as carriers won't have to make up the expense of partially covering the cost of the phone. I don't see what the problem is.
Click to expand...

Boy, it's funny how we recast history to spin the Apple positive. The fact is that Apple did start this way, Apple selling the original phone at full price. The faithful did buy (as they would anything that Apple would stamp a logo on and spin "thinner", "lighter" and "magical"). But then sales trailed off such that Apple had to go to the subsidy model. It wasn't a natural business move- I doubt Apple wanted to do it or they would have done so from the start. They HAD to do it because the rest of the market showed that it wouldn't pay up for the full Apple retail in enough volume to stick to that approach. The switch happened so fast that Apple felt compelled to offer the early adopters a partial refund (I think it was something like $100+ credit) to try to smooth over the shift with those early, "full-price" buyers.

Yes, the faithful would still buy and yes some non-fans pay full price too but the end of the subsidy model probably points to big pain for Apple iPhone sales. Look at the rest of the Apple product lineup that is unsubsidized: better quality? (probably), better looking? (typically), thinner? (often), lighter? (sometimes), better OS? (arguably yes), etc but how many Windows computers are there vs. how many OS X computers? Price isn't the ONLY factor but it is a big one for the masses. An unsubsidized iPhone is likely to be the highest priced phone on the market vs. many unsubsidized Androids that can appear to the masses to be "just as good" or "close"… much like a Macbook Pro at $2,XXX vs. a Windows laptop at $6XX tends to sway a lot of people the latter's way.

Is the iPhone faithful a larger pool now than when the iPhone launched? Yes. Lots of users will feel somewhat locked into the walled garden of the iOS OS and cough up the difference to stay with iPhone. But still, the indifferent (masses) might see $7XX vs. $3XX for a similar-looking Android and choose the latter. Pretending (spinning) that the mass market will just roll with the end of phone subsidies and pay up for iPhones is likely delusional. I think the Android phones generally "win" with such a change as their makers seem more focused on volume to make their profits rather than profit-per-unit sold.
 
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AppleFanatic10 said:
I know for me (a broke college student) I would probably never buy a brand new phone again. I'd probably start buying used or something like that. OR if they keep the whole upgrade after 6 months program, I may just upgrade through there. I honestly don't think they should get rid of the subsidized phones.
Click to expand...

You do realize that with subsidies removed, carriers would just offer a financing option similar to T-Mobile so that you can still walk out the door paying a low upfront price for their phones right? They know most people can't/won't walk into the store and drop $649 for an iPhone upfront.

It's actually a better deal than the ripoff that carriers are doing right now. For example, a carrier charges you $100/mo for service and that $100 includes money that is paying them back for the subsidy. With subsidies removed the only difference would be that the carrier is charging you $80/mo for the service and $20/mo to pay for the phone, after you've paid for the phone your rate plan is only $80 unless you decide to upgrade again.
 
CEmajr said:
You do realize that with subsidies removed, carriers would just offer a financing option similar to T-Mobile so that you can still walk out the door paying a low upfront price for their phones right? They know most people can't/won't walk into the store and drop $649 for an iPhone upfront.

It's actually a better deal than the ripoff that carriers are doing right now. For example, a carrier charges you $100/mo for service and that $100 includes money that is paying them back for the subsidy. With subsidies removed the only difference would be that the carrier is charging you $80/mo for the service and $20/mo to pay for the phone, after you've paid for the phone your rate plan is only $80 unless you decide to upgrade again.
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Yes and no, if someone is on a grandfathered unlimited data plan then it does not lower your plan. You just finance the full retail price which with the subsidy ends up being way cheaper for the subscriber. Plans have not gone down with att unless you switch to their Mobile Share Value plan which only benefit customers that get rid of unlimited plans and finance their phone on their NEXT plan...
 
Yeah that's true. If you're on AT&T/VZW then their goal is to push you off of grandfathered plans and onto their share plans so I doubt they would offer any incentive to those customers.
 
maflynn said:
Didn't that already happen with T-Mo - you bring your own phone (or buy one subsidized) your monthly payments are less then.
Click to expand...

Mark my words... AT&T and Verizon will never do this. There may be some minor concessions so they can produce adverting that make it appear like they are 'giving back' to help with the transition from subsidies - but these are public companies and they have aggressive revenue demands. Lowering prices (beyond sales/promotions) are like taxes - they don't go down and don't go away.

I wish they would go down... more than almost anyone - but the carries will not provide that to consumers.
 
webwbr said:
Mark my words... AT&T and Verizon will never do this. There may be some minor concessions so they can produce adverting that make it appear like they are 'giving back' to help with the transition from subsidies - but these are public companies and they have aggressive revenue demands. Lowering prices (beyond sales/promotions) are like taxes - they don't go down and don't go away.

I wish they would go down... more than almost anyone - but the carries will not provide that to consumers.
Click to expand...

Couldn't agree more. I don't see the carriers "giving back" any of the subsidy money. Most likely, they will keep the monthly plans as they are, citing some inane "benefit" that they happen to add (and the customer has no choice to opt out of). ARPU goes up + capital not tied up funding phones in 2 year contracts = big win for the carriers.
 
maflynn said:
Perhaps, but that's how most of the world operates. At this point in the market maturation, the carriers want to drop the subsidy since they gain nothing by it.
Click to expand...

I agree with you. What I can't understand is how consumers buy into the notion that the offers (like Jump and so on) out there are "saving" consumer money when in reality they are not. Maybe if you use one phone for 10 years :eek:

Edit: The argument is for 1-2 lines. I think you may save money if you have a family plan of 4+ lines.
 
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DBZmusicboy01 said:
Will we all do? All they want is profit.
Click to expand...

Why do you think AT&T and Verizon are in business!

Apple is, I guess, greedy, too aas they set the prices for the Apple products.

Not to worry as the carriers will ALWAYS offer some incentives to sign up for a new contract! The phones/hardware are their only tools to do so.
 
By the way, without any contract to tie you over, I can see people jumping around to avoid paying overages. For example, let's say I reached my data limit before the month is over. Since I have no contract (assume the phone is bought outright), I can jump to another carrier and have pro-rated data.
 
Keep in mind that a contract works both ways. I mean, sure it means that you agree to pay a certain price for a certain number of services over a predetermined period of time.

However, it also means that the carrier is obligated to provide you with those certain services at those prices for the period of time as well. What this means is that the carriers may not arbitrarily change (raise) the prices of the plans or services during that time. If they do, then they are breaching the terms of the contract.

This is why I actually prefer contracts for phones because this way, unlike the cable company, the carrier can't simply send me a letter one day saying that they are raising the rates for the services I already have, just because they feel like it. It has happened with the cable company a number of times.

Not saying that the carriers necessarily would do such a thing, but without a legally binding document (a contract) forbidding them from doing such a thing, what's to stop them from it?

We'll see where things are at in Sept 2015 when my 5S contract is up.
 
DBZmusicboy01 said:
Will we all do? I read somewhere that the CEO planned on taking that away because it's pricey for the company when in reality I know they can afford it but they are extremely greedy. All they want is profit.
Now I don't think the idea of paying over $650+ for a phone would be easy for anyone. Who knows maybe the iphone 6 will cost $700
Click to expand...

I would must rather they went the T-Mobile way. It's well past time they made it two line items and let us walk the moment we paid the bill on the hardware.

I have had to have an unlocked phone for ages due to work but paid the same amount as someone on subsidy, $15-20 of which was paying off their phone. Why should I have to pay that amount when the carrier put nothing into my hardware cost. I've been tempted more to than once to find a lawyer and file a class action suit on behalf of every person that bought a full priced phone or went over 24 months before upgrading to get that money back.

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JayLenochiniMac said:
We did just fine buying the original iPhone with no subsidy and many people on this board buy iPhones at full price all the time. Monthly payments would get cheaper as carriers won't have to make up the expense of partially covering the cost of the phone. I don't see what the problem is.
Click to expand...

The problem is that the rates might not get cheaper. At least for a while. Just like how they haven't been cheaper for those getting full price phones for the past 5-10 years. My rate on ATT with a subsidized iPhone is $69.99 a month. My price with a full price or past 24 month phone is $69.99. So I'm paying money to ATT that I don't really owe them since around $15 a month is supposed to be for paying back the subsidy. So on month 25 I should get a discount in my bill until I upgrade again. Or month 1 if I paid full price.

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blarivee said:
It is bad deal to the consumer no matter how they market it. AT&T is offering the unsubsidized option with reduced monthly plans ($15 reduction).
Click to expand...

It's at least something. Better than we got before
 
JayLenochiniMac said:
We did just fine buying the original iPhone with no subsidy and many people on this board buy iPhones at full price all the time. Monthly payments would get cheaper as carriers won't have to make up the expense of partially covering the cost of the phone. I don't see what the problem is.
Click to expand...

Times have changed. With the plethora of cheap Android phones, Apple is really going to have to do something if the companies drop subsidies. Few people are going to pay $600+ upfront.

Oh, and don't count on your bill getting any lower.
 
hansonjohn590 said:
Times have changed. With the plethora of cheap Android phones, Apple is really going to have to do something if the companies drop subsidies. Few people are going to pay $600+ upfront.
Click to expand...

It'll affect high end Androids as well, which are like $500 or so unlocked.

I'm sure Apple will keep the 5c low on the ladder to keep cost down to attract cheap Android users, considering that nearly half of 5c users came from Androids (vs. 80% of 5s owners who came from older iPhones).
 
blarivee said:
It is bad deal to the consumer no matter how they market it. AT&T is offering the unsubsidized option with reduced monthly plans ($15 reduction). If you do the math this does not fully cover the price of an unsubsidized iPhone (it may for other less expensive phones). One can argue that AT&T pays less for the iPhones wholesale. In that case all they are doing is shifting profits from carriers back to the phone manufacturers. What this means is carriers will find some other ways to gouge you, like move calls to voice over LTE and charge you overages on your data plan.
Click to expand...

Voice over LTE is just voice. AT&T has been doing voice over 3G over a while now and it has worked fine.

The problem with data networks is not voice. Voice has become the easy part thus far to a point where carriers moved from minute-based plans to data-based plans with unlimited voice minutes. At this day and age, voice over cell towers is has gotten as dirt cheap as a text message. [well not as cheap but it is getting there]



As per the OP, subsidies are going to end. No question about it. This is how unlimited data started going away. First were the rumors, then the hard statements (like as of recent concerning subsidies), next step is actually getting rid of them. T-Mobile is already ahead of the curve and did it first in their 'Uncarrier' strategy.
 
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