Post-subsidized device era (AT&T)

[appletvbob]

No matter how you frame it, we now have to pay more for our iPhones, yes? I've been on AT&T since day one and ready to purchase my 5th iPhone since 2007. I'm struggling to wrap my brain around the argument that we aren't paying any different than before.

 

[BentTable123]

You are paying a lot more. The plan price has increased, the subsidy is gone, and you get less than unlimited data.

 

[ecschwarz]

It really depends who you ask, but they're just breaking the device cost away from the service. Obviously, plans are much different than they were before, but when you used to pay $0, $99, $199, etc. for the phone up front, your carrier was covering $450 to Apple for the subsidy. That $18.75/month over your 2 year contract (450/24) was sort of lumped in with data and voice services and you kept paying it even after your contact was over.

Now, with most of the payment options, you're paying nothing up-front and paying more per month if you get a more expensive phone. For those who brought their own devices or paid their phone off (either over the time period they picked or early), the total on the bill drops by that much.

Unlimited data aside...

In theory, if you had an old 450 capped-minutes, 1000 text, 2GB data plan, it would be $40+$10+$30 and include the cost of your phone and you'd keep paying the $80/month even if you didn't get an upgrade. Somewhere in there, $18.75/month ($450 total) would cover the cost of your phone that AT&T pays to Apple.

Now, if you got the cheapest iPhone when it sold for $450 (so let's use the 5S a week ago), AT&T is still paying Apple $450 for the phone, but charging you $18.75/month over 2 years (or if you want it paid off earlier or later, more or less). For service, they're charging (on the current plans) the access charge (unlimited text and voice portion) + data. This would be $25+$30 for 2GB of data. Add in the costs of the phone and your bill would be $73.75 while you're paying off your phone and when it's paid off, it would drop to $55.

There was a caveat where people moved to new plans while on the old contracts. What AT&T did there was basically say your access charge jumped up to $40 until the contact was over and then drop it to $25. That little adjustment was just to finish out contracts and maybe offer some incentive to switch to newer plans.

If you have a really really old plan, there is the "screwed" aspect where they charge you the old rateS as though you had a phone subsidy (see my first example plan), but then add your Next payment on top of that. Basically to avoid that, move to a newer plan. I helped out a friend and she and her dad basically have the same plan, but it dropped by about $25. When she starts Next for her new phone, it will be almost the same as her old plan's price. If she had kept her old plan, it would've just added whatever her Next payment was to the total. Yuck.

Basically, the newer plans and phone payment plans aren't necessarily worse, but for the data portion, you need to find the sweet spot for your usage (on bigger data plans, the access fee is only $15, so if you have 4 lines, it may be almost as cheap to get a big bucket of data as trying to share a smaller one). They also benefit users who bring their own devices or have phones that are paid off, rather than continuing the mentality that you must upgrade every two years.

 

[rui no onna]

No matter how you frame it, we now have to pay more for our iPhones, yes? I've been on AT&T since day one and ready to purchase my 5th iPhone since 2007. I'm struggling to wrap my brain around the argument that we aren't paying any different than before.

That depends. Personally paying less compared to before.

We're on the Mobile Share 10GB plan (doubled to 20GB) with 4 iPhone lines (@$15ea) and 1 iPad line (@$10) for $170/mo. Taxes and fees are much lower compared to the old minutes-based plans as the $100 for base 10GB is considered internet access and therefore not subject to all the taxes and excise fees (which seemed to be around 15-20% of my phone bill).

The new plans are also much better for those who get cheaper phones. In the old model, AT&T provided greater subsidies for iPhones compared to other phones. The repayment of that subsidy is hidden in the mandatory data plan. Someone who was getting, say, a Moto G that's free on contract (but costs AT&T less than $200 in subsidy) was effectively subsidizing iPhone customers.

Just as an example:

Example 1: Family Talk (assuming you can get activation/upgrade fees waived)
$70 700 minutes inclusive of lines 1&2
$20 line 3&4 fee (@$10ea)
$30 shared unlimited messaging
$120 data (@$30 ea)
Plan: $240/mo or $5,760 for 2 years
Device: $1,200 upfront cost (32GB model @$300ea)
Total 2-year cost: $6,960

Example 2: Mobile Share Value
$100 10GB
$60 line 1-4 fee (@$15ea)
Plan: $160/mo or $3,840 for 2 years
Device: $3,000 paid either in full or 0% APR installment plan (32GB model @$750ea)
Total 2-year cost: $6,840

Seems like a small difference. However, the first example penalizes people who don't upgrade on a 2-year schedule. Meanwhile, if you go 4 years without replacing your phone, the second example saves you a lot of money. Here are the calculations if only two lines upgraded every two years and the other two of the lines just kept their phone for the entire 4 years (e.g. my parents)

Example 1: Family Talk
Plan: $240/mo or $11,520 for 4 years
Device: $1,800 upfront cost (32GB model @$300ea, 6 devices total)
Total 4-year cost: $13,320

Example 2: Mobile Share
Plan: $160/mo or $7,680 for 4 years
Device: $4,500 paid either in full or 0% APR installment plan (32GB model @$750ea)
Total 4-year cost: $12,180