This is why carriers are no longer granting exceptions on early upgrades...

Discussion in 'iPhone' started by redman042, Sep 14, 2012.

  1. redman042 macrumors 68030


    Jun 13, 2008
  2. Hopsdaballa04 macrumors regular

    Feb 4, 2009
    So you're telling me that carriers lose money in the long haul? It may cost them upfront, but they will make that up over the life of the contract. I have a feeling the $150ish that I pay to At&t a month is not used completely for infrastructure upgrade/upkeep. I'm sure they are still making a pretty high profit each month off of me, making up for the subsidized price that they give subscribers. I'm sure they make the subsidized money back within the first year of the contract. Of course this is all speculation. I don't have anyway to access At&t's financials.
  3. xofruitcake, Sep 14, 2012
    Last edited: Sep 14, 2012

    xofruitcake macrumors 6502a

    Mar 15, 2012
    I don't think it is a given that carrier won't offer early upgrade in the future. It is a push and pull between carrier desire to grow by offering a better deal to attract customers from other carrier and the end user demand of Iphone. In less than one day, both ATT and Verizon already sold out their initial day allotment of Iphone 5. There is no real reason for them to do anything more. The only time a carrier like ATT or Verizon offer incentive is when order too many Iphone from Apple (yes, they are just a reseller that will stuck with unsold inventory) but worry that they may not be able to sell it all. Looks like all of them are much smarter in this cycle and did not over order their Iphone and hence no sweet deal. But in the future, one of these telecom may decide to grow their network substantially and will start to order more Iphones and offer discount again. It is capital market working.

    Of course this is all speculation. I don't have anyway to access At&t's financials.

    You can look at the 10K or 10Q (yearly report and quarterly report) and they are all making tons of money. It is a war between greedy telecom and a greedy phone manufacturer trying to decide how to divide the profit from a phone user. For ATT, Verizon, and Sprint, they would love to see phone manufacturer like Apple to sell them their phone at cost and let the carrier get all the profit. But unfortunately they ran into a big consumer brand like Apple where user will stick with the manufacturer rather than the network. There is a reason that only Apple and Samsung make money in smartphone space. Everyone else loss money because Telecom carriers suck out all their profit. There are too many phones out there that has no standout feature and can be easily replaced by phone from another brand.
  4. Eddyisgreat macrumors 601

    Oct 24, 2007
    They won't make it up over the life of the contract if people keep slicing it in half every time apple makes new stuff.

    Which is why all this "OMG I SHOULD GET FREE STUFF BECAUSE I"M TRAPPED 4 2 MO YRS" stuff is nonsense because some people apparently have never fully finished an entire 2 yr contract with their iPhones (having gotten subsidy every year).
  5. leenak macrumors 68020

    Mar 10, 2011
    I don't know, prior to my discount, Verizon is quoting around $100/month for my service. That isn't chump change consdering the last time I paid for my own cell service, it was somewhere in the $20-$30/month range :)
  6. Hopsdaballa04 macrumors regular

    Feb 4, 2009
    I don't disagree. Ultimately it's At&t's choice on what they want to do. I believe the other poster said it best. The carriers don't need to subsidize the iPhone, due to the large following it has. It still sold out on all major carriers and in less time than it to the iPhone 4 or 4s.

    If something occurs every year is it truly nonsense? I don't think it is. I have been able to upgrade on the yearly cycle myself. I can understand peoples frustration and with our free market economy they have the right to move to another carrier. If At&t didn't have such a large HSPA+ network; I would have paid the $215 and went to Verizon.
  7. Scott6666 macrumors 65816


    Feb 2, 2008
    The 2 year is just an arbitrary timeframe. No reason to act like it's heaven sent or taught at every business school.

    It could just as easily be a 1 year contract if some analyst had decided that was profitable enough.

    The market demands a 1 year contract.

    Even cable tv contracts are typically only 1 year.
  8. alent1234 macrumors 603

    Jun 19, 2009
    it used to be 1 year. changed around 2005
  9. Eddyisgreat macrumors 601

    Oct 24, 2007
    Clearly there is a disconnect between the demands of the market and what the market is actually willing to bear.

    Because one can recieve service SANS contract and pay full price for the phones.
    But they are unable (unwilling) to pay retail price of $650 and go to a carrier who will provide the month to month service. They are willing to get the phone for a full discount and "spread" the payments throughout the life of the term. Then you have spoilt iPhone users who want a discount, don't want to pay full retail price, aren't happy with a discount ($199 + $250 early upgrade fee) and want to renew their contract to "two years" but not finish it out.
  10. racer1441 macrumors 68000

    Jul 3, 2009
    I'm proud to be one of those people. Take advantage when you can.

    I would much rather just pay for the phone full price, and not have that added into the cost of the plan, but go and buy a full price phone on Verizon, guess what, your plan is the same cost. So, screw'em where you can.
  11. Eddyisgreat macrumors 601

    Oct 24, 2007
    I actually agree with you on this.

    That's why I get a new one every year (alternating lines). I figure, if i'm gonna pay the price for the same service why not right?

    But I don't kick+scream because all of my lines aren't eligible for 100% new customer subsidy when it hasn't even been less than a year. The fact that we've gotten it so many times was a bonus.
  12. PerplexShyt macrumors 6502

    Sep 1, 2011
    oh wow 10 billion in subsidies when they are making like 700 billion in profits (not exact number, but you get the point)
  13. nostresshere macrumors 68030

    Dec 30, 2010
    The carriers have been trying to do 2 year contracts for a long long time. They did not have them if you had your own phone. The 2 year thing was if the carrier paid or paid for part of the phone.

    You do not have to get a new phone
    You do not have to have data
    You do not have to have messaging

    These are all options that you can take or leave.

  14. tdar, Sep 14, 2012
    Last edited: Sep 14, 2012

    tdar macrumors 6502a

    Jun 23, 2003
    On the Space Coast
    The real theme of that article is that Wall Streeters ( the people quoted in the article) have become like the general populace and want to only focus on what comes in and never expect to pay out. (it could be argued that they caused this effect in the populace not emulated it) I'm old enough to remember when they were about investing.

    FACT: Phones cost money.

    FACT: Customers (at least in the US) have shown that we do not want to pay full price for our phones up front. (remember the first iPhone launch?)

    FACT: If the above is true and it is, then the only way to attract customers is to in effect finance the phone.

    FACT: What this is really about is that they want us to pay an interest equivalent for this financing.

    FACT: If these carriers don't get the message that we don't have any more to pay them and as time goes on we will have LESS, then they will one day wake up to a very sad reality.
  15. redman042 thread starter macrumors 68030


    Jun 13, 2008
    I'm on the same boat as everyone else in that I want to get all I can get from the carriers. Why not try? I work hard for my money. But I also understand how business works and I knew that these early subsidies weren't going to last forever. Even if the carriers are making big profits, they are obligated to their shareholders not to hand money to customers unless the payback justifies it. It may have been justified when AT&T's networked sucked and they lost iPhone exclusivity and had to "buy" customer loyalty for two more years, but things are different now. So I'm not going to piss and moan now that all the carriers are holding us to our two year contracts. It was inevitable.

    And when you stop to think about it, upgrading iPhones every single year is a little ridiculous. This is cutting edge technology, and we are going to chuck it and replace it every single year from now until we die?? Seems a little excessive. It made some sense when the technology was still "catching up" (earlier generation iPhones had poor cameras, laggy processors, and insufficient RAM, and each new generation improved on those deficiencies) but for the last several years their phones have been damn good. Seems like a new iPhone should be fine for two years.
  16. codelode84 macrumors regular


    Oct 10, 2011
    Cincinnati, OH
    Keep it real people! AT&T's average profit has been nearly $4 billion a quarter for the past years. The only dent in that is when they took a hit b/c of T-Mobile failed acquisition. The carriers aren't losing money b/c of the iPhone they are making truckloads of money. Think about this I have 2 iPhones and my average bill is $150 a month. I barely use the phones anywhere other than on my home wi-fi. I'm lucky if I use 2 gb a month and I am probably consider a big user. Then the text message package they charge $30 for; get real it is not about them losing money it is just how much money they can fleece us for. If you don't think so you are kidding yourself.

    Comments like this along with the CEO of AT&T making remarks about regretting unlimited data plan which has made them billions of dollars just really makes me mad. If Verizon would have gotten the iPhone first there is no doubt AT&T would be where Sprint is at today. The only company playing this right at this time is Sprint they understand that unlimited data really doesn't cost that much and makes people happy.

    I really hope Apple starts their own cell service so we can get rid of the dog meat offering we currently have and move something that will actually be top quality.
  17. Mrg02d macrumors 65816

    Jan 27, 2012
    Except sprints data is pure garbage...Unlimted garbage is still garbage. Nothing is functional when out and about because the data isn't fast enough to load a map or stream pandora. Sprint sucks because they are stingy buttholes that won't spend money to make money.
  18. sviato macrumors 68020


    Oct 27, 2010
    HR 9038 A
    Canadian contracts are 3 years, you guys have it pretty good :rolleyes:
  19. stuffradio macrumors 65816

    Mar 17, 2009
    You guys are complaining about 2 years? You have no right to complain. We have to put up with 3 year contracts.

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