

It's Time To Stop Subsidising Mobile Phones - bensummers
http://www.trustedreviews.com/editorial/2010/07/02/It-s-Time-To-Stop-Subsidising-Mobile-Phones/p1

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Tichy
I suspect human nature is in the way. Isn't buying a phone for "0€" equivalent
to buying stuff by credit card? I hear in the US spending by credit card works
to get consumers to buy all the time.

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ben1040
I wonder if non-subsidized phones would cause the manufacturers to think
harder about quality, as well.

In the US, with Sprint, AT&T, & Verizon you pay the same price for service
whether or not you bring your own phone, so you may as well take the
subsidized device. To a person who buys a smartphone on subsidy for $200, as
far as they're concerned that's the price and they expect an equivalent amount
of value.

If the subsidy were out of the equation, and you had to pay $600 for that
device, wouldn't you expect more from the phone than you would if it were
perceived as a cheap throwaway? It seems like that would get the manufacturers
to step up their game a bit, which is good for the consumer.

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CaptainMcCrank
Nexus 1. Has it shaken the industry?

No manufacturers are stepping up their game and google is crying uncle on the
goitalone, unsubsidized model.

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ben1040
My take is the N1 wasn't disruptive to the carrier controlled/subsidized model
because in the US, you had two separate N1 models that effectively only worked
on one carrier (unless you found EDGE data service to be acceptable).

An unlocked N1 sold for the T-Mobile 3G band can't be used with full
functionality on AT&T, and vice versa. You can't buy an N1 and still have the
flexibility to choose a carrier who meets your needs at that particular time.

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jrockway
T-Mobile does this. If you buy a N1 at full price, you get a $20/month
discount on your service plan; making the total cost of the phone over 24
months the $600 that you pay initially. If you buy it subsidized for $179,
then you are locked into a 24 month contract with ETF, and you end up paying
$659 for the phone. (Not a terrible interest rate, but you're not "saving
money" as you may think.)

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stcredzero
I will be buying an unsubsidized Factory unlocked iPhone 4. (Without paying
eBay markup!) My current jailbroken 1st gen iPhone is entirely prepaid with
$0.11/min calling and $0.10 for sending a text and $0.05 to receive, but I
will switch to an Unlimited calling and text plan for $50/month. Mobile
bandwidth is through WiFi through a Sprint 4G device, which will double as my
home Internet.

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jrockway
_Sprint 4G device, which will double as my home Internet_

Hope you have a backup plan. Since the Evo came out, Sprint's 4G is
significantly slower than their 3G, at least in the places where I use it.

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stcredzero
Good to know. I've already been vetting the device. At home, 4G is the same
speed as 3G, but with unlimited use.

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starkfist
In the USA, isn't the real issue that you can indeed buy your phone
unsubsidized, it's just a hassle (or impossible) to get your new phone's fancy
features working on a carrier? Why would someone want to pay $700 for an
iphone/android and then have half of the features not work, because they can't
get a compatible plan?

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stcredzero
Buy a mobile broadband device, and things work well. You don't get GPS, but
the WiFi location is pretty darn good.

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jswinghammer
I look at it as a pay now or pay later sort of situation. The charge for my
iPhone was low enough that I was willing to get it for $200. I wasn't willing
to get it for $800. I love my iPhone but not $800 worth of love.

I might pay that back over two years but I'd rather do that than put down $800
for a phone. I'm not even sure that I will pay it back because I am getting
service in exchange for staying with AT&T for two years. I feel like I end up
breaking even on this deal and if I lose a little then I'll live with it. I
just can't put down $800 for an iPhone when I could get an iPad 3G for that.

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ZeroGravitas
There seems to be some confusion on this in the linked comments too, even
though the very first commenter hit the nail on the head, but:

You don't need to pay for anything, including phones, up front any longer.
Credit is (too) easily available and basically guaranteed to be cheaper and
more flexible if you unbundle it from the actual purchase. These disguised
loans should really only be attractive to people with low incomes and terrible
credit ratings, and they will be taken advantage of because they have no other
options.

The fact that you seem to be repulsed by the idea of paying amount $X for a
phone, but think that paying that exact same sum, plus interest, plus hidden
markup is acceptable as long as it's made complicated and so hidden in plain
view is mind-boggling to me.

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dagw
I was looking at some phones the other day and overheard a customer who agreed
to basically pay 15$ more a month for the next two years, just so that they
could avoid having to pay $120 up front. That sort of thinking is strange
(unless you are a cell phone carrier, in which case it is awesome).

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pbhjpbhj
So the answer is to extend your credit elsewhere and third the overall costs -
which is fine if you have access to an easily extended line of credit.

It's not always going to be cheaper for everyone to pay up front but on the
whole it does seem better.

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dagw
If they are so poor that they absolutely cannot scrape together $120 then they
really should be buying a $20-30 second hand phone and a pay-as-you-go plan.
Committing to $30+ a month in those sort of financial situations is just a
really bad idea.

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gamble
The issue isn't subsidies, but the fact that almost every carrier in the US
and Canada refuses to lower your monthly bill when the subsidy has been paid
off. Until that changes, the only sensible response is to get a new subsidized
phone as often as your contract allows.

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mgkimsal
It's been time for about 10 years.

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mallipeddi
In India actually most people buy their phones separately -no 2-year lock-in
contracts with the carrier. Even the iPhone was launched this way.

~~~
ZeroGravitas
Surely someone must have studied the comparision of countries with and without
this system and came to some conclusion about how it affects tariffs, the
amount spent on phones, upgrade cycles etc.

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mzl
I would guess such things have been studied. It is probably very hard to
change an entrenched model though, so even though people might spend more
money on phones and services in model A than in model B, that result might
only be valid if all players switch.

