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The Days of Cheap, Subsidized Phones May Be Numbered

timothy posted about a year ago | from the installment-plans-are-not-for-your-benefit dept.

Cellphones 329

In the U.S., subsidized phones are the norm: for post-paid, long-term contract use, getting a low up-front price on a phone is one of the few upsides. New submitter Apptopia writes "After T Mobile mostly did away with subsidized phone plans, the other major carriers (Verizon, AT&T, Sprint) are paying attention. Carriers lose money with phone subsidies for high-end smartphones (particularly Apple's iPhone). If they do away with the subsidy, you will have to pay full retail price for phones, but your monthly bill will be lower." If people had a better idea what they were paying for, though, manufacturers might fight harder on price. There are lots of well-reviewed, multi-band, unlocked phones on Amazon and DealExtreme from lesser-known companies, and Nokia's new Asha 501 (though limited in many ways, including availability, having just launched in India) shows that the "smartphone" label can apply even to a sub- $100 phone.

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confused (5, Informative)

Anonymous Coward | about a year ago | (#43693699)

It's always been cheaper to buy a phone outright and not have a contract

Re:confused (4, Interesting)

allcoolnameswheretak (1102727) | about a year ago | (#43693887)

It obviously depends on how much you use your phone. I own a prepaid 10€ stupidphone good enough for being reachable and making emergency calls. I buy a new 25€ credit about once in four months. As a matter of fact, I can't even remember the last time I payed cash.

Maybe I'm the exception (and I'm a man so I don't need to have hourly chats with my friends every day). But I'm connected to the Internet all the time at work and at home 24/7. People say PC's are dying because of Smartphones and Tablets. For me it's the other way around. I feel I don't need a Smartphone or Tablet because I always have a PC with Internet nearby. And when I'm commuting, or going for a walk, or sitting in the park I'm quite thankful for not having any high tech around to distract me from nature, my thoughts or a good book.

Re:confused (4, Insightful)

Anonymous Coward | about a year ago | (#43694129)

Totally agree with you - in every sense of the word. The whole smartphone phenomenon has passed me by. I find my dumbphone very handy every once in a while, but you'd have to pry my work/home internet connected pc's from my cold dead hands......

Re:confused (1)

houghi (78078) | about a year ago | (#43694159)

You are not alone. I am the same and many of my friends are the same as well. We send each other an SMS and then we meet in person for drink or dinner.
When I call my parents, I use VOIP, even though they do not have a PC. Using one of thes is cheaper when calling international: http://www.backsla.sh/betamax [backsla.sh] (And I need to do that if I want to call them)

Re:confused (3, Insightful)

hairyfeet (841228) | about a year ago | (#43694405)

I don't know how it is in your area but in mine the growing trend is the Walmart straight talk prepaid "all you can eat" plan (yes I know its actually 2GB before they start throttling, but many users don't use their phones for web kiosks) with Android smartphones. I can't say as i blame 'em, after trying out a friend's I may end up switching myself as his phone was just $70, the screen was clear and CPU powerful enough it was pretty decent at doing search by voice as well as being a PMP, all in all I'd say for $50 a month including unlimited talk and text it was a decent deal.

Re:confused (2, Interesting)

Anonymous Coward | about a year ago | (#43693903)

Exactly. "Cheap" subsidized phones?? More like expensive subsidized phones.

It's like saying a normal bachelor house is "cheap" because your first payment is only $1... even though the following payments are $20k for 20 years.

Re:confused (1)

erroneus (253617) | about a year ago | (#43693959)

Your confusion is not without merit. It is the LIE whose days are numbered. There is no such thing as a "cheap subsidized phone." When they sell you a phone "cheap" (and it is never cheap actually) is more than paid for in contract requirements which include overpriced data plans and all the like. When given the option, many people will pay for what they use and even opt out of data plans entirely. Wfi is everywhere.

People have been sold bad math as truth for so long that this change represents "something new."

Re: confused (1)

turbidostato (878842) | about a year ago | (#43694039)

The problem is marketing full knows price doesn't depend on cost and, for the most part, contracts without subsidized phone are basically priced the same so they end up being even more expensive than those with a mobile included.

Re:confused (0)

Anonymous Coward | about a year ago | (#43693995)

It's like those rent to own places that will rent you a TV for $50/month, but you have to pay for 24 months so in the end you pay double or more what it would have cost if you had bought it outright.

Re:confused (2)

mlk (18543) | about a year ago | (#43694103)

Depends on how you look at it.
My Note is on a £35 a month 24 month contract with an upfront fee of £70. The total cost of ownership £910.
An unlocked Galaxy Note 2 was at the time £450. The same plan is £12.90 on SIM only, over two years that is £310, total cost of ownership £760.

Now I'd don't have £450 to drop on a new phone. So I'd have to take out a loan. Looking for a loan would cost, getting one for such a small amount would cost. Going direct to the mobile operator costs £150. Is the time and hassle of getting a loan saved worth £150? I'd say yes, you may feel differently.

Re:confused (2)

TheRaven64 (641858) | about a year ago | (#43694229)

The loan was for two years, with interest payments of £150 (so, £75/year) on a total of £450. That works out at about a 17% AER. On other words, you'd have been about as well off to get the first credit card offer that came through your door, buy the phone outright, and pay back the money at the same rate. You'd have been a lot better off if you could afford to pay back £50 on your credit card bill every money. A quick search tells me that the Sainsbury's credit card has a 7.8% APR, so if you got one of these, you'd be a lot better off to buy the phone on the card, and then paying back as much as you could afford.

If you're in a situation where £450 is an unaffordable expense, I'd imagine that you already have a credit card that you pay off every money, so you postpone paying for your regular expenses by 14-45 days, in which case just buying the phone on the card you already have would be cheaper and no more effort.

And it sounds like you actually got a comparatively good deal on your phone. Most 'subsidised' phones are equivalent to a loan with an APR of 20-50%. I'd love to see the regulator say that phone companies had to sell phones at the same price whether you had a contract or not, but could include a loan for phone purchasing with the contract as long as they stated the terms with the same detail required of other lenders.

Re:confused (5, Insightful)

Anonymous Coward | about a year ago | (#43694451)

Now I'd don't have £450 to drop on a new phone. So I'd have to take out a loan.

This right here is what's wrong with consumerist entitled way of thinking and why corps have no problem shearing people as they wish, including these OMGFREE! subsidized phones.

See, my train of thought would be "Now I'd don't have £450 to drop on a new phone. So I'd have to look for cheaper options or make do for a month or two with my old trusty Nokia", not "I can't afford it, therefore I'll overpay 30% because BUT I NEED THIS NEW SHINY NOW!".

Re: confused (0)

Anonymous Coward | about a year ago | (#43694135)

Not in the United States. Verizon and AT&T charge the same monthly monthly price if you bring your own phone as if you use one of their subsidized phones. The prepaid plans as well, but the math works out more or less the same.

Re: confused (0)

Anonymous Coward | about a year ago | (#43694143)

Should read, "they have prepaid plans as well"

Re:confused (1)

Garybaldy (1233166) | about a year ago | (#43694289)

Ah you must be from the other side of the pond.

Some US carriers do not offer an un-subsidized price.

good ! (0)

Anonymous Coward | about a year ago | (#43693703)

good, because cellphones suck hugely.. and in many, many ways.
lets all hope it was just a passing phase and we've all seen the light.
like sports, there's far too much attention placed on these damn things,

New phone every month? (2)

bejiitas_wrath (825021) | about a year ago | (#43693713)

Who gets a new phone every month? I still have a Blackberry 9700 and that does everything that I need.

Re:New phone every month? (3, Insightful)

Mike Frett (2811077) | about a year ago | (#43693845)

It's a Monkey see Monkey do kinda of thing. Some Teen sees his friends with the newest Phone and they want one also. They would probably be laughed at and bullied if they didn't. But I agree with you, I'm fine with outdated Tech as long as it still does what I want it to do; I don't even own a phone, I don't have a use for one currently.

In my opinion, Tech is the new Religion, most of it is a want, not a need. It's a Crutch.

Re:New phone every month? (2)

maxwell demon (590494) | about a year ago | (#43693907)

While you don't need a smartphone, it's a good idea to have a simple phone with you in case you've got an emergency. Being able to call for help immediately may make the difference between life and death. Given that simple phones are very cheap these days, there's IMHO no good reason not to have one.

Re:New phone every month? (0)

aurispector (530273) | about a year ago | (#43694245)

WHO doesn't need a smartphone? For anyone who works and needs email and web access it's a must-have. I could not function anywhere near as efficiently without one. Phone, email, scheduling/calender/contacts all go everywhere with me. Google maps is extremely useful on the road. It's not a ball and chain, it's the key to freedom - otherwise I would be stuck at a desk all day.

Re:New phone every month? (0)

Anonymous Coward | about a year ago | (#43694411)

bullshit. You're a spoiled brat. Funny how paper maps and a 2 digit IQ work better than fucking with your smart phone in traffic. I'm amazed by the number of folks who can't interact effectively with customers and subs because they're incapable of sitting down and having a structured discussion without powerpoint. I'm 35. I'm not that fucking old, but I manage to run a mid-sized division (120+ people) without using the damn BB for anything more than my wife's shopping list on a daily basis.

Re:New phone every month? (2)

maxwell demon (590494) | about a year ago | (#43694465)

WHO doesn't need a smartphone?

Mike Frett, assuming he wrote the truth.

an interesting perspective... (5, Insightful)

cas2000 (148703) | about a year ago | (#43693715)

...but bizarrely distorted from reality.

telcos and their allegedly-"subsidised" phones are the reason why phones are still so ridiculously expensive. they remove the normal effects of competition in the tech market-place, so we're still paying $600-$1000 for a current gen phone just as we were 10 or 15 years ago.

every other tech device - including extremely similar devices, tablets - have come down in price at least four-fold if not ten-fold over the same time period.

phones remain expensive to buy outright because the customers that the phone manufacturers are targetting are their largest customers, the telcos. if new phones were cheap to buy outright, people would be far less inclined to sign up for abusive two year contracts to get a hire-purchase phone (not "free" and not "subsidised" - the price is embedded in your contract)

Re: an interesting perspective... (0)

alen (225700) | about a year ago | (#43693781)

iPhone 5 and galaxy s4 both cost over $200 to build
Add in the design, selling and lots of other costs and $650 is a fair price. Apple has gross margins of 38%. Samsung is about the same. Nothing in the greedy range.

After lots of other corporate expenses the net profits are in the 10% range for both companies.

Htc and other companies lose money selling $650

Re: an interesting perspective... (0, Flamebait)

flyneye (84093) | about a year ago | (#43693915)

Yeah, 200%+ profit is fair for JUNK that will be outdated JUNK next year. Wouldn't want those poor giving souls at crAPPLE to starve. Why, it costs so much to develop the next idea for punishing aficionados, they might have to lose sattelite T.V. in the break room.

Htc and other companies APPEAR to lose money selling $650. Silly,like buying a used car for that "INSANE PRICE" no one can beat, you only make up the difference later in your bullshit contract. They NEVER lose. You lose. You'll never see or guess at their numbers either. Just whatever they feel like telling you.

Optimist consumers are funny.

Re: an interesting perspective... (1)

Sponge Bath (413667) | about a year ago | (#43694041)

Yeah, 200%+ profit is fair for JUNK that will be outdated JUNK next year.

There is no 200% profit for any smart phone maker, there is more to business than just the BOM and assembly costs (as pointed out in the post you are responding to). If you think Apple, Samsung and HTC smart phones (the ones mentioned in the post you are responding to) are all junk, then tell us which smart phone you think is superior.

Re: an interesting perspective... (1)

fnj (64210) | about a year ago | (#43694223)

If they can't sell iPhones and Galaxies for less than THREE times what it costs to make them, then yes, the greedy bastards are doing something wrong. If capitalism can't do better than this, it is wildly inefficient. The stockholder leaches are siphoning off way more from the people who do the actual productive work than any sane society should allow.

If this is NOT the best capitalism can do, then we better get busy adjusting regulations, because something is upsetting the invisible hand of the market MIGHTILY.

Re: an interesting perspective... (3, Interesting)

Sponge Bath (413667) | about a year ago | (#43694421)

The $200+ cost mentioned is only for parts and assembly. You aren't allowing a penny for research, development, design, advertising, distribution, support, updates and services accompanying the device. Nobody is claiming this is "the best capitalism can do", but to continue talking about 3x markup as if there are no costs beyond BOM + assembly is not realistic.

Re: an interesting perspective... (1)

Anonymous Coward | about a year ago | (#43694093)

iPhone 5 and galaxy s4 both cost over $200 to build
Add in the design, selling and lots of other costs and $650 is a fair price. Apple has gross margins of 38%. Samsung is about the same. Nothing in the greedy range.

After lots of other corporate expenses the net profits are in the 10% range for both companies....

Nice how you want to simply dismiss those "lots of other corporate expenses" (which includes those executive meetings at the local strip club every week) as nothing in the "greedy" range. These companies make billions of dollars. It takes a SHITLOAD of "expenses" to chew up that much money to end up with the net profits they end up with.

At least try and understand how business expenses work in the real world before making such ignorant claims about greed.

Re: an interesting perspective... (1)

Anonymous Coward | about a year ago | (#43694117)

iPhone 5 and galaxy s4 both cost over $200 to build

So you know the actual rates Apple and Samsung have worked out with their suppliers? You'd be the first to get that knowledge outside the boardrooms.

Apple has gross margins of 38%

[citation needed]
Besides, Apple could probably sell their phones at a fairly hefty loss and still make money from their appstore and itunes.

Htc and other companies lose money selling $650

Looks like you got cut off here, but I have a hard time believing HTC is "losing money" on their phones.

Re: an interesting perspective... (1)

fnj (64210) | about a year ago | (#43694185)

Gross margin of 38% is not in the greedy range on what planet? Of course you have to specify what kind of gross margin you are talking about. EBITDASG&A/Sales? EBITDA/Sales? EBIT/Sales? EBIT(1-t)/Sales?

Even if you are talking EBITDASG&A/Sales, 38% is high. Even the Aerospace/Defense industry who brought you the $500 hammer makes do with 21% [nyu.edu] . Electric Utilities, 30%. Electronics, 20%. Engineering & Construction, 11%. Steel, 19%. Trucking, 19%.

If instead you are talking about EBIT/Sales, 38% is just off the charts. The only industry higher is Financial Services.

EBITDASG&A is earnings before all costs - i.e., raw earnings.
EBIT is earnings before interest and taxes.

Re: an interesting perspective... (2, Informative)

mspohr (589790) | about a year ago | (#43694385)

I just bought a Nexus 4 for US$ 299.
Great phone. Big screen. No subsidy. Free to use any carrier.

Re: an interesting perspective... (0)

nabsltd (1313397) | about a year ago | (#43694511)

I just bought a Nexus 4 for US$ 299. Great phone. Big screen. No subsidy. Free to use any carrier.

And, if you use it in the US, you are getting ripped off, because you were better off getting a subsidized phone from the carrier.

That's because you are still going to pay the exact same monthly charges for your voice/data plan as if you had gotten a subsidized phone. The only thing that T-Mobile changed was that they are no longer requiring a long contract. But, you still have to pay for the phone.

Re:an interesting perspective... (2)

iampiti (1059688) | about a year ago | (#43693795)

Are you sure about this?
European cell phone market started a similar transition a while ago and I haven't seen any decreases in phone prices. Granted, it can be difficult two relate the two but I haven't seen it happening anyway.
Also, I disagree too with what you say about phones not having decreased in price in the last few years: Yes, the top phones still cost 600$ or more but this year top of line phone also has 2x the power in CPU and GPU, and a better screen (among others) than the last year's top phone. So yes, you're getting more for your money although probably not in the form you wanted (a price reduction).

Re:an interesting perspective... (1)

cas2000 (148703) | about a year ago | (#43693805)

tablets have had similar or better performance improvements as well as huge price reductions.

(android tablets, anyway. ipads are still priced as luxury items because Apple customers are willing to pay that much)

Re:an interesting perspective... (1)

whoever57 (658626) | about a year ago | (#43693865)

Compare the cost of buying a Nexus 4 from the Google Play Store against the "unsubsidised" price from T-Mobile.

Re: an interesting perspective... (0)

Anonymous Coward | about a year ago | (#43694163)

Yeah, I'd be thrilled if anyone could explain that one to me...

Re:an interesting perspective... (2)

flyneye (84093) | about a year ago | (#43693877)

" you will have to pay full retail price for phones, but your monthly bill will be lower."

'N' monkeys might fly out my butt, too. You might see a temporary drop, but eventually there will be a surcharge to cover the janitor scrubbing the executive toilets, to make up the difference. Prices never really go down. NEVER.

"Never trust a whore who says she doesn't want any money, what she really means is; she wants MORE money" --Wm. S. Burroughs

Re:an interesting perspective... (1)

Sponge Bath (413667) | about a year ago | (#43694079)

You might see a temporary drop...

Yes, it is amazing how people repeatedly fall for the same scam:

we will lower the tax rate, but increase appraisals (you pay more)
we will lower the price, but make it a subscription (you pay more)
we will [do seemingly helpful thing], but [do devious unhelpful thing] (you pay more, more, more)

CHEAP!???? (1)

gl4ss (559668) | about a year ago | (#43693719)

they haven't been cheap. you've been fucked over them. look, if you want to buy something on partial payment: FUCKING DO IT! you don't need the phone company for it - and shouldn't, because you should see how much your service costs and how much your phone costs separately.

EXPENSIVE!???? (1)

Anonymous Coward | about a year ago | (#43693777)

Current smart-phones cost half the price of my 5-year old laptop at its time (granted, it was a bit on the expensive side at its time) at twice the performance (twice as may cores, twice as much RAM, 4 times as many pixels on the screen, and 20 times the battery life).

That's a bargain.

  People are willing to pay. Phones don't get cheaper. Competition isn't on price, it takes place on the hardware provided for the price. Like for any other computer.

Re:EXPENSIVE!???? (0)

Anonymous Coward | about a year ago | (#43693943)

Bullshit.

you misunderstand what's cheap or expensive. (1)

gl4ss (559668) | about a year ago | (#43694357)

Current smart-phones cost half the price of my 5-year old laptop at its time (granted, it was a bit on the expensive side at its time) at twice the performance (twice as may cores, twice as much RAM, 4 times as many pixels on the screen, and 20 times the battery life).

That's a bargain.

  People are willing to pay. Phones don't get cheaper. Competition isn't on price, it takes place on the hardware provided for the price. Like for any other computer.

you fail badly. it being cheap or expensive isn't just a dollar number. there's another number to it, and that is the retailers margin. this is where americans have been getting fucked in the ass by operators - you've been paying the operators huge retailing profits while the operators have been telling you guys that they've been covering the cost of the phone :D. and sure they have, with huge money extracted from the consumers who had been unable to price shop due to the arrangement.

there's price competition. wherever people can see the prices. the "100 dollars for galaxy s4" deals were price competition as well - with one major difference, the difference that you didn't really know the whole price, so it was price competition with fake prices - sweet, eh? well, not so sweet for the consumer.

but when you really have a 100 dollar android phone and a 500 dollar top range android phone next to each other, then hell yeah - people are going to think twice about getting five cheaper ones and there is real competition then.

High end phones have always been $650 (2, Informative)

alen (225700) | about a year ago | (#43693721)

As long as I can remember from the late 90's living in Europe

Re:High end phones have always been $650 (2)

gl4ss (559668) | about a year ago | (#43693745)

As long as I can remember from the late 90's living in Europe

well there was exceptions about a decade ago... treos & etc "american" smartphones were 1000 euros+. nobody, really nobody, bought them if they saw the price sticker, but subsidizing them with 120$ / month service charges apparently worked in america. (this was around when say, 3650 s60 phone had an actual cost of 230euros)

Re:High end phones have always been $650 (2, Informative)

EEPROMS (889169) | about a year ago | (#43693867)

Only idiots with to much money and no internet skills pay more than $400 for a so called high end phone. One of the guys at work recently purchased a 5.7" quad core IPS screen mobile from china for a little over $300 (Model# N7300, google it). I was thinking, naaw it will be a heap of crap, well it arrived and worked and not only that "it was pre-rooted". It played 720p mkv movies with no issues and has a dual sim and a SDCARD slot.

Re:High end phones have always been $650 (2, Insightful)

timmyf2371 (586051) | about a year ago | (#43693905)

Absolute nonsense. Some of us "idiots with no internet skills" have simply considered all the options and decided we would rather buy a device from Samsung/HTC/Apple/Nokia etc.

Personally, I use an iPhone because I prefer the way its software operates vs Android. As a superior internet user, perhaps you would be kind enough to point me to the cheaper device from Asia which runs iOS?

Re:High end phones have always been $650 (0)

Anonymous Coward | about a year ago | (#43694137)

But iOS is terrible, so your opinion is invalid.

Re:High end phones have always been $650 (0)

Anonymous Coward | about a year ago | (#43693951)

Yea,sorry dude but I'm sure your buddies $300 phone is utter shit. Talk to us if it still works in a year or two. Not all IPS displays are made the same, not all phones are assembled the same, not all batteries are the same. Yes yes it's all China, but having made a bunch of Alibaba purchases recently, let me tell you theres quality within China too.

Plus remember your $300 Chinese phone has 0 support and 0 warranty. These things aren't free.

Re: High end phones have always been $650 (1)

rjr162 (69736) | about a year ago | (#43694017)

I did Google.. And it's a dual Core 1GHz... Hardly impressive for the price (I paid $600 for a Note II off of Newegg for the wife)

Re: High end phones have always been $650 (1)

jdunn14 (455930) | about a year ago | (#43694221)

Nice of you to get her the tablet she's always wanted.

Re:High end phones have always been $650 (0)

Anonymous Coward | about a year ago | (#43694105)

Only idiots with to much money and no internet skills pay more than $400 for a so called high end phone. One of the guys at work recently purchased a 5.7" quad core IPS screen mobile from china for a little over $300 (Model# N7300, google it). I was thinking, naaw it will be a heap of crap, well it arrived and worked and not only that "it was pre-rooted". It played 720p mkv movies with no issues and has a dual sim and a SDCARD slot.

pre-rooted you say?

And ordered straight from China?

Yes, well nothing suspicious there. I'll take a dozen. After all, I'm certain they were just pre-rooting it for my benefit and not theirs.

Oh, it's times like this that I remind myself that PT Barnum isn't famous for his sayings. He's infamous.

Re:High end phones have always been $650 (0)

Anonymous Coward | about a year ago | (#43694111)

I have pretty Internet Skills and yes, maybe too much money as I consider the 500 eur I paid for the Iphone or Samsumg(in the past I used Nokias) I develop in cheap.

I make tens of thousands of euros for every hundred I spend. So do lots of people that carry expensive phones to their job.

They are quality stuff, and worth it at least or some people.

If you don't have "to much" money, have you considered that maybe the idiot is you?
(penny wise, dollar fool)

Re:High end phones have always been $650 (0)

Anonymous Coward | about a year ago | (#43694153)

Well, you won't get a Galaxy S4 for $400, will you?
How is it idiotic again, to buy that one? (Yes, if you actually need it, as I, being a game developer [who always has to develop for 2 years in the future], do. And as my early adopter / enthusiast / modder clients also do.)

Re:High end phones have always been $650 (4, Interesting)

Nikademus (631739) | about a year ago | (#43694333)

I would say, only an idiot would spend $300+ on a china unknown brand without any kind of warranty and not even any test. Most devices like the one you describe won't ever get any OS upgrade anytime soon (or even CM), and generally have pretty low end components, like a very low response touchscreen, weak battery, etc...
$300+ for a chinese unknown device when you can get a Google Nexus 4 for $299, who's the idiot there...

Not numbered. More declining. (4, Interesting)

Mr_Silver (213637) | about a year ago | (#43693729)

The US phone market is just going the way of the European phone market. You'll still be able to get a contract and subsidised handset if you want, but you can also get a SIM only deal and bring your own handset.

Not everyone can afford to drop £500 on a phone outright so there are many people who still go down the contract route.

The SIM only deals will be split into two. Either you top up the SIM at the beginning of the month and get a bunch of texts and data - or you can get a contract for your SIM which gives you a load of minutes, data and texts for a monthly fee.

Last time I had access to a network operators stats (4 years ago), customers on contract were about 51% of the total base. I wouldn't be surprised if SIM only is now the majority.

Re:Not numbered. More declining. (0)

Anonymous Coward | about a year ago | (#43693799)

Why would you rent a $500 phone (and pay even more over time) that you can't afford when there are so many sub-$200 phones that are better than last year's top models? Phones are not status symbols, folks. Even the dumbest hicks have high end phones. You're not impressing anyone.

Re:Not numbered. More declining. (2)

mumblestheclown (569987) | about a year ago | (#43693825)

somebody who cannot afford $500 on a phone should not be buying a $500 phone with effectively high interest rate payments spread over 2-3 years.

Re:Not numbered. More declining. (3, Insightful)

gl4ss (559668) | about a year ago | (#43694373)

somebody who cannot afford $500 on a phone should not be buying a $500 phone with effectively high interest rate payments spread over 2-3 years.

exactly! this is what people don't get about partial payments!!

just the other week a friend of mine was gloating about how cheap an iphone5 is if paying partial payments! as if it wasn't many hundreds of bucks if you pay them in small installments.... people are fucking stupid.

Re:Not numbered. More declining. (0)

Anonymous Coward | about a year ago | (#43693889)

I completely agree. The article is mostly BS - getting a choice is actually good for competition and good for the consumer. The big networks will never do away completely with subsidized handsets - because they like the control they get over the software by supplying the handset.

Re:Not numbered. More declining. (1)

houghi (78078) | about a year ago | (#43694123)

I top up when I need. I am not a heavy user, so I top up perhaps once every two or three months for 25 EUR. Some people do with even less.

Once a year I look if what I have is still the best deal for me. For now it is. The moment it isn't, I change operators (or just reseller) and get to keep my number.

I have an Acer Liquid Metal, because I could get it very cheap about two years ago. 30 EUR or the like. Many people still use their old Nokia from several years ago. Indestructible and a battery life smart phone users can only dream of. (I am well aware that they are limited to phoning and SMS)

If this one breaks, I will just use my Nokia 3210 again.

Contracts will never go away in the USA (-1)

Anonymous Coward | about a year ago | (#43693733)

I priced out a 4 line t-mobile plan and its the same price as my AT&T plan after you figure in the extra $80 a month for the phone payments

And why would I want to spend almost $2000 at once for phones if its the same price to pay over time? And AT&T gives me earlier upgrades before my 2 years is up.

Re: Contracts will never go away in the USA (1)

Anonymous Coward | about a year ago | (#43693771)

Can you show your calculations?

Re: Contracts will never go away in the USA (2)

alen (225700) | about a year ago | (#43693819)

4 Line mobile share on AT&T i pay $266 with taxes for 10gb data and unlimited minutes And texts

T mobile it's $100 plus $40 for the 2gb data add on for each phone plus $80 for the phone payments plus taxes which are almost $10 per line per month

And t mobile I have to wait 2 years to upgrade. AT&T gives me a discount on iPhone upgrades after 6 months and a full subsidy after 18

Re: Contracts will never go away in the USA (1)

Spliffster (755587) | about a year ago | (#43693893)

Hello. I am living in a country where cellphone network providers are regulated by the state. They must offer sim cards without phone contracts. I get 100% coverage in my country with all carriers and pay 69$ a month for unlimited text, speech and internet. The phone i bought (Galaxy Nexus) has cost me $380 and will last for 2 years.

Before we had this regulations I payed at least twice the price per year. I took about 2 years for the market to adjust and priced dropped significantly. Our telcos are still reporting huge profits every year so the must have made much more before.

Basically because most f the people here started buying the phones, the cellphone providers became just another data provider (utility). Subsidized phones have kept the prices artificially high in the past.

Best
-S

Re: Contracts will never go away in the USA (0)

Anonymous Coward | about a year ago | (#43693921)

I'm too cheap. Feature phone on prepaid - under $17 a month. Plenty of minutes + text for me. Yea a smart phone would be nice, but I can wait until I get home, like I've done all my life, to web surf/calendar/etc...

The biggest thing I miss is not having an excuse to stare into my hands in public... and a contract....
 

Oh, I do love stories about US mobile phone rates! (2)

itsdapead (734413) | about a year ago | (#43693977)

Here in the UK, we often get ripped off for computers, software and electronics (usually priced as $1=£1*) so its nice to know that there are some things where we have it better than the USA.

Currently paying £13 per month for 200 minutes of voice, 5000 texts and pseudo-unlimited data (HSPA+ in most places). One-month rolling contract, bring-your-own phone. (I don't use much voice - it would be another £12/month for 2000 minutes). Bundled phone contracts are still the norm (at the end of the contract you can usually keep the phone and negotiate a reduced rate) but all the carriers offer SIM-only plans.

(* some of which is down to sales tax, but not all).

Re: Contracts will never go away in the USA (0)

Anonymous Coward | about a year ago | (#43694303)

I had a choice of prepaid plans when I joined t-mobile, $30/mo unlimited talk/text and small (256meg?)data, or the one I went with: unlimited data (5gig @ 4g) and text, and 100mins/month talk (10cents/minute after, have never hit it) My phone (Galaxy Nexus) cost $400 new, but I'm saving $55/month over what Sprint's minimum plan was for it, with a $200 subsidized phone. Have had this phone 15 months now, which works out to a savings of almost $600. Over then length of a two year contract that will be over $1100. If I decide to buy another phone at that point, I'll be in the green no matter which I decide to get.

Granted this is just anecdotal evidence, I just wanted to provide a counter story to yours. I know most all of my friends have all switched to prepaid plans.

New arrivals (1)

Anonymous Coward | about a year ago | (#43693741)

Ubuntu And Firefox phones are coming soon to the same market segment as Nokia 501. Sub-$100 will get many "smartphones" soon.

lol (0)

Anonymous Coward | about a year ago | (#43693743)

You think AT&T and Verizon will lower their monthly payments? That is cute. They will just remove the subsidy and absorb the extra profit for their CEO^D^D^D shareholders.

What are you going to do? Not have a cell phone?

Re:lol (0)

Anonymous Coward | about a year ago | (#43694305)

why did you bookmark this page three times

article title written by apparent moron ... (0, Flamebait)

Lee_Dailey (622542) | about a year ago | (#43693785)

howdy y'all,

so, when did the article title writer ever look over a contract? or set up a budget? or compare the actual costs of an item from multiple sources?

as others have pointed out subsidized DOES NOT necessarily equal cheap. it frequently equals really expensive when you include all of the costs.

what a dingleberry ... [*sigh ...*]

take care,
lee

Lock in? (1)

xgerrit (2879313) | about a year ago | (#43693811)

If they do away with the subsidy, you will have to pay full retail price for phones, but your monthly bill will be lower.

Speculation presented as fact... and it's not even a sentiment that's supported by the history of the carriers. Yeah, they might do away with subsidies, but does anyone really think the monthly fees will go down? They don't go down now when you've gone out of contact and more than paid for the cost of your phone. Or you can outright buy a phone that's prepaid and in return for less risk on the carriers part, you'll pay a higher price per minute.

Re:Lock in? (1)

stenvar (2789879) | about a year ago | (#43693885)

Or you can outright buy a phone that's prepaid and in return for less risk on the carriers part, you'll pay a higher price per minute.

The carrier has a higher risk when you buy your phone outright: the risk of you switching to another carrier when the other carrier offers you better conditions. That's why there are long-running contracts in the first place. So, in principle, you should be paying more if you pay month-to-month. In practice, you're actually wrong: month-to-month contracts tend to be cheaper, although largely because you tend to get a lower level of service (little/no phone support, no store support, etc.).

Re:Lock in? (1)

xgerrit (2879313) | about a year ago | (#43694073)

The carrier has a higher risk when you buy your phone outright: the risk of you switching to another carrier when the other carrier offers you better conditions. That's why there are long-running contracts in the first place.

So at the point when I've already been convinced to purchase a phone that's locked me to a carrier and (here in the US at least) would have to purchase an entirely new phone to switch to a competing carrier... you're saying they need to increase the per-minute-cost because they're concerned I may jump ship to a competitor?

It seems more likely the concern would be that I'm not going to buy any more minutes... which if I don't, still has no financial penalty for them. If they don't like the APRU of pre-paid customers, that's not them "taking on risk", that's them trying to increase the cost of their service. Which is exactly what I would expect and why I doubt if subsidies are eliminated the cost of service would go down.

Sorry about the cynicism ... (1)

MacTO (1161105) | about a year ago | (#43693813)

... but I'm not expecting more honest telcos out of the deal. Whenever I see phones sold outright by the carriers or their affiliates, the phone is locked to the service provider. Whenever I look at the service plans offered by carriers, the monthly fee is the same whether you're on contract or not (the big difference is that you're not locked into a contract, so you can change plans or carriers down the road).

There are upsides. If carriers start refusing phone subsidies altogether, the price of phones should go down. Maybe you'll see more independent phone retailers popping up too. But I'm not expecting this to be a quick fix and it will take proactive attitudes from consumers.

Reason For Subsidies (5, Insightful)

Dredd13 (14750) | about a year ago | (#43693843)

Part of the reason for subsidies is the disjointed, non-standardized nature of the US cellular network. Paying full price for a phone is much more tolerable to me if I can jump ship to any other carrier that I want, like I could in most countries.

But, today, if I bought an unlocked GSM phone, to use on AT&T, and then a year from now wanted to switch carriers, my choices are hampered by that lack of standardization. That phone is -- essentially -- worth only half as much because it only works on half the carriers (the GSM carriers, as opposed to the CDMA carriers).

IMHO, that problem needs to be resolved before this works as a next step.

Re:Reason For Subsidies (1)

stenvar (2789879) | about a year ago | (#43693895)

The problem is being resolved: all carriers are switching to LTE, and multi-frequency phones are becoming the norm.

In addition, for each major network, you have a choice of several companies offering plans on it, as the major carriers all resell bandwidth in bulk.

Re:Reason For Subsidies (1)

Dredd13 (14750) | about a year ago | (#43693931)

To your first point... yeah, LTE could solve this problem, but it'll be a number of years before that's ubiquitous enough nationwide to be relevant.

To your second point... if your complaint and reason for leaving is "Gee, Verizon's network around here sucks," having as your main option "switch to some other carrier Verizon is reselling to" is completely unattractive. You're still on the same network, but now you're on a "partner" provider as opposed to the owner provider, so you'll generally get even worse service than you did to start.

Re:Reason For Subsidies (1)

stenvar (2789879) | about a year ago | (#43694427)

Well, if you don't like Verizon or their resellers, don't buy a Verizon phone. There are plenty of other carriers and phones you can move between them. I just don't get what all this bellyaching is about.

Re:Reason For Subsidies (1)

MtViewGuy (197597) | about a year ago | (#43694031)

I'd almost agree, but today's cellphones have vastly better cellular radio/antenna systems that can accommodate multiple frequencies in GSM or CDMA rather easily. As such, selling something like an unlocked Samsung Galaxy S 4 or HTC One is actually viable for a change.

Re:Reason For Subsidies (1)

Dredd13 (14750) | about a year ago | (#43694205)

Is anyone actually selling unlocked CDMA phones, so that you can flip-flop between say Sprint and VZW if you so choose? I wasn't even of the belief that that was "a thing".

CDMA is locked "out" not locked "to" (0)

Anonymous Coward | about a year ago | (#43694379)

Is anyone actually selling unlocked CDMA phones, so that you can flip-flop between say Sprint and VZW if you so choose? I wasn't even of the belief that that was "a thing".

It is, or was, a thing.

Unlike GSM phones, CDMA phones have never been locked by firmware to the carrier who sold the device. With CDMA phones it has always been the carriers procedurally locking out the device by refusing to register it to your account. If the device was of a type which the carrier never sold then the lock out is implemented by the registration software but if the device was of a type that the carrier sold then with help from a knowledgeable insider you could force it into the carrier's registration DB and use it. Most people never knew about the possibility, but it used to be done in the days of the Motorola V60c phones.

You really think carriers are losing money? (2)

the_B0fh (208483) | about a year ago | (#43693881)

Are people really that stupid? There are plenty of comparisons showing how much money you save by going prepaid vs subsidized phone.

That means the extra money is going into the carriers' pocket.

That extra money means they're losing money...?! [shakes head at state of math among reporters]

Cute Theory (5, Insightful)

whisper_jeff (680366) | about a year ago | (#43693891)

If they do away with the subsidy, you will have to pay full retail price for phones, but your monthly bill will be lower.

It's cute that you think that monthly bills will be lower if people are required to pay full price for their phones...

Re:Cute Theory (2, Informative)

Anonymous Coward | about a year ago | (#43694297)

I paid full price for my S3 and pay only $30 a month with T-mobile while my mom is paying like $300 a month for 3 phones on Verizon. Only difference is I get unlimited data (throttled after 5gb) and 100 minutes. Yes, you can pay less on your bill.

The bill NEVER goes down! (0)

Anonymous Coward | about a year ago | (#43693933)

Never, ever. If anything, now you're going to be stuck paying $649 in $20 monthly installments and your voice bill will be the same.

Phones are too expensive anyway. (1)

Anonymous Coward | about a year ago | (#43693955)

I've always wondered why I can get a tablet like my Nexus 7 for $249, yet the phone version with 1/4 of the screen size that differs only in having a cel phone radio installed is ~$500.

Is a cel phone radio transceiver really a $300 chip?

Re:Phones are too expensive anyway. (0)

Anonymous Coward | about a year ago | (#43694141)

Yes, the cell chip adds some cost. Antenae, too. But there's design, there's certification, there's lawyers, then there's infrastructure to test the phones (in-house) and then real world testing. All of those add bodies, time and cost. You' got to take more then just the cellular chip into account.

Now, $300 onto a device to add cellular to it seems steep. But that's just conjecture pulled out of my ass.

Re:Phones are too expensive anyway. (1)

Paco103 (758133) | about a year ago | (#43694161)

The Nexus 7 and Nexus 4 have almost the same resolution despite the screen size difference. The 4 has a higher density. The Nexus 4 also offers 2GB RAM vs 1GB for the Nexus 7, and 4 also includes wireless charging, a Barometer, and Ambient light sensor that are not included on the Nexus 7. 4 has also a Snapdraqon quad core 1.5Ghz processor, compared to the 7's Tegra 3 quad core 1.2 Ghz processor (I am not sure of direct benchmark comparison between these two chips). So, there are other differences, and the Nexus 4 is only $300 for 8Gb / $350 for 16Gb. Though with that said, the Nexus 7 is seen on sale periodically as low as $140 (refurbished).

Good (0)

Anonymous Coward | about a year ago | (#43694045)

Pay for what you want. And the providers have no more leverage to keep phones SIM/Netlocked.

Maybe not Lower Monthly Bills (1)

jmcharry (608079) | about a year ago | (#43694109)

I fired Verizon when they refused to lower my bill after my contract was up and the phone paid for. Telcos never leave money on the table.

Telcos never lose money (1)

bdsesq (515351) | about a year ago | (#43694145)

Submission claims they "lose money"
They might make less money but they NEVER lose.
Only the customers lose money.

Is it just me or does everyone hate their cell carrier?

Asha 501 is a featurephone, not a smartphone (1, Insightful)

makomk (752139) | about a year ago | (#43694171)

Nokia's new Asha 501 isn't a smartphone, it's a featurephone with a touch screen. Apps for it are written in J2ME with a bunch of Nokia-proprietary extensions - basically a slightly improved descendant of what your old Nokia 3330 supported. Apparently it doesn't even support 3G unlike newer featurephones.

Can't you just buy unlocked phones? (0)

Anonymous Coward | about a year ago | (#43694181)

Obviously it won't be a solution for the general consumer population until more people become aware of the unlocked phone market. But am I correct in saying that you can avoid data plans/contracts/etc. altogether by buying an unlocked phone and just using wifi?

Re:Can't you just buy unlocked phones? (1)

green1 (322787) | about a year ago | (#43694265)

Sure you can, and then you can use only wifi in your house and have no ability to communicate with the outside world when you leave your basement.

Or you can spring for a cell phone plan with a carrier, at which point you might as well take the "free" phone, because you pay for it whether you take it or not. (Most providers do not offer any discount to the contract plan if you bring your own phone, and pay as you go is always more expensive than a contract)

Now there are signs (as this article states) that this may be changing. And while I don't know about the prices going down as claimed in the article, I would say that in the long run it can only be a good thing for competition and for the end customers. I would say that the ideal situation is one where the cellular companies give the customer the choice, I should be allowed to finance an expensive device over the term of the contract if I want, I should also have the option to bring my own phone and save the cost of the financing. The end result would be stiffer competition between providers as they know you can take your device and run, and at the same time, more competition in the phone retail market as more retailers spring up to sell phones which should allow more variety in devices, as well as eventually lower device prices. (right now you pretty much have to buy your phone through your cell phone provider, because nobody in their right mind would buy a device elsewhere knowing that they still have to pay for the one included in the plan even if they don't take it)

$2.50/month costs the last 6 yrs (0)

Anonymous Coward | about a year ago | (#43694197)

In 2006, I switched from a monthly plan to a t-mobile pay-as-you-go plan for my personal phones.
It was $30 for some minutes and a cheap flip phone. I paid $100 to become a "gold member" so any minutes would last 365 days. Every year, I add $10 to the phone to keep the existing minutes alive another 365 days. I've swapped phones 3 times.
* flip phone ($30)
* Galaxy S (free - a friend upgraded)
* Nexus4 ($370)

Last fall, when my minutes were expiring, I added up all the costs for the plan and it worked out to less than $2.50/month.

When I switched to the Nexus4, a new microSIM was needed. T-mobile shipped a replacement for $1 and migrated my old plan over in about 5 minutes.

Sure, the up-front costs were higher than with other plans, but all this time it has been much, much cheaper than any monthly plan possible.
Even if I needed the cell phone more, it would be cheaper to pay for more minutes - a few months of $300 extra costs would be nothing and well worth it. t-mobile will let me by data for 1 day or a 1 week at a time. Perfect when traveling around the USA.
The Nexus4 is unlocked, so going overseas I can swap in a local SIM if the pricing is right. Otherwise, wifi-only network access is just fine. I'm used to it and have apps designed for disconnected use.

Stop wasting so much money on convenience folks. I have a phone at home and a phone at work. the 30 minute commute hardly means I need to talk to anyone. It isn't safe anyway. If I lived in a big city where my living room was the entire city, I'd happily buy more minutes - even $100/yr would be cheaper than any monthly plan. Heck - $300/yr would be cheaper than any monthly plans.

This is a good thing (1)

onyxruby (118189) | about a year ago | (#43694231)

This removes the phone from being buried in the cost of the contract and brings us in line with the rest of the world for cell phone standards. Now if only we can get unlocked cell phones and the ability to simply have our service tied to our SIM card instead of our phone and we'd be golden. This country desperately needs competition and this is a great first step in that direction and a very consumer friendly move.

LTE auctions prevent competition (0)

Anonymous Coward | about a year ago | (#43694447)

This removes the phone from being buried in the cost of the contract and brings us in line with the rest of the world for cell phone standards. Now if only we can get unlocked cell phones and the ability to simply have our service tied to our SIM card instead of our phone and we'd be golden. This country desperately needs competition and this is a great first step in that direction and a very consumer friendly move.

Not gonna happen. In the US, and elsewhere, spectrum auctions by national airwaves regulators like the FCC force different carrier services to fragment into different LTE frequencies. Limited in-phone antenna capabilities will continue to lock phones to the carriers whom they were initially sold for use with.

T-Mobile was only able to get out of that slow-speed portable device jail because the AT&T breakup contract gave them some of that other carrier's frequencies.

Then the days of expensive phones is over too (1)

gelfling (6534) | about a year ago | (#43694363)

There aren't that many people who are going to want to repeatedly shell out $600 for a phone that they lose or break in a year. It's about price points not about the phones. People will spend "X" dollars and give or take, no more. That translates in about $250 as the top end of the price scale people are generally willing to spend.

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