Finally! As a former employee of this, and the other major company, I told my cohorts frequently that the shot in the foot for cell companies was the subsidies. It gave consumers the idea that phones weren't worth anything. On top of that, to make up the cost, they had to overcharge for services and accessories. Now if only we could get Congress to quit subsidizing farms...
On a lighter note, i think a lot of people buy cell phone service because they can get in fairly cheap. Taking away making small payments toward the phone is going to make it very difficult for the average Joe to get into an Iphone or a Galaxy S4 and what not.
hakesterman - I think that ATT is offering a plan where you pay for the device as a separate line item charge over two years. Pay the full price, but spread out. It seems like a decent compromise to me.
This is non-sense. I've been an ATT customer for years and you've always been able to buy a no-contract phone.
Plus when you sign a contract at someplace besides ATT they pay that company something like $300. So are they putting these places out of business and pocketing it all themselves? If we do sign a 2yr contract will they give me $300? I'd be ok with that.
if I buy a contract phone from at&t my monthly voice and data is roughly $75. if I use an old phone, or an unlocked phone I still pay $75 dollars for the same plan. There is no incentive if I use AT&T's service & not take advantage of subsidized phone, gonna pay the same amount either way. this is just another way to increase profits on an already over inflated market.
Cell phone companies already don't subsidize our new phones! Most people can't afford a $700 cell phone outright. We DO PAY FOR our phones...over time. A two year contract includes that hidden cost of new phone purchase/upgrade. Hell I've held onto a phone after the two year contract expired. Did they lower my payment? NO! But they were willing to offer me a reduced, no contract payment about $20 cheaper each month with the same SLA. I did the calculations: $20*24 months = $480 + $200 I paid for the new phone = $680. Which is more than they pay wholesale... Food for thought.
If they get away from subsidizing phones, they WON'T lower the monthly costs to consumers. They will simply pocket the extra money. Big business looks for 1 thing, their PROFIT.
Allow me to translate: "We're not making enough money, our board and shareholders are having to replace their limos MONTHS after the ashtrays are filled and the cost of gold plated yachts has risen steeply. Now we've hooked you on cheap stuff we're going to push the price up and cream off the extra cash ourselves."
I predict subsidizes will disapear on phones, however we won't see a drop in the prices of rate plans. It will force smartphone manufacturers to build lower cost, higher performance phones (like the ones we already see from many Chinese manufacturers)
Wow, nobody read the article very closely or has looked at what AT&T has done. Here's the rundown: You pay a price for your shared data block, price dependent on how much data you want. You pay a price for each device attached to the account: subsidized smartphones are $40, non-subsidized are $25. Bringing your own phone to the party saves you $15*24= $360 over two years. A $600 phone is cheaper to subsidize over two years. ($200 upfront + $360 in subsidy payments nets you a $40 savings. Anything under $560 is cheaper to buy outright. Buy a $180 Moto G brand new or any used phone for that price and you save $380 over a $200 subsidized phone for the two year period.
Just look at that grill of a shyster... yeah reduce or eliminate subsidies and save tens to hundred of dollars while reducing your monthly bill by mere $5-10.
You will never see low monthly cost with "bring your own plan" like in Europe or south-east Asia, they will simply pocket the savings and make it seem like you are getting a deal by minuscule monthly reduction in price.
Besides it costs them next to nothing to buy these phones in bulk... there is absolutely no way they will pay even 75% of retail on the devices they subsidize.