Subsidies on major carriers

Discussion in 'iPhone 5' started by Mthoroughbred, May 9, 2013.

  1. Mthoroughbred

    Mthoroughbred Contributor
    Silver

    Joined:
    Dec 16, 2008
    Likes Received:
    96
    I have a pretty good idea how subsidies work. But what I have no idea is why after you complete your 2 year agreement on your subsidized phone your bill remains the same? This is something that has intrigue me for a while and haven't seen anyone address this.


    Sent using iCafe app
     
  2. Europa

    Europa Moderator
    Senior Moderator

    Joined:
    Dec 12, 2008
    Likes Received:
    5,523
    It's not really an issue since few people continue to use the same smartphone for more than two years. But yeah, the bill should go down after two years for those who do. T-Mobile addressed it.
     
  3. chris

    chris Administrator
    Administrator

    Joined:
    Jun 10, 2006
    Likes Received:
    1,777
    If you are a wireless customer who is out of contract, you should either leave or re-up and take advantage of your upgrade. Should wireless companies give you a break on your bill? Sure, but that might cause confusion among their customers. Bills/rates and plans are already confusing. Let's say a customer is off contract and starts receiving a bill that is $100 vs $120. Now that customer goes in and buys a new iPhone 5. Their next bill has the activation fee and goes back to $120. Now they see a bill of $155 and the carrier has to explain not only the activation charge, but the change in billing.

    My in-laws are well out of contract. They are using the iPhone 3G/ iPhone 3GS. By the time they upgrade (and I'm not sure if/when they are planning to), they'll have burned a minimum of 1 year that they could have been using towards a contract agreement on a new phone.
     
  4. Mthoroughbred

    Mthoroughbred Contributor
    Silver

    Joined:
    Dec 16, 2008
    Likes Received:
    96
    That would not be the case if the wireless networks would be open about those policies. I just feel like they are double dipping and still charging you for a device when you already finished your 2 year agreement.


    Sent using iCafe app
     
  5. Europa

    Europa Moderator
    Senior Moderator

    Joined:
    Dec 12, 2008
    Likes Received:
    5,523
    It's not a secret. It's foolish not to take advantage of the subsidy they offer. Like I said, most people do.
     
  6. Mthoroughbred

    Mthoroughbred Contributor
    Silver

    Joined:
    Dec 16, 2008
    Likes Received:
    96
    Don't get me wrong I like subsidies. I just wanted to know others options on the matter.


    Sent using iCafe app
     
  7. Mthoroughbred

    Mthoroughbred Contributor
    Silver

    Joined:
    Dec 16, 2008
    Likes Received:
    96
    I get what your saying. Since your bill will remain the same just go ahead and upgrade. I guess that's there way of them having you stay with them by upgrading.


    Sent using iCafe app
     
    #7 Mthoroughbred, May 9, 2013
    Last edited by a moderator: Aug 12, 2013
  8. Europa

    Europa Moderator
    Senior Moderator

    Joined:
    Dec 12, 2008
    Likes Received:
    5,523
    Yeah, locking people into contracts is their main goal. They make up for the subsidy in less than two years. It's a bonus for them if you don't upgrade after two years.
     
  9. Nrevezzo

    Nrevezzo Member
    Bronze

    Joined:
    Apr 15, 2009
    Likes Received:
    23
    I don't think the amount of your service has anything to do with the subsidy on the device. The subsidy on the device is to keep you as a paying customer for the length of the contract. This is how they recoup the difference between the cost of the device and what you pay for the device. Some phones are free with a 2 year contract but the service cost is the same.
     
  10. Rafagon

    Rafagon Genius
    Gold

    Joined:
    Dec 7, 2011
    Likes Received:
    1,254
    How much time would you guys estimate it takes a carrier to recoup their cost of an iPhone 5 16GB model ($649 retail) subsidy? Five months, maybe? How much did AT&T pay for that iPhone, considering that they probably got a nice volume discount?
     
  11. Mthoroughbred

    Mthoroughbred Contributor
    Silver

    Joined:
    Dec 16, 2008
    Likes Received:
    96
    Your bill isn't gonna be cheaper if you buy it outright then if you get it through subsidy? The only benefit is that the phone that you purchase at full price is unlocked? Your bill will be the same as someone that has locked themselves to a 2 year contract?


    Sent using iCafe app
     
  12. Europa

    Europa Moderator
    Senior Moderator

    Joined:
    Dec 12, 2008
    Likes Received:
    5,523
    If you're referring to AT&T, then yes, the bill is exactly the same regardless if you buy it at full cost or subsidized. You just get a discount on the hardware if it's subsidized. The benefits to buying at cost are that you aren't locked into a 2-year, pro-rated contract with an ETF that starts at $325 and it's unlocked.
     

Share This Page