In my opinion, if I am offered the same phone on a "month-to-month no contract but pay for the phone" basis or one where I must sign a 1 or 2 year contact with an EFT but with the phone at a subsidized price, the EFT should reflect the amount of the subsidy and be reduced based on the term of the contract so that the subsidy is paid off as the the contact runs.
IOW (to use simple numbers) if the difference in cost for the phone (ie: The subsidy) is $240 less than a outright purchase with a 2-year contract then the EFT should be $240 and be reduced by $10 for each month that I use the phone. Since after 24 months I own the phone, the un-repaid subsidy with 2 months to go is just $20. Any attempt to start the EFT at more than the subsidy or have the EFT shrink slower than the subsidy is repaid is a rip-off. The SUPPOSED reason for the EFT is to repay the CellCO for the subsidizing the cost of the phone over the term of the contract so this method is fair to both sides.
If someone disagrees, please explain why and what is a fairer method.
My above method of handling the EFT is based on not considering the question of interest (or "Cost of Money") but just treating it as a straight payment situation (or a Zero Interest Loan) and ignoring the question of amortization/etc. Taking those factors into account WOULD increase the original EFT and slow the decrease in remaining EFT due but not to the extent that the so called "Pro-Rated EFT" plans charge. The basic method would either pay off the $10 a month plus one month's interest on the remaining subsidy amount [ie: The monthly payments decrease each month) OR treat it as a normal fixed payment loan where the monthly reduction pays off one month's interest and the remainder pays down the principle.
