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 SYNACKJust Firewall ItPremium,Mod
join:2001-03-05
Venice, CA
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| A better and more honest breakdown of the costs The main problem with carrier subsidized phones is the blurring of the actual costs.
They basically wrap the extra cost into the monthly bill, but keep on charging for it forever, even once the 1-2 years have passed, unless we jump on another subsidized phone. I had my last phone for much longer than that, but never got a break in monthly rate.
While we get a clear breakdown of all the junk fees on the bill, the actual cost for the subsidized phone is never shown, while it is of course clearly rolled into the monthly bill.
For better transparency, I would prefer a contract that does not contain any phone subsidies. If done honestly, it should be significantly less.
Phone subsidies could be replaced with a easy loan, that, if paid off over the contract time, would increase the monthly bill to what we have now, so the bottom line is exactly the same until the phone is paid off. We would be free to pay cash, get a phone loan from our preferred financial institution, or directly from the phone vendor.
ETFs can still be retained, but should not depend on the presence or absence of a subsidised phone. A longer contract would simply offer a certain additional incentive or rate guarantee.
People who constantly upgrade the the newest and greatest would also be better off, because there will be a thriving market for used phones (ebay, craigslist, etc.). Currently, everybody gets a new phone with a new contract, also indirectly contributing to e-waste. | |
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| I agree except for the idea of retaining ETF's
if we go to a pay upfront model, the point of that model is that you can use any carrier you want and switch at any time, which increases competition and lowers prices.
Buying up front, with ETF's would be a lose-lose scenerio for the customer, we'd have to fork over a lot of money up front, monthly service charges would stay the same, and we'd be stuck with carriers we don't like. | |
 GbcueAlmost P.E.Premium
join:2001-09-30
Santa Rosa, CA
kudos:8
·AT&T U-Verse
| reply to SYNACK
That's precisely what T-Mobile's doing.
For their 2-year contract plans, you pay more, because a phone is subsidized.
With their non-subsidized plans, you pay less per month, but you can also pay for your un-subsidized phone with a 0% interest loan over 20 months (provided you have good credit).
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 FBGuyyippee ki yayPremium
join:2005-03-19
1 edit | its just too bad the unsubsidized plans are not that much cheaper than the subsidized plans. they are still starting to go down the right path.
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| reply to SYNACK
I'm glad you brought this up.
I brought up that there is no such thing as a "phone subsidy," and got a bunch of drivel as responses. I guess the truth was too much to hear, or people are just so financially illiterate.
'»Analyst: Apple Will Stick With AT&T Exclusivity'
A re-post:
Not to pick on you guys specifically, but it always annoys me when I read: subsidy.
There's no such thing as a carrier subsidy.
A subsidy implies you're getting something for free. No wireless carrier is doing that. What they're providing you is financing.
When you get a loan to buy a car or a mortgage to buy a home, that's financing. The lender isn't giving you something for free. Quite the contrary, you're paying them back and then some (a lot in fact).
Proper lending is (sort of) regulated, there's legislation and regulations dealing with all that. The terms need to be spelled out. They required to provide you with critical info like: principle (amt borrowed), interest rate, total interest payments over life of loan, etc.
But unlike traditional loans, wireless contracts aren't like that. There's opacity and subterfuge as far as the eye can see. The wireless carriers want it like that so they can bundle the financing costs with the cost of service, and you don't know the difference.
If people understood that $20-30 of their monthly fees paid for their phone, and the effective interest on it is really 10-30%, they'd see it for what it really is:
A scam.
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quote:
said by jmn1207 :
The reason "subsidy" is used is because, for all practical purposes, the phone is heavily discounted, or free, since the cost of service is no different for a phone purchased outright. Until I am offered a significantly discounted service plan with the features I want by bringing my own phone to the game, the cost of the phones are mostly considered to be subsidized.
quote:
said by clickie :
This also works in favor of the carrier because you don't know how much of your contract is for service and how much is for the the handset.
That's the whole problem.
There's no incentive for buying your own phone outright in the U.S. Wireless carriers bundle the cost of service together with the cost of the phone. This hides the true costs.
To add insult to injury, people think they're getting a good deal under this system. A "subsidy," despite it being completely illusionary.
I don't think this will change unless the government requires the cost of financing to detailed/itemized separating from the cost of service. We require the cost of most other types of loans to be detailed, this isn't any different
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quote:
said by nukscull :
Subsidy doesn't imply that you're getting something for free.
It means the cost is subsidized by other means, which can include free, but it doesn't.
So when you buy a car, and the dealer provides you with a car loan from the automaker's financial division (i.e. vendor financing), the dealer is giving you a "subsidy?"
If you guys believe that, it explains our nation's financial illiteracy.
quote:
The difference you pay for the phone is subsidized by the 1 or 2 years you agree to be a contracted customer of the carrier.
Once again, that's a loan. A contract in which you're provided something up front, and then a series of payments are obligated, is a loan.
I'd like to emphasize, I'm not against the concept of financing at all. It provides capital, so people and businesses can make purchases that few could afford to make all up-front.
I'm against shady lending though, which is what wireless carriers are essentially doing. They're hiding the terms of the loan they're making, they're hiding the effective interest rate, hell they're even hiding the fact that a loan was even provided. They're playing a game of hiding the ball.
The cost of the financing and the cost of service should be broken out separately, and detailed. Only then can people make informed decisions.
quote:
If you want an unsubsidized phone, they are available. So no one is getting screwed that isn't choosing to get screwed because of their finances
So you pay lower fee for service when you bring your own phone purchased outright?
No.
There's no incentive to do that, because you'd be getting screwed. By paying a service fee that included financing for a loan you didn't receive.
What I'd like is simply disclosure and transparency of the loan made and the service provided, just like we'd expect from any other type of loan. | |
 bentand IngaPremium
join:2004-10-04
Loveland, CO | reply to MovieLover76
Haven't you learned anything from the past 30 years?
Competition doesn't lower prices, it breeds collusion.
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