| reply to fAcEtIOUs
Re: Increased ETF justified; bogus $1.99 data fees not EFT's serve absolutely no purpose other than to lock in customers and keep the price of the phones inflated.
ANY of these phones that were sold on the open market (without subsidization) would quickly drop in price to meet customer expectations or they will fail entirely. NOT a single phone (not even the iPhone) cost $600 to bring to market. I believe more than one site has tore the iPhone apart and determined it's cost to manufacture is around $100.
Actually lets kill 2 birds with one stone. AT&T complains too many iPhones are using too much data. So lets remove them from the subsidized purchase program and make everyone from here on out pay full price for it. Then AT&T doesn't have to mess with a ETF and the consumers will see the real price of the phone as it slowly drops to about a 10% margin. |
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 en102Canadian, eh?
join:2001-01-26
Valencia, CA | ETF's are like insurance policies.
We don't want to sell $200 devices...(MFRP $500), only few customers will pay for them.
We want to sell high end devices for $99, (MFRP $650).
Hint - iPhone 3G = $99, but has contract on the phone AND data, while all other devices will allow you to swap out to a cheapo phone and cancel out the data.
If we went to a standard in many other countries where the device isn't subsidized or locked, then they are quite pricey (a coworker had a HTC Touch - not pro for $500 USD in India). |
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 MattAll noise, no signal.Premium
join:2003-07-20
Jamestown, NC
kudos:12 | reply to Skippy25
If you think they are so cheap, go buy one yourself directly from oh say, Motorola. That $199 Droid? $599 directly from Motorola.
»www.store.motorola.com/mot/en/US···eDisplay
The grumbling isn't that the phones don't cost that much without subsidization, because they do. The argument is Verizon makes such a ridiculous profit margin off a 2-year contract customer, that raising the ETF is completely unnecessary.
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trafficcloak.com - pptp/sstp vpn services |
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approval from:
fAcEtIOUs 
| Re: Increased ETF justified Yes, they make a profit from 2 years worth of service... but ETF stands for "early termination fee"..... Aka canceling early. The fee ensures that they don't lose money if you break your contract.
To the person who said that the iPhone only costs $100 to make... Here an article says the the "pure manufacturing costs" are almost $180. »mytriniphone.com/blog/2009/06/co···3gs-179/
Now factor in the fact that they have to ship the phone, advertise the phone, deliver it to you etc.... then someone has to take care of your order... there has to be a staff to support you... thousands of towers which cost tens or hundreds of thousands of dollars each... billions of dollars in spectrum... you get the point.
Anyone getting a high end smartphone worth $400-$600 and only paying $100-$200 then complaining that it's ridiculous for them to actually want to be paid for the phone if you cancel early obviously doesn't understand how subsidizing works in the first place. Like someone else said, it should go down a little each month. |
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| reply to Matt
Re: Increased ETF justified; bogus $1.99 data fees not
Lame. You think Motorola charges us the same price as Verizon? If you do you're delusional or work for one of their retail stores. It's usually you guys who defend every customer unfriendly pricing scheme they pass our way. At the same time, they are upping your quotas and taking spiffs away yet you still field your blind devotion.
The MSRP of the phone IS NOT what the carrier pays. |
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 jsz0Premium
join:2008-01-23
Jewett City, CT | reply to Matt
The issue with ETF fee's is especially predatory. The logic doesn't work even if you base it on the MSRP. A phone being subsidized with a 2 year contract at $199 that MSRP's for $599 is a $400 "discount" Typically your contract has a minimum requirement so you will certainly be paying at least $60-$80 per month over a two year period that's $1440-$1920 to the carrier. So, based on the fraudulent MSRP number, that means about 25% of the profit they make at the low end of the spectrum covers the phone subsidy. So in this case after your first 7 months in the contract the carrier has broken even on the subsidy. Let's be generous and extend that by 5 more months. That means less than half way through your contract you're not longer being subsidized. This example is even worse when you consider this $599 phone is actually being sold to the carrier at maybe $400 or less. That means your subsidy ends up being less than 15% of the revenue the carrier makes off the 2 year contract. In the above example that means your subsidized period is over in less than 6 months yet you have 18 months left in debtors prison.
So why can't you cancel?
A) You signed a contract and that's your own fault
B) You signed the contract for a subsidized phone because the carrier & handset makers collude to deny you access to a free market unsubsidized choice by working together to inflate the MSRP.
I can understand some level of contract lock-in by the carrier but they're just being greedy and misleading here. 1 year subsidized contracts would be reasonable and reflect the reality of what the carrier is actually covering up front. It's a lot more like "rent-to-own" than subsidizing. |
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 FBGuyyippee ki yayPremium
join:2005-03-19 | reply to jcremin
Re: Increased ETF justified we are talking about the cost of the device. not the cost of service. the cost of service would take into account the spectrum, towers, customer service, etc.
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sbcglobal.net speedtest result 11/11/09 - 5256kbps |
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MattAll noise, no signal.Premium
join:2003-07-20
Jamestown, NC
kudos:12 | reply to SallyStruthe
Re: Increased ETF justified; bogus $1.99 data fees not I'm self employed and have never been associated with any cell phone company. Nor do I own any stock for that matter. Secondly, I'm not defending anyone. I think the ETF is a pure money grab, but I also am not naive enough to believe that a smartphone costs $100 or that Verizon doesn't pay close to retail for it.
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trafficcloak.com - pptp/sstp vpn services |
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 thenderScreen tycoonPremium
join:2009-01-01
Brooklyn, NY
kudos:1
2 edits | reply to Skippy25
said by Skippy25:I believe more than one site has tore the iPhone apart and determined it's cost to manufacture is around $100. This is such nonsense.
a) Cost to manufacture and cost to run a successful publicly traded company while supporting your device in its current stage and advancing it to the next are two TOTALLY DIFFERENT THINGS THAT SHOULD NEVER BE COMPARED.
b) None of these sites knows what the cost of the parts are. They could be more, they could be less, but they can't get an exact or even estimate fix on how much it costs to manufacture it. You have to look at so many different variables. It is difficult to calculate exact manufacturing cost per item even if you are the company doing the manufacturing. I sincerely doubt an unauthorized third party is able to come up with a legitimate estimate.
Have you ever tried to bring a commercial electronics device to the manufacturing stage?
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Macbook repair in NYC |
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 jester121Premium
join:2003-08-09
Lake Zurich, IL
 ·voip.ms
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Nice math, except you conveniently left out the part where a portion of what you pay actually goes toward the cost of making phone calls. 
Congratulations on getting the knee-jerk word "predatory" in there though -- that makes the customer sound like a victim, which is always good for a specious, emotion-backed debate that's void of logic and reason. |
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bn1221
join:2009-04-29
Cortland, NY | reply to SallyStruthe
Agreed but to be fair is I have a 5 year old phone that been on contract for 5 years...year 3-5 should be lower monthly fee than the first 2 since the phone subsidy is part of the monthly bill. |
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jsz0Premium
join:2008-01-23
Jewett City, CT | reply to jester121
said by jester121:Nice math, except you conveniently left out the part where a portion of what you pay actually goes toward the cost of making phone calls. That part is small. Read AT&T's financial statements. They don't disclose exact figures but you can make a pretty good guess based on what they do disclose. Somewhere around 80-85%+ profit margin which is in-line with other services. That's why I overshot the number of months the subsidy covers. From 7 to 12 and from 3 to 6 or 12. That's plenty of time for the carrier to make a fair profit. It's not exact but without real figures it's impossible to know.
Congratulations on getting the knee-jerk word "predatory" in there though -- that makes the customer sound like a victim, which is always good for a specious, emotion-backed debate that's void of logic and reason.
I specifically mentioned it is ultimately the customers fault for signing the contract. The big issue is how the handset makers and carriers create an artificial market to prevent the customer from having other choices. It's fine if they want to offer these 2 year contracts and, for many people, it might make complete sense to sign one. If you're happy with your carrier and plan to be with them for 2 years the ETF is a non-issue. In most cases if you buy an unlocked handset and signup for the same 2 year contract and decline the subsidized phone you're going to pay *exactly* the same price. How is that fair? It just shows the subsidy is made up and inflated to mislead customers. That is absolutely a predatory practice because the handset maker and wireless carriers are actively preventing you from buying an unlocked handset in a free market and then giving you no choice but to pay for a subsidy you're not even getting if you do decide to pay the hugely inflated price.
My solution is for the carriers to have to disclose the exact cost they are paying for the phone. Let the customers do the math and make their choice. They can't make a good choice if the information they're getting is just a made up number that exists only to make the 2 year contract look better giving the customer no other alternative choices or points of reference. |
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jester121Premium
join:2003-08-09
Lake Zurich, IL Reviews:
·voip.ms
| The retail price of phones is clearly visible on the signs in the store, and presumably not too difficult to locate on their website (though I don't care to check for myself at the moment). After paying an activation fee, a phone owner can sign up for service with no contract at all -- it will probably take jumping through some hoops because the trained monkeys aren't used to it, but I know people who've done it with a few carriers and it is available.
Hooty for you and your solution -- why would the carriers disclose their unit costs to you you or any customer, or to their competitors? It doesn't happen in many other industries and it's not information to which a customer has a reasonable expectation.
Not to trot out the same tired song, but if you think your way is better and customers would clamor to get a piece of it, start your own company and do something about it. There are plenty of small regional cell companies out there that are reselling carrier service and seem to be making a go of it in whatever their niche might be, so maybe yours is an idea whose time has come.
My suspicion is that no one really gives a damn -- remember, the people buying iPhones and paying the $30/month are the same ones who Karl and the rest of the BBR crowd are always ridiculing for spending $0.10 for a 160 byte (or whatever) text message and doing it hundreds of times a month. |
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jsz0Premium
join:2008-01-23
Jewett City, CT | said by jester121:The retail price of phones is clearly visible on the signs in the store, and presumably not too difficult to locate on their website As previously noted the MSRP price is an artificial value. This is where the arrangement becomes quite deceptive to customers. If the issue is investigated and it can be proven that the carriers and handset makers collude to artificially reduce competition and increase prices they will have to change their business practices. The FCC is already looking into it. The FCC has the mandate to do this because the wireless carriers are using public property in the form of licensed wireless spectrum to deliver their service. |
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| reply to jcremin
Re: Increased ETF justified said by jcremin :
Yes, they make a profit from 2 years worth of service... but ETF stands for "early termination fee"..... Aka canceling early.
...
of your order... there has to be a staff to support you... thousands of towers which cost tens or hundreds of thousands of dollars each... billions of dollars in spectrum... you get the point.
That makes no sense. If you cancel early, they don't have to provide you with customer support. They need less network capacity because you're not a customer. Those can be used to support another customer and they don't have to hire more CS, etc. when they get a new customer. So that is irrelevant to the ETF discussion. |
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| reply to Matt
Re: Increased ETF justified; bogus $1.99 data fees not said by Matt:money grab, but I also am not naive enough to believe that a smartphone costs $100 or that Verizon doesn't pay close to retail for it. Do you believe the car dealer when they say they're selling you the car for $100 over their cost? |
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| reply to en102
said by en102:If we went to a standard in many other countries where the device isn't subsidized or locked, then they are quite pricey (a coworker had a HTC Touch - not pro for $500 USD in India). I quite like the system I have in the UK. If I want to buy the phone sim-free and unlocked, I can (and take the immediate hit in the wallet). If I want service I can go to any one of several networks and get a month-to-month contract for a low price. I can switch when I feel like it. In practice I can just stay on pay-as-you-go because it is very good value.
Or, I can pay a lot more than $99 for the phone and get it subsidised through the network. If I go to the right store I can get that phone factory unlocked and without their branding all over it. I'm not forced into a data plan (unless I actually wanted an iPhone), either. |
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| reply to Matt
Well here is one source:
»www.phonesreview.co.uk/2008/06/1···-3g-100/
And I believe if you look around you will find others that have discovered the same thing. |
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1 edit | reply to thender
EVERY device can be taken apart and have every core part analyzed and priced. It is done for the major consoles, it has been done on several phones and it will continue to be done. |
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| reply to jsz0
MSRP is a scam to begin with.
What many of you may not know is that there are also minimum selling prices and as a reseller you have to maintain that price or you will lose your right to sell their products. And resellers cannot legally tell you want their prices are for a product. Doing so will put them in breach of contract and they could be held financially liable. |
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