There are two things wrong with EFTs (and their levels) in my opinion.
First is that they are supposed to be set at a cost that recovers the subsidy by the cell phone company for giving you the phone at a price lower than what they will sell it to you if you want to buy outright. The actual EFT is MORE than the difference in cost however. I can see this difference IF they want to treat it as if it were a loan that is being paid back over the term of the contract and the difference is interest on the loan (but see point 2 below).
Second, the EFT does not get reduced over the term of the contract on a prorated basis (or an amortized basis if you consider this as a loan). If you have only one month left on a 24 month contract why is much more than 1/24th of the EFT still due? Even when there is a claim of the EFT being reduced on a prorated basis, the monthly reduction is much less then 1/24 of the full EFT. Attempting to use loan formulas to determine the implied interest rate does not yield pay-off figures like the cell companies charge.
Quite simply because recovery of the cost of equipment has very little to nothing to do with the ETF and more to do with locking in a "unit" of profit for the next X amount of time.
I have said and will continue to say that phones being tied to a carrier and them "subsidizing" them needs to end. They should implement a system that requires you to purchase the phone outright through either a cash price or a finance plan. In addition, a phone should be able to be used on any courier that it is compatible with at any time a customer decides to take it there.
However, there are 2 things that work against this and thus against the consumer. 1.) Carriers wont be able to lock in customers and they will be free to leave if unhappy and actually have an option 2.) The inflated cost of phones will not be as profitable to the carriers or the manufacturers.
said by Skippy25:No thank you. I like my "no additional cost" phone.
I have said and will continue to say that phones being tied to a carrier and them "subsidizing" them needs to end. They should implement a system that requires you to purchase the phone outright through either a cash price or a finance plan.
|reply to RARPSL |
The only fair ETF is no ETF!
|reply to openbox9 |
Glad you put that in quotes because you and I both know that the phone cost you as you pay for it outright or through the inflated price of the service.
You may feel better about buying things that you have no idea how much you are paying for, but I prefer to know what exactly I am paying for the item I am buying.
The difference is that I look at it like I'm paying for a service that includes a device for the service. I don't need it separated, nor do I really care how much the device costs.