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Verizon CEO: We'll Kill Phone Subsidies If Users Want It
Company Playing Wait and See With New T-Mobile Strategy
by Karl Bode 04:33PM Thursday Apr 04 2013 Tipped by Bill Neilson See Profile
Verizon Wireless CEO Lowell McAdam today stated the company is watching T-Mobile's no contract pricing with great interest, and that Verizon will offer no contract wireless if consumers start clamoring for it. T-Mobile is offering users less expensive data plans but no phone subsidies -- users for example paying $100 down for the iPhone 5 and an additional $20 per month for 24 months. "I'm happy when I see something different tried," McAdam stated.

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Well not that happy -- Verizon certainly prefers having users locked down under contract and facing steep ETFs if they try to switch to a competitor. Still, like all carriers the subsidies paid to companies like Apple can be a significant drain on earnings.

The only way Verizon follows T-Mobile's lead is if consumers force them to, but with many users currently under said contracts, it will be a little while before we see whether users are ready to give up the $200 subsidized phone approach en masse.

Leap Wireless is sitting on an unsold pile of iPhones after announcing they'd be selling the devices at full unsubsidized price. T-Mobile's installment plans may lure significantly more users, but the future of the subsidy at the moment is anything but clear.

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Billmnfl

join:2013-04-01
33558-5947

2 recommendations

Wait and see?

Wait and see till you are out of business.
I would rather buy an unlocked phone and go with the best price for service.
I think your phone subsidies are a fraud.

ITALIAN926

join:2003-08-16
kudos:2

Re: Wait and see?

Hey Lowell, doesnt VZwireless have their own CEO? Lets talk about FiOS expansion....

hey hey hey

@charter.com
said by Billmnfl:

Wait and see till you are out of business.
I would rather buy an unlocked phone and go with the best price for service.
I think your phone subsidies are a fraud.

Not fraud. I like them just fine. No way I'd pay $600 for a phone. I paid $50 for my phone. It would have been $450 full price. I'll take the $50 and a 2 year contract I have no intention on breaking anyway.

Verizon going out of business? Try looking at their quarterly repots. they have been gaining more customers then the other 3 COMBINED and have the lowest churn in the industry.

Also no such thing a truly unlocked phone. Since Verizon and Sprint still use CDMA for calls and texting and at&t and T-mobile still use GSM who makes this magical unlocked GSM/CDMA device that works on EVRY frequency used by the 4 major carriers? Heck you can even use Sprint device on Verizon and vise verse even though both use CDMA because they use different frequencies.
TBBroadband

join:2012-10-26
Fremont, OH
Reviews:
·AT&T U-Verse
·MegaPath

Re: Wait and see?

Sprint had huge amounts of money too at one point and look at them. The bigger you are the harder you fall and all that goes up- must come down. Customers/Consumers will stop paying for the high fees/prices that VZW and AT&T want (and now with Sprint) and will move to MVNOs and other contract free services such as with T-Mobile. Have you seen that contract free subscriber rates are actually going UP and contract customer counts are coming down? Customers are tired of the contracts, tired of the credit issues and BS and are looking for true options. VZW and AT&T will see it or will pay for it later.

BTW- the BB Storm 2 was a GSM/CDMA phone and could be used on TMO and AT&T along with CDMA networks. It was a world phone. VZ just didn't want you unlocking it to take else where. And actually Sprint will refuse to use a VZW phone and VZW will refuse to use a Sprint device. You can however take those devices to other budget carriers that are CDMA - Revol/Metro and they'll flash/unlock them and use 'em.
Billmnfl

join:2013-04-01
33558-5947
I would expect, like all things electronic, that if the you weren't required to maintain a 2 year agreement, for which you pay dearly, and if the phone company with billions behind them weren't paying for the cell phone, then, like the microwave and desktop computer, prices would come down. But hey, if the cell company wants to pay me $600 per phone as a manufacturer, why not. If they can't move their stock, the price will come down, just like the clone phones and tablets that do the same as your $600 phone but only cost me $149.
tmc8080

join:2004-04-24
Brooklyn, NY
Reviews:
·ooma
·Optimum Online
·Verizon FiOS

1 recommendation

said by Billmnfl:

Wait and see till you are out of business.
I would rather buy an unlocked phone and go with the best price for service.
I think your phone subsidies are a fraud.

Cellcos telling manufacturers what to charge for handsets is the BIGGER fraud.. those price gouging high prices for the phones upfront are the BAIT to lure customers into making a deal with the devil cellcos for 24 month contracts. Seriously.. when did you see handsets go from $99 all the way upto $600 and more until the Iphone & Android handsets? Metro PCS revealed how low handset prices for an entry level android phone could go to $40 versus $300+. This only adds to the anti-competitive dysfunctional marketplace.

BTW, this is talking about mainstream mass produced handsets.. not the early analog days where you had to be a rich fat cat or criminal (drug dealer) to afford analog service pricing.
itguy05

join:2005-06-17
Carlisle, PA
said by Billmnfl:

Wait and see till you are out of business.
I would rather buy an unlocked phone and go with the best price for service.
I think your phone subsidies are a fraud.

From what I've seen T-Mobiles plans are not that great when you add in 4G service. So you are really not saving anything by forgoing the subsidy.

IowaCowboy
Iowa native
Premium
join:2010-10-16
Springfield, MA
kudos:1
Reviews:
·Verizon Broadban..
·Comcast

Subsidies are good

Consumers prefer subsidies, look at all the unsold iPhones with Cricket.

If it weren't for the subsidy, I could not afford an iPhone. And I had to use the VZW device financing offer to buy my iPad mini.

As for MVNOs, I would rather do business with a carrier that owns and controls the network. Has VZ, AT&T, Sprint, US Cellular, or t-mobile gone out of business in the ten years that cell phones become mainstream, the answer is no.

Have MVNOs gone under, yes. And the carriers that own the networks can kick an MVNO to the curb without warning and that $649 unsubsidized iPhone becomes an overpriced paperweight.
--
I've experienced ImOn (when they were McLeod USA), Mediacom, Comcast, and Time Warner and I currently have DirecTV. They are much better than broadcast TV.

I have not and will not cut the cord.
jjeffeory

join:2002-12-04
USA

1 recommendation

Re: Subsidies are good

Consumers prefer having it now, which isn't quite subsidies. Look at what T-Mobile is doing. That's another way for consumers to have it now and still pay for the phone. If we stop paying these stupid prices for these gadgets, maybe their price will go down as well?

IowaCowboy
Iowa native
Premium
join:2010-10-16
Springfield, MA
kudos:1

Re: Subsidies are good

Another barrier is incompatible networks. VZ and Sprint are CDMA/LTE while AT&T and T-Mobile are GSM. So an unlocked phone is no good as they are incompatible with each other's networks. And they operate on different frequencies.
chgo_man99

join:2010-01-01
San Jose, CA

1 recommendation

financing != (does not equal) affordability.

It makes it easier to obtain expensive device earlier for people with less expendable income. But if people struggle to obtain something even for under $600, maybe they should not be buying expensive gadgets in the first place?

Thats why our economy is in trouble because many people borrow to the hilt whether its for cars, mortgage, student loans. Today interest rates on savings account are useless. Stocks and bonds don't offer the same liquidity and guarantee against loss as fixed assets such as cash.

IowaCowboy
Iowa native
Premium
join:2010-10-16
Springfield, MA
kudos:1

Re: Subsidies are good

The iPad Mini was $559 as I bought the one with 4G in it + 32 GB of memory.

I live on a tight budget but I have money for the necessities and some luxuries (like pay TV and Internet). My rent and utilities are paid each month.
TBBroadband

join:2012-10-26
Fremont, OH
Reviews:
·AT&T U-Verse
·MegaPath

Re: Subsidies are good

And again- if you could NOT fiance the iPad you could not buy it- meaning you did a "rent to own" option if you will. The point is; this is only going to cause more problems in the long run. It did not help you. It only spread those payments out. You could have still paid for it by saving.

But as we all know- VZW can do no wrong with you as you are their poster child.

IowaCowboy
Iowa native
Premium
join:2010-10-16
Springfield, MA
kudos:1

Re: Subsidies are good

I financed the iPad with Verizon Wireless. I still had to pass a credit check and while I might have credit issues in the past, I have good credit with VZW (since I pay them on time each month).
chgo_man99

join:2010-01-01
San Jose, CA

Re: Subsidies are good

Was it interest free? if it wasn't would you still buy it on "credit" or wait a few weeks or months to get one?
TBBroadband

join:2012-10-26
Fremont, OH
Reviews:
·AT&T U-Verse
·MegaPath

1 recommendation

I can also show you companies with piles of iPhones that are subsided and are STILL sitting on those same devices. Look at Sprint for one.

And you'd only rather do business with the actual network because you want the "bling" that they offer- only a brand and nothing more. I bet I actually pay LESS than you over a month than what you pay to VZW and have more- by not having their brand name.

And do you realize when the last MVNO went out of business???? (FYI- Page Plus Ceullar- is the oldest VZW MVNO and they're still around). And Cricket/Leap Wireless is NOT a full MVNO- they have their own network and ROAM onto VZW,Spent and Revol.

SteelerRaw

@timet.com

Re: Subsidies are good

said by TBBroadband:

I can also show you companies with piles of iPhones that are subsided and are STILL sitting on those same devices. Look at Sprint for one.

I looked at Sprint. They moved 6.6 million iPhones in 2012. You should find a better example because that one doesn't support whatever point you were trying to make at all.
raythompsontn

join:2001-01-11
Oliver Springs, TN
Reviews:
·Comcast

1 recommendation

said by IowaCowboy:

If it weren't for the subsidy, I could not afford an iPhone.

Rent to own companies really want people like you.

Consider the price for a subsidized 32gig iPhone, $299 and $100 a month. Over the course of two years you have paid $2700. Now consider a phone you buy, $750 at Apple, $45 a month with Straight Talk and over two years you have spent $1830. Your two year, can't afford the phone, just cost you an additional $870, the cost of a new phone, again. You have effectively paid for two phones.

Better to save your money for a few months, buy the phone outright, and then go with a prepaid plan.

IowaCowboy
Iowa native
Premium
join:2010-10-16
Springfield, MA
kudos:1
Reviews:
·Verizon Broadban..
·Comcast

Re: Subsidies are good

And what is the cap on straight talk, they might advertise unlimited but once you hit a gig, you get kicked off the network and lose your phone number. I've had the same phone number since 2009 and I've had the same home phone number since 2007.

Like I said, I'd rather do business with a tier 1 company that owns and controls the network. And with postpaid, you have access to more towers (VZ + partner towers) where prepay you have limited towers (VZ towers only) and I was told that by a VZ employee.

When the iPhone first came out, no subsidy plus two year contract at full price.

If I could buy the phone outright, I'd still go with VZ but on a month to month basis with the freedom to upgrade or switch carriers at anytime.
--
I've experienced ImOn (when they were McLeod USA), Mediacom, Comcast, and Time Warner and I currently have DirecTV. They are much better than broadcast TV.

I have not and will not cut the cord.
raythompsontn

join:2001-01-11
Oliver Springs, TN
Reviews:
·Comcast

1 recommendation

Re: Subsidies are good

said by IowaCowboy:

And what is the cap on straight talk, they might advertise unlimited but once you hit a gig, you get kicked off the network and lose your phone number.

You get throttled, not kicked off. Your assertion is incorrect. Exceed limits on most carriers, even Sprint, and you will get throttled. The limits are large enough that unless you are streaming video you will likely not hit the limit. Watching video on a phone is torture.
said by IowaCowboy:

I've had the same phone number since 2009 and I've had the same home phone number since 2007.

I have had the same cell number since 2000 and the same home phone number since 1988. What is magical about having the same number? Using Google Voice I can change cell numbers every month if I so desire. Having the same phone number is a non-issue.
said by IowaCowboy:

Like I said, I'd rather do business with a tier 1 company that owns and controls the network.

Your choice.
said by IowaCowboy:

And with postpaid, you have access to more towers (VZ + partner towers) where prepay you have limited towers (VZ towers only) and I was told that by a VZ employee.

Straight Talk uses AT&T towers. Verizon uses CDMA whereas ST uses GSM which is available outside the US. I can travel to another country, buy a SIM, and have phone service while I am in the foreign country.
said by IowaCowboy:

When the iPhone first came out, no subsidy plus two year contract at full price.

So you paid an extra $55.00 a month for two years for nothing.
said by IowaCowboy:

If I could buy the phone outright, I'd still go with VZ but on a month to month basis with the freedom to upgrade or switch carriers at anytime.

As long as your phone will support GSM and CDMA. Otherwise you will be limited to switching to carriers that only support the protocol that your phone supports.

Had Verizon offered a phone, unlocked, full price, with a prepaid contract for $50.00 I would have taken it. But Verizon did not offer such at the time that I made the switch. All Verizon offered was a subsidized phone at $100 a month as a data plan was mandatory. Tack only all the extra "recovery" fees (ie profit) that Verizon adds and the cost with Verizon can get pricey.

If you want to spend twice what a phone costs over two years, and continue paying that price once the contract is up, it is your choice. Rent-to-Own companies really like people with your way of thinking. Paying double what a product actually costs the retailer provides nothing but profit for the provider.
bn1221

join:2009-04-29
Cortland, NY

Re: Subsidies are good

ST also uses Verizon towers for the CMDA phones. Yes, they have both.
chgo_man99

join:2010-01-01
San Jose, CA
said by raythompsontn:

If you want to spend twice what a phone costs over two years, and continue paying that price once the contract is up, it is your choice. Rent-to-Own companies really like people with your way of thinking. Paying double what a product actually costs the retailer provides nothing but profit for the provider.

One way to solve that problem would be if everybody did this and stick to them, upgrade your phone exactly every 2 years or earlier whenever eligible for upgrade. Because once contract expires and still you continue to pay a full price each month, they rack up profits like crazy. Even worse so for unlucky souls who got hooked up on share mobile plans. They are not cheaper than plain old individual/family plans but tradeoff valuable GBs for unlimited talk and texts who in this modern age of Skype and iMessage, etc no one needs anymore. Plus $10 extra for each tablet is insulting, kinda defeating the primary purpose of share plans. Unless you want argue with me their primary purpose is for making fat profits.

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK
What you are actually saying is you want it now, but don't have the funds for it, so you'd rather get it now and pay dearly for it over 2 years.

Yes, this is true, many consumers want it now but can't pay now. They can't finance because they are already mortgaged to the hilt and/or have poor credit histories, so they pay a lot more.

What T-mobile is trying is allowing you to finance a phone. IE not they subsidize it, but you finance it, and then you choose the plan you want (or even the carrier you want) and save money. You still have to pay off your phone but you get a much better savings over time then the traditional subsidy model. This works for the "I want it now, but don't have the money." OF course this will not help the people who are deeply in debt and have trashed their credit, but honestly, I don't know how much the these companies want a customer who will probably default on their regular 2 year contract anyway.
--
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini

Rob
In Deo speramus.
Premium
join:2001-08-25
Kendall, FL
kudos:2
Reviews:
·Comcast

1 recommendation

said by IowaCowboy:

If it weren't for the subsidy, I could not afford an iPhone. And I had to use the VZW device financing offer to buy my iPad mini.

Or, you would get a phone that is within your budget... and when phone manufacturers such as Apple see a sharp decline in sales, they'll lower their margin.

There's no reason why an iPhone should cost $699.
--
CheckSite.us | YourIP.us | Reverseip.us
kerya666

join:2002-12-20
Valrico, FL
said by IowaCowboy:

Consumers prefer subsidies, look at all the unsold iPhones with Cricket.

Consumers prefer choices. Have both variants available, subsidized and non-subsidized with a much lower monthly bill.

Though I am having hard time believing that they will not just pack the unsubsidized offer with full of fees to even it out anyways.

jazzy_

join:2004-01-27
Charleston, SC

if it were an option

Perhaps if they had phone plans with lower monthly costs for people that bring their own some would use it. But as it is you are better off getting your phone subsidized since they gouge you no matter what.

lakerfan82

join:2009-01-30
Corona, CA

1 recommendation

They'll still force you to buy a Verizon branded phone

Won't be worth it... they'll still force you to buy a Verizon branded phone, doubt they would let you bring a phone and pop a Verizon LTE sim in it, so you'll be paying their $600 retail price instead of getting a phone directly from something like the Google Play store...

hey hey hey

@charter.com

Re: They'll still force you to buy a Verizon branded phone

said by lakerfan82:

Won't be worth it... they'll still force you to buy a Verizon branded phone,

yeah and?.............

doubt they would let you bring a phone and pop a Verizon LTE sim in it,

Exactly how would you use the phone to make calls and text? Since Verizon still uses CDMA for them and will for upto the next 8 years? And do these non Verizon phones support LTE over the 700 MHz frequencies that Verizon uses for LTE? Um nope.

lakerfan82

join:2009-01-30
Corona, CA

Re: They'll still force you to buy a Verizon branded phone

Iphone 5 does, no reason to think others can't or won't. VoLTE will support SMS and voice late 2013. Google Voice too.
wkm001

join:2009-12-14
The Galaxy S4 looked like it had two SIM card slots. I'm hoping this is for all of the LTE offerings by all the carriers. Hopefully it has a CDMA radio in it too. Basically what I'm trying to say, this may be a true world phone. My Verizon Galaxy S3 is, I can put a SIM in it from any carrier and use it. Of course I only get edge speeds on T-Mobile, but 3G speeds will work on AT&T. The SIM isn't locked either.

Hopefully LTE will simplify things though. Voice over LTE will hopefully allow the manufacturers to make one device for all carriers. If the carriers allow it... The manufacturers are certainly getting more powerful and it seems they don't have to cater to the carriers so much.
coma9

join:2013-02-05
United State

Bloatware?

I wonder if his phone is loaded with bloatware and Verizon garbage software.... or did he root and throw a custom rom on his phone like me?

••••
XJakeX

join:2005-03-05
Coventry, RI

1 recommendation

Phone costs are made up

The real fraud here are the stated full costs of cell phones. Since more than 90% of these phones are sold in subsidized plans, the makers have no real reason to complete on price. Create an environment, where Apple, Samsung, Motorola, etc. have to battle each other in the marketplace instead of in the courtroom, and you will see the full un-subsidized prices of these phones down where they should be, between $200 and $300.

n2jtx

join:2001-01-13
Glen Head, NY

Leap

Leap Wireless has no one to blame but themselves for their pile of iPhones. They are selling locked down iPhone's at an unlocked price (as noted here a few weeks ago). You would be better off going directly to Apple and buying an unlocked iPhone for the same price. Perhaps the idiots at Leap will wake up and realize their stupidity (I doubt it). They'll spin it as being a business model that does not work.
--
I support the right to keep and arm bears.
wkm001

join:2009-12-14

Split it out?

Verizon Wireless does not want to draw a line between subsidized and unsubsidized pricing on their plans. They have never done it and I don't expect they ever will.
bn1221

join:2009-04-29
Cortland, NY

F-U VZ

How about "I buy my own phone retail full price and you drop my bill $30 a month since you don't have to subsidize me?"

Oh, you won't...well then I guess I get a contract free Iphone from Apple direct and put a prepaid SIM in there.

whiteshp

join:2002-03-05
Xenia, OH

Wait and see...

Verizon would be more than happy to drop subsidized phones with a bi-yearly price hike.

Consumers may be more than willing to drop their $200 mfg cost subsidized phone for $800 valued on their bill cell phone. But but that would require math.... Na they'll just pay $800.

New Special Next Week! New "till end of time" contract offers $50 off existing new phones! Consumers flock in droves! {ETF: first born}
--
--
A democracy cannot exist as a permanent form of government. It can only exist until the corporations discover that money can elect representatives to vote themselves a monopoly, buy media to blame 'The Godless' and forced price inflation on the public.