backtop


Print 57 comment(s) - last by StrangerGuy.. on Dec 14 at 10:37 AM

He said carriers need to stop focusing on luring in new subscribers and instead set their sights on getting existing customers to use more of the network

AT&T's CEO recently said that carriers could no longer afford to pay subsidized prices for subscribers' new smartphone hardware.
 
According to a new report from CNET, AT&T CEO Randall Stephenson told an investor conference in New York City on Tuesday that subsidies for high-end smartphones must end.
 
More specifically, Stephenson sees smartphone market penetration at 75 percent in the U.S., and it's expected to climb to 90 percent "soon." This kind of growth, he said, means that carriers need to stop focusing on luring in new subscribers and instead set their sights on getting existing customers to use more of the network.
 
"When you're growing the business initially, you have to do aggressive device subsidies to get people on the network," said Stephenson. "But as you approach 90 percent penetration, you move into maintenance mode. That means more device upgrades. And the model has to change. You can't afford to subsidize devices like that." 
 
Before Apple's iPhone launched in 2007, wireless carriers placed their focus on bringing new subscribers in to the network. Once the iPhone was released, it was made exclusive to AT&T initially, where the carrier offered unlimited data plans through its 3G network as a way of drawing in data-hungry customers who wanted the new iDevice. 
 
In 2010, AT&T was the first carrier to eliminate the unlimited data model and move to tiered plans instead.
 


Randall Stephenson [SOURCE: phonearena.com]

But the goals have changed for AT&T. Now that the iPhone and other smartphones have flooded the market, it wants to move away from subsidized pricing as a way of building customer growth and instead help customers make better use of its network. 

One of the ways it has done this is through its Next plan. This allows customers to purchase a new handset with no money down and pay a monthly fee for 20 months as part of their wireless bill. After one year, the handset can be traded in for an upgrade to newer hardware. From there, a new 20-month cycle starts based on the price of the device.

"If you are a customer and you don't need to upgrade your device, you can get unlimited talk and text and access to the data network for $45 all-in," said Stephenson. "You can use your own device or finance it. I think this will be very powerful. It's where we see the market going."

AT&T also recently reduced off-contract prices and changed its base costs for each data tier. 

Stephenson added that AT&T will be looking more toward the lower end of the market now that capacity problems have been addressed for the high end (thanks to LTE). Part of the low-end strategy is utilizing its latest purchase of Leap Wireless, a prepaid carrier that AT&T purchased for $1.2 billion back in July of this year.

"You will see us go very aggressively in the prepaid market," said Stephenson.

It seems like AT&T has been watching T-Mobile's latest "UnCarrier" moves. T-Mobile eliminated contracts for reduced cell phone plans in March and was the first to introduce an early phone upgrade program in July. Then, in October, it started offering a free unlimited international text and data plan.

More recently, T-Mobile announced Tuesday that it would be dropping down payments for Apple's new iPhone 5S and iPhone 5C handsets, as well as certain iPad models. It's a limited holiday offer, though. 

Source: CNET



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

By kattanna on 12/11/2013 11:48:47 AM , Rating: 2
quote:
ALL cell phones should *only* be purchasable at a full retail price


why not both? or do you not like options?


By Motoman on 12/11/2013 12:01:47 PM , Rating: 2
If you feel the need to buy a phone you can't afford to pay for all at once, as noted, your option is to use a credit card.

Which is infinitely better because you still get to spread the cost of the phone over a period of time, but you don't get locked into a long-term contract with ETFs and such...you *own* your phone and you can do with it what you please.

No one's been denied any "option."

Although, as someone else pointed out, the better "option" is likely to just buy a phone you actually *can* afford.


By Mint on 12/11/2013 12:48:26 PM , Rating: 4
There's nothing wrong with financing. Why are you drawing the line at cell phones? What about cars and homes?

The problem is not that vendors are letting people avoid paying for phones all at once. The problem is, as you mentioned, the obfuscation of total price.

There should be a law where all contracts for all consumer products show the total commitment in a big font on the front page.

Something tells me that prices would be a little more competitive if AT&T iPhone contracts showed $2376 on them instead of $200.


By Motoman on 12/11/2013 1:31:59 PM , Rating: 2
quote:
There's nothing wrong with financing. Why are you drawing the line at cell phones? What about cars and homes?


Do you have to pay an ETF is you sell your car or home after a year? No? Huh. Guess you're not comparing apples and apples then, now are you?

Also, as noted, the obfuscation of the true cost is another unique issue. People financing a car or a house have 100% understanding of what their actual cost is. Traditional long-term cellphone contracts are deliberately constructed and marketed to obfuscate that actual cost.


By Accord99 on 12/11/2013 4:28:58 PM , Rating: 2
quote:
Do you have to pay an ETF is you sell your car or home after a year? No? Huh. Guess you're not comparing apples and apples then, now are you?

You pay an ETF if you break your contract, try breaking a mortgage early.

quote:
Also, as noted, the obfuscation of the true cost is another unique issue. People financing a car or a house have 100% understanding of what their actual cost is.

The housing bubble and the proliferation of consumer leasing of cars says most people don't really know much more than the monthly payment.


By Motoman on 12/11/2013 4:42:00 PM , Rating: 2
quote:
try breaking a mortgage early.


I have. It's called selling your home. You think there's an ETF in there?


By Jeffk464 on 12/11/2013 1:36:37 PM , Rating: 2
Financed home yes, financed car no, finance daily spending absolutely not. Financing takes your spending income and drops it around 10-18%, it also puts you in deep do do if anything happens to your income.


By Monkey's Uncle on 12/11/2013 3:53:04 PM , Rating: 2
quote:
There's nothing wrong with financing. Why are you drawing the line at cell phones? What about cars and homes?


Finance phones, cars and homes? Are you MAD?

I buy my cars and houses for cash only. Finance them ... feh!


By Monkey's Uncle on 12/11/2013 3:55:13 PM , Rating: 2
(hit submit too quick)

Phones I get on contract!!


By JediJeb on 12/11/2013 5:36:49 PM , Rating: 2
quote:
There's nothing wrong with financing. Why are you drawing the line at cell phones? What about cars and homes? The problem is not that vendors are letting people avoid paying for phones all at once. The problem is, as you mentioned, the obfuscation of total price. There should be a law where all contracts for all consumer products show the total commitment in a big font on the front page. Something tells me that prices would be a little more competitive if AT&T iPhone contracts showed $2376 on them instead of $200.


What should be done is a requirement that the phone financing be separate from the service. Let the phone companies sell the phones, but make them sell them separately, that way you know just how much you are paying for service and how much you pay for phones.


By Monkey's Uncle on 12/11/2013 3:39:21 PM , Rating: 2
Problem with credit cards are these:

- Horrific interest rates - payday loans and credit cards to me are nothing more than legal loan sharks. It is extremely tough to find a credit card company that will give you a credit card with anywhere near a reasonable interest rate.

- Ability to pay a 'minimum' payment that barely covers interest. This has the potential causing financially irresponsible customers to pay up to 10 times the value of the phone. It is far too easy to get into a deep debt rut with a credit card - I hate the freaking things.

Using the carrier to finance the phone brings to the table a couple things:

- Buyers are FORCED to pay for the phone via his service charges (used to be 10% of your bill goes to the phone - may have changed with the new regs in place). That means the phone should be paid off in a couple years. Financial irresponsibility is removed from the picture because the phone users has to pay ALL his service charges. There is no such thing as a 'minimum' payment.

If the buyer leaves their contract, they are still required to pay the unpaid discount they were given on their phone - which conceivably could go on their credit card or other financial medium. But hopefully they had stayed with that carrier long enough for the normal attrition to reduce te amount remaining into something payable.

The only real gripe I have with cellular provider's discounting phones is that (at least in Canada) they give you no way to pay off the discount (called a 'Tab' here - much like a bar tab) except via a 10% monthly service cost attrition and lump payments when you leave the plan. They give you absolutely no other way to pay off that phone. This is a pain if you have half of the phone cost up front and want to pay it off in 6 months. Worse, some of the cell provider kiosks in malls or large stores like Best Buy refuse to sell you a phone outright. They insist that you MUST buy it on 'the tab' (to me this is sheer & utter BS).


By Accord99 on 12/11/2013 4:31:52 PM , Rating: 2
In Canada, if you have a Tab plan you can pay it off anytime you want and then ask for a BYOD discount. Or you simply cancel the plan or port out the number, and they'll bill the remainder of the subsidy plus a contract termination fee of between $0-$50 depending on the provider and the province you're in.


By Monkey's Uncle on 12/11/2013 6:28:39 PM , Rating: 2
Have you tried paying off a tab? I have - with both Bell and Telus.

The only way out of a Tab is:

1. Keep paying your monthly bill -- 10% goes to your tab.
2. End the contract.

Both told me in no uncertain terms that there is absolutely no way to make a lump sum payment to your TAB. The only way to pay it off are those that I have listed.

Here's another one for you. The independent operators (kiosks and big box stores) will not sell you a high-end phone outright. They will only sell you a phone on a monthly plan with a tab (they don't get as much commission on hardware-only sales so will refuse to sell you just the phone).


By Accord99 on 12/11/2013 10:45:02 PM , Rating: 2
Bell and Telus (or Rogers) don't have a Tab, they have the classical contract system whereby the device subsidy balance you received upfront is reduced by 1/24th of the initial subsidy each month (for the now maximum 2 year contracts). The only way to pay of the subsidy early is to cancel the plan, or to do an early renewal to get a new subsidized device.

A true Tab is like with Koodo which reduces the outstanding Tab by 15% of your monthly bill, can be paid off at any time and with current regulations, automatically zeroes out after 24 months.


By Monkey's Uncle on 12/12/2013 10:58:03 AM , Rating: 2
Virgin is a subsidiary of Bell. No early payoff of tab without cancelling the plan. Got that directly from their CS rep on the phone when I asked them how I can pay off the tab on SGS4. I was NOT amused. Even fired a note off to Richard Branson about it.

Koodo (sub of Telus) said the same thing to me when I wanted to pay off a tab on one of my SGS3s. I cancelled my contract with them, paid off my SGS3 and took that phone to Virgin.

Both said the only way to pay the tab is via the 10% reduction of with each monthly payment or by cancelling the plan. Period. No other options. I didn't want to cancel the plans as they were a really good value.


By Monkey's Uncle on 12/12/2013 11:01:51 AM , Rating: 2
I see you have "with current regulations".

Those "current regulations" to don't come into play unless your tab was started after those regulations came into effect. In both cases for me this was before these regulations were imposed in Canada. In short they have to be written into your agreement. If they were not, there is no early payout without terminating your plan.


By extide on 12/11/2013 6:01:28 PM , Rating: 2
Ok dude you need to realize there is a distinction between financing a phone and getting a subsidized phone with a service contract. The latter is the evil one, that one should go away, yes. HOWEVER, purely financing the phone is not a bad thing, this is how T-Mobile does it. Your service is entirely separate from your loan for your phone. If you want to cancel service 4 months in on T-Mobile, there is no cancellation fee. You do, however, need to pay the rest of the balance of the phone itself. And also, when you finish paying for your phone, if you choose not to upgrade, your monthly bill essentially goes down because you are no longer paying for the 'phone loan' portion.

It is quite short-sighted to make such a blanket statement as to say, "phones should only be available at full price." Especially without considering other good options.

Also there is no need for you to get all high and mighty about how it is not good to use credit cards and blah blah. People's personal finances are exactly that, PERSONAL. They can do what they want, and it's none of your damn business.


"We’re Apple. We don’t wear suits. We don’t even own suits." -- Apple CEO Steve Jobs














botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki