AT&T and Verizon also looking into ending device subsidies

By , Jan 8, 2013

subsidized iphone

Last month, T-Mobile confirmed that it was ending device subsidies ahead of its official iPhone launch. The carrier hopes that customers will buy into the idea, which has them paying full retail prices for mobile devices in exchange for lower monthly fees.

Well apparently, the idea has attracted the attention of the big wigs at Verizon and AT&T. According to a new report, CEO’s from both companies are intrigued by the theory, and will be watching T-Mobile’s experiment closely over the next several months…

The Wall Street Journal reports:

“Last month Deutsche Telekom AG’s DTE.XE +0.65% T-Mobile USA said it would completely stop subsidizing phones in 2013, instead offering plans that essentially allow for interest-free financing.

“That is a great thing,” Verizon Communications Inc. VZ -2.43% Chief Executive Lowell McAdam said in an interview at the Consumer Electronics Show in Las Vegas. He joked that Verizon would support U.S. regulators in banning phone subsidies…

…AT&T T -1.69% Mobility Chief Executive Ralph de la Vega said Monday the company is watching the T-Mobile strategy, and AT&T could make a similar move if it becomes popular, but the company isn’t focused on the issue.”

While both executives say they are very interested in T-Mobile’s new strategy, they also say that they are worried their customers would not take kindly to the major change. Ralph de la Vega even says AT&T’s researched the idea, but isn’t yet comfortable with it.

The move, however, would make sense from the carriers’ perspective, as they typically have to eat hundreds of dollars per handset up front in subsidies, and then hope their subscribers pay their bills. This way, they wouldn’t have to take the risk of fronting the money.

Of course, it would also benefit consumers, who would see substantially lower monthly cell phone bills. But the problem is getting them to pay in upwards of $600 or $700 per handset. And for a family of four getting new phones, that equates to more than $2000.

What’s your take on the whole non-subsidy idea? Would you rather pay a bunch of money for your handset up front and have lower monthly bills, or vice versa?

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  • Blake

    This wont go well with consumers

    • Alex

      I’m impressed with T-mobile. They have stepped up their game, and they have moved towards an under estimated market. I will support this idea and motivate people to buy full price. I expect tmobile to match their prepaid prices of $50 unlimited everything with no contract. Let the prepaid feud begin….

    • http://www.facebook.com/profile.php?id=1100358050 Walcy Carroll

      i like the way t-mobile is going, but it should give or present the option to pay the full price of the phone upfront or the 199 route/2yr contract deal..

      the major problem that i think is basically alot of people are not good at budgeting the money, and someone is more than likely to have 200/300 dollars rather than 600 available on them, and putting 200 on a credit card will appeal more than 600. I prefer to save up for an item and pay for it in cash upfront rather than use credit for anything…

  • http://twitter.com/HyShai Shai

    Consumers never like paying full price up front. Americans would finance Big Macs if McDonalds would offer it. (Scratch that; credit cards.)

    • http://twitter.com/rolynn719 Roy Swartz

      You got that right!!

    • http://www.facebook.com/jordan.miller.370 Jordan Miller

      I would happily pay full price! I have been doing such that, that is why I still have unlimited data ;)

      • Brandon

        You lucky bastard lol I changed to Verizon post unlimited :( otherwise I would be happily paying full price for a device as well :)

    • http://twitter.com/aomia syler

      Why do you got to bring American’s into this lol but yea full price up front is not going to happen unless your Oprah rich.

    • Brandon

      Americans? Lol last I checked not only Americans use credit card dip shit and I happily pay full price up front for my Big Mac’s lol ;p don’t make this about trash talking a country

  • memuser

    The problem for me is I do not trust companies like AT&T and Verizon. They say lower monthly rates but I am sure once they get people used to paying for their phones themselves they will slowly move the monthly charge back up.

    • http://twitter.com/rolynn719 Roy Swartz

      Very True!!

    • http://twitter.com/drewstone2 drewstone

      then throttle speeds or something else to piss customers off. Cus you know customer service will definitely remain par-for-the-course.

  • http://twitter.com/Konahamarue ElementalXTC

    I wouldn’t mind it, but I am 100% sure ATT and Verizon would NOT lower their monthly rates even 1%. The cost of maintaining the infrastructure and well as profit margins keeps them salivating and greedy. Taking an early hit to guarantee a 24-month assured profit is nothing. Plus it would eliminate ETFs which make plenty of bank for them.

  • http://twitter.com/PhilBeez86 U Kn0w What 1t 1s

    I don’t think it will work well for t-mobile. Just as the article said, do you really see. Family of four paying 2000 for new phones when their contracts end? I don’t, I see t-mobile going under.

    • Alex

      The family of 4 can also afford around $300 monthly bill…

      • http://twitter.com/PhilBeez86 U Kn0w What 1t 1s

        It’s actually less than that for AT&T and if everyone pays, then the bill comes to around 65 a person a month. Dont comment to try and sound smart. Get your facts straight becuase u just sound stupid right now.

      • Alex

        Hold on mija… Lets give this math thing a try $65 x 4 = $260 + tax and state fees so $298…oh

        Remind me to not let YOU prepare my taxes this year.

        I bet ur the one in the family that doesn’t pay their bills on time. Lol

      • Edgar_W

        Alex = moron! You are SO wrong on the monthly. add Data which is usually $15 ~ $110 depending on what plan and you have a bloat bill. For a family of 4 that equates to a monthly car payment!!! When did we get sick enough to start paying that much for connectivity!? I would not want YOU to prepare my taxes! MORON! Better go dump smartphones and go back to *cough* blackberries!

      • Alex

        Somebody get my zipper cus this guy needs something to keep his mouth shut!

      • Brandon

        What the fuck did you even read the conversation you just posted on? Lmao you just sound retarted right now hahaha!!! Remind me not to let you do anything in life not just taxes lmao

      • Edgar_W

        I think it was you who did not read the convo right. Another bigger moron=Brandon

      • http://twitter.com/PhilBeez86 U Kn0w What 1t 1s

        That’s funny, actually I pay the bill and my family members, (all adults) pay me. And it’s actually $64 a person after taxes and everything u idiot. And we all have iP5′s except one who will upgrade next month. Once again #YouJustSoundStupid.

      • Brandon

        Daaaaamn!! Lol Alex just made you look stupid lmao ! Don’t talk shit about facts if you don’t know what the fuck you’re saying yourself ;)

  • http://www.facebook.com/profile.php?id=604885391 Richard Borkovec

    Or offer two different plans: a lower priced one where you don’t get a subsidized phone, or a higher priced one where the phone is subsidized. That way you can see the difference right up front, and have a choice.

    • http://www.facebook.com/stephen.m.simon Stephen Michael Simon

      This is such a great idea that I would almost say pass it on to the carriers, but I’m sure they have already shot this idea down for reasons we will never understand.

      • http://www.facebook.com/profile.php?id=604885391 Richard Borkovec

        Cause they’re money greedy bastards, and know they’ll make more off the subsidized phones.

      • Marco Ferrazzo

        In Canada virgin does the exact same thing with their super tab plans so why not?

      • Falk M.

        That’s how we roll in Germany :) :P

      • http://www.facebook.com/joe.jonsen Joe Jonsen

        capitalism

      • wadjj

        I wish you understood what you were talking.

  • http://twitter.com/digitalfeind Dani Hayes

    “…customers would not take kindly to the major change.”

    “hey, we don’t take kindly to people who end device subsidies.”

  • Guest

    I think they should offer both plans Win win situation

  • Guest

    Why don’t they offer both plans. Win win situation

  • http://www.facebook.com/clint.coller Clint Ross Coller

    You think they will really offer lower cost plans too? naaaa!

  • http://www.facebook.com/people/Steven-Cannan/100000630162509 Steven Cannan

    Oh hell no! that not even remontly a good idea! why?!?! that will make sales even worse! ugh! god so many rants coming -_-

  • http://twitter.com/HiTekkSteff Stephaughn Alston

    I would payer higher up front for a cheaper bill but getting people on board for this would be a headache for AT&T,Verizon, & T-Mobile. And people would upgrade less which would in the long run be a problem for manufacturers & carriers!

    • Alex

      They don’t have to get people on board. People pay to move devices to other carriers for…..

      Lower Monthly Rates

      I’m going to coin that acronym LMR!

      Heck there’s a market with Millions of people doing it.

  • http://twitter.com/klouud Timothy Polumbo

    As long as I make up the difference in the monthly bills. If I end up paying MORE over-all I am not going to be happy. And by not happy… I mean change to a carrier that doesn’t charge me more overall.

  • http://www.facebook.com/ryanjames.christensen Ryan James Christensen

    It’s good and bad. Bad because consumers have to may more up front. Good because it help lighten monthly bills. I don’t like the idea. Buying a phone for $200 is fine. I’m not worried as much if it gets broken or anything. If you break a $700 phone then you get more worried. The cheaper phone prices help lighten the load on how expensive phones really are.

  • Alex

    Essentially they are offering unsubsidized phones which can be purchased on Craigslist/eBay

    An iPhone 4S is around $350
    An iPhone 5 is around $550

    They would have to keep up with that, and really match the prepaid rates seen on cricket metro pcs virgin simple mobile straight talk.

    Can they do it? If they can everyone will drop prepaid carriers and join the big names for their customer service. The only thing prepaid lacks is quality customer service.

    Personally I feel they will fail.

    1. ETF – brings in bucks
    2. Contract commitment – brings bucks
    3. Service throttling – brings in bucks.

    If they go full price a person has choice, liberty to go where they want and pay what is fair. I’ve been on prepaid for the last year and I can’t say enough positive things about it, I do miss being able to always get the newest/greatest phone, however my wallet feels a lot lighter.

    There have been several analysis that have been able to prove the bring your own phone concept works! Money will be saved, consumers do have choice.

  • Latrese

    Well I’m in a Family of 5. Yes 5,and all of us have a cell. We’re not about to pay $3000 – $3500 for some phones. We’ll bring back pay phones single-handedly lol

    • Alex

      Lol Bring Back Pagers !!

      Haha

  • http://twitter.com/FastbreakJ Jesse Campbell

    If they do this they should waive any early termination fees and unlock the phones out of the box. It would only make sense because you would essentially be paying for this when you pay the unsubsidized price.

  • GuyBey0ndC00L

    this will turn off so many consumers and hurt cell phone makers the some. Simply by most consumers will not be afford it.

  • 4p0c4lyps3

    What an f’n laugh. If the big 3 in the US were to implement such a strategy they wldnt b selling many high dollar phones, plain and simple. Apple & Sammy would both be SUNK, end of story.

  • https://twitter.com/MrElectrifyer MrElectrifyer

    This works for me; I hate contracts, thus I never buy phones from my Carrier at subsidized price. Instead, I find refurbrished versions the same old phone on either Kijiji or eBay, buy it out at great prices and use on any carrier offering the best price.

    Definitely not gonna work for the impatient nor those with special eyes that can distinguish between a refurbished and a new phone.

    • http://twitter.com/PhilBeez86 U Kn0w What 1t 1s

      You must use boost or virgin mobile… Enough said rotfl.

      • https://twitter.com/MrElectrifyer MrElectrifyer

        Lol, Fail

      • Alex

        That u know Wii kid must have his parents pay his bills. I’m calling him out….

        I can show him dollar for dollar how paying full price (unsubsidized) is cheaper and as effective.

        He’s probably never heard of MVNO. It means we get the same cell tower service just pay a lot less. Shhhh….. These are big words, this young man probably won’t understand. Hehehe maybe when he’s old enough to drive a car.

      • Edgar_W

        Alex, take your small balls and ego off the forum. Making things personal is just a waste of time, , , moron. Add data plans to your package [$15-$100 depending on the plan] and you are making monthly payments for a car! Figure THAT into you math. . .btw I WORK for T-mobile and this discussion has been hashed out for nearly 9 months in our offices. . .

      • Brandon

        Ummm adding data plans to your package? I thought you worked at tmobile lol where they have unlimited data, unlimited texting and 100 minutes for a flat rate of $50 lol I think you just have a little crush on Alex and trolling everything he posts lol and you say not to make it personal yet what are you doing by talking shit to him about his balls lol which I’m sure you know his balls very well ;) lmao !

      • Edgar_W

        Troll? look who’s stalking who. Brandon = moron. . .

  • http://www.facebook.com/profile.php?id=100002090550614 Kash Gummaraju

    Actually in a sense part of the $700 or $600 could pay for the rest of the monthly bills, because if the rates were lowered then the high prices would compensate for the lost money.

    • http://twitter.com/PhilBeez86 U Kn0w What 1t 1s

      It’s about having the money on hand. The general public doesn’t have 6-700 for multiple phones to purchase at one time. The real world has to work for their money and pay bills to keep a roof over there head. Maybe when u move out of mommy and daddy’s you will understand.

      • Alex

        So the “Real World” should finance their phone and pay a boat load in interest??!

        What the heck! Isn’t that how we got into this economic problem to begin with? People buying stuff they couldn’t afford. (Pay back)

        Maybe we stop putting stuff on credit and save money. That’s a crazy idea.

        Oh wait fat boy over here wants the latest iPhone 5….

      • Guest

        The article mentions “interest free” financing. That means you don’t pay interest on the price of the phone.

      • Alex

        Ur comment suggests people should buy iPhones for low price $199

        Your pointless quote “public doesn’t have 6-700 for phones”

        When a person buys unsubsidized the do not pay interest on the phone

        When a person buys subsidized they pay interest on the phone over the life of the plan.

        Tmobile will stop subsidizing make plans interest free…

        I’d be happy to give you an economics lesson any day son….

      • Guest

        i know what you are saying, but when the article says “interest free” you must understand that it means you do not eventually pay more that the full cost of the phone.

        i am not insulting you, and i apologize if my comment came across as condescending; i did not intend that. however, you should not prejudge people so quickly. you haven’t a clue of my wealth of knowledge, or lack thereof, but you assume you know a vast amount more. i believe most see your arrogance in your comments before the content, which you do have.

      • Alex

        I like the lack there of part.

        Lol.

        I think you are an arrogant piece of crap and just because you read some blogs and jail break phones you feel you are entitled to belittle everyone on this blog. I’m glad I was able to “check” you and put you in ur place.

        Now in the future conduct yourself how you just did with me, if You disagree have some manners and explain your point of view, don’t just say you sound stupid.

        Now that I’ve gotten that clear I feel there is some validity to your comment and I hope to see positive changes to the wireless community in the future.

        BTW:

        Have a nice day

      • Guest

        you “hope to see positive changes to the wireless community in the future” while simultaneously commenting about people’s moms and your balls. you are truly showing your preteen age and logical inconsistencies.

      • Alex

        Do you have a Small man complex?

        It seems like everything that has been said has to be one
        Up’ed

        It’s always the Little guy that can’t stay quiet.

      • Alex

        Look Smalls,

        I don’t make promises I can’t keep. I can promise you that if u see me u will have the worst 30 seconds of ur life.

      • http://twitter.com/PhilBeez86 U Kn0w What 1t 1s

        Hahaha that’s hilarious, u really have no idea who you would be fucking with! U think because I’m on a blog site that I’m your typical “tech guy”. Chase Bebe, check me on YouTube ho, than open your mouth.

      • Alex

        Chase BABY ??

        Did you really try to say your a badass with a name like that?

        WTF::: call me out in a youtube vid and I’ll see if can set it up so my gym can come out there a sponsor me so we can make this happen. Let me know whats good.

        Maybe we can make some money in the end.

      • Alex

        ON this blog site>>

        Bro id wreck you… You talk crap on a site.

        I talk crap to your face.

        What you gonna do?

      • Guest

        The article says one would be in a contract which would allow for financing. That means not being required to have the money on hand at the time of purchase.

      • Alex

        Did you even read the article?

        Or should I get you the tape version so you can listen to it instead?

        Read the last paragraph it states people would be required to pay $6-700….where did u get people do not need money at time of purchase?

        I think you should use crayons instead of a stylus maybe we can get u a Leapster pad so u can learn to Read.

      • Guest

        i apologize, i misread a phrase.
        i cannot, however, apologize for your immaturity and superior arrogance.

      • Alex

        Stop stuttering son…

        What you need to do is take the banana out you mouth and learn to speak.

      • Guest

        if i wanted a Leapster, i would not ask for yours, as you are hopefully still using it for spelling purposes.

  • Ahmadjoon

    Sorry for asking but i have a lot of problems with wifi on my iPad 3 can anyone help me?

  • Tom Canuck

    Heh. Monthly fees will drop till people are used to the idea. Then they will go back to where they are now

  • http://www.facebook.com/siggen Sigurd Bøe

    We have this in Norway, and you get less bang for your bucks doing this. In Norway you can go into most any store and buy any phone with or without any contract from operators the store is affiliated with. The exception is iPhone which only goes for a contract in stores, and without contract at apple.com/no/

    If you chose a contract, you pay an additional fee each month for 1 year (the max legal contract binding for phones for private persons). And you end up paying less total then buying the phone, and having that contract. What I am saying is that the monthly fee for having a binding contract is less total than what you save on the phone. Example: I bought an iPhone for 270 dollars cheaper by binding my self to a contract on a price plan i would have anyway, and the total extra monthly fees of all the months in the binding year amounts to 210 dollars.

    The savings are higher on phones that apple didn’t make, but we already know that us Apple people pay for a premium product anyway.

  • http://twitter.com/Jsal017 Javier Salinas

    From what I read in the comments, I think people do not completly understand how t-mobiles new plans work. First off, you don’t have to pay the full price of the phone up front (although it is an option). You can make payments on it $10, $15, $20 depending on which phone you get. Also they do put you on a 2 year contract because of how low the monthly plan is. I’m paying $30 less monthly with T-mobile even though I’m paying the EIP ($40) for two phones with unlimited data (no throttling).

  • http://www.facebook.com/joe.jonsen Joe Jonsen

    ummmmm iPhones sales will tanks if they expect consumers oto pay $750 for a phone

  • http://twitter.com/Rickt78 Richard Thompson

    To put it bluntly…
    I think it’s dumb. They’ll lose millions because the average consumer won’t pay that much up front. Especially in today’s economy.

  • http://twitter.com/Rich_Inniss  Rich 

    I rather pay less on the phone. All of us who are grandfathered into unlimited data will be screwed. If we dont change our plan we will be paying just as much, and now much more for phones. I don’t want to spend 700 bucks on a new phone every other year either. At that point i might as well go the extra 300 bucks and get a MacBook Air, and just have a LTE/4G usb receiver

  • http://twitter.com/burlow burlow

    the only reason I don’t like this idea, is that if at&t/verizon actually did this, they would lower the monthly bills only by a fraction, not nearly what we pay them in the subsidy portion of the bill payment.
    If they seriously cut the monthly bills a fair amount (I’m not asking for a hand out, just be fair) I would gladly pay retail.

  • http://www.facebook.com/joe.jonsen Joe Jonsen

    fact is 70% of casual phone buyers dont have $700+ to spend upfront on a hand set

    • http://www.facebook.com/joe.jonsen Joe Jonsen

      just like most folks cant buy a whole house or car..lol 199 to 299 is the sweet spot for upfront phone costs in this market

  • Mgggb

    This won’t work. I know from personal experience. Basically I told my parents I wanted to get an iPhone 4s for Christmas on virgin mobile. I showed them that over the course of two years it would cost 2 to 3 times less but they still couldn’t get over the $550 price tag. I would also like to mention that I was paying for all of it so no cost to them. Now I’m stuck with sprint, who is the same network charging me $80 a month. This is why I used 37gb of data, to get my money’s worth.

  • wadjj

    In Australia the general deal is subsidized plans are 10 dollars dearer every month and in Australia we pay no upfront fees with plan, instead we pay monthly handset fees. Which, from what I saw, is very good for carriers because it promotes impulse purchase. The downside, however, is that getting rid of plans is so expensive here that you might as well keep it till the expiry date.