AT&T CEO says carriers can’t afford to continue offering major device subsidies

By , Dec 11, 2013

Randall Stephenson

It would seem that T-Mobile was onto something when it announced that it was doing away with device subsidies earlier this year, because that appears to be where the whole industry is headed. Carriers simply can’t afford to continue heavily subsidizing phones and tablets.

That’s what AT&T’s Randall Stephenson thinks anyway. Speaking at an investor conference this week, the CEO said that the current model is not economically viable. More customers are upgrading to smartphones now than ever before, and they’re upgrading more frequently…

CNET’s Marguerite Reardon:

Speaking at an investor conference in New York City on Tuesday, AT&T CEO Randall Stephenson said that with smartphone penetration at over 75 percent and soon reaching 90 percent, wireless operators need to work harder to get customers to use more of the network rather than simply getting on the network.

“When you’re growing the business initially, you have to do aggressive device subsidies to get people on the network,” he said. “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.”

Stephenson went on to say that breaking customers of their current upgrading habits won’t be an easy task, but they’ve already starting putting things in motion. Earlier this year, the carrier announced the ‘Next’ financing program and last week it announced new no-contract plans.

The most interesting part in all of this, to me anyway, is that T-Mobile seemingly predicted all of this before anyone—or at least was the first to act on it. And in doing so, it’s managed to wrap all these would-be ‘scary’ changes into its consumer-friendly ‘Un-carrier’ campaign. Genius.

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  • SunnysidedownlikeSURPRISEeggs

    I’m not sure he knows what ‘afford’ means

    • Jackson Grong

      In means that they would not make 334 millions but only 329

    • D R

      He thinks that instead of a subsidy payment from AT&T to Apple, it would be better for a bonus payment be made from AT&T to himself, equal to 105% of the payment to Apple [a little extra for thinking up this idea of not paying Apple].

  • Rowan09

    I switched to t-mobile and now on MetroPCS since you can use any unlocked GSM phone now. I pay $60 a month with unlimited everything. I thought I would sacrifice speed but I got an average 25 download and 20 upload yesterday in Long Island NY. We’ll see how it goes but AT&T would have to offer me something like this for me to switch back and they won’t.

    • J. Rockwell

      Right when the iPhone 6 comes out I will be switching from AT&T for a plan like this. Currently paying 85.00 for 3gb’s. Been happy with the service, but feel like I am getting fleeced.

      • Rowan09

        Yeah man. I was a little worried at first about getting good service but I travel all over LI and I’m fine. I’m no longer doing contracts so I have to freedom to try things out and I’m really impressed with how far Metro has come. They use to be terrible but T-mobile definitely helped them out and vice versa.

    • Jack Wong

      I am leaving at&t in next Oct, contract is over, enough BS in the last 5years, I can’t stand for that guy anymore…

      Plans are getting more and more expensive, I am still using the most affordable family plan from 5 years ago.

  • bobism

    greed

  • ap3604

    :rollseyes:

    Excuse me, but since AT&T just reported a 3rd quarter profit of 3.8 BILLION, go cry me a f *** ing river Randall…

    • 4p0c4lyps3

      Agreed. Fck’n AT&T scumbags.

    • J. Rockwell

      Can’t wait to drop them.

  • Maxim∑

    If they start reducing subsidiaries watch customers fly over to Verizon Tmobile etc….

  • ɑղժɾҽա

    Just bring back unlimited data, AT&T!

  • Jon20

    If AT&T wants to keep people on their network, maybe they should consider losing the so-called rollover minutes that nobody ever goes through because people text, and increasing the amount of GB in their Data plans. Or better yet…just go back to unlimited data since that’s what everybody else is offering and some of us were Not fortunate enough to be grandfathered in to unlimited data. They are just ripping us off at this point

    • Dani Hayes

      I have 450 minutes and with rollover I have almost 3500 now.

      • Jon20

        Same here. I think it’s crap that they do roll over yet they have unlimited Mobil to mobile and we mostly text so I don’t use those minutes. The only reason I don’t switch is because I like their coverage and I’ve heard too many billing issues with Sprint for me to switch to them for their unlimited everything.

      • Dani Hayes

        I had sprint for 8 years before the iPhone 3G came out. I jumped to AT&T and never looked back. Looking to join T-mobile’s unlimited plan. I’m tired AT&T nickel and dime bullshit. I have unlimited data still and they keep slowing my speeds because I use 5gb. One month I ran my data up to 12gb after being throttled. Lol. My way of saying “f you AT&T”.

  • Rick Hart

    It don’t matter what carrier you have they all are make hand over fist anyway! They all need to have unlimited data. Verizon want to go over to volte wonder how the data plans are gonna work then? They all are whiny babies saying they can’t make any money which is bullshit!!!! Fortunately I’m a grandfathered unlimited Verizon costumer jailbroke i5 with mywi and I use as much as I can hell with them

    • Rigs101

      Me too I use 60-70gb a month haha for $120 month for 3 phones damn right I’m gonna use my unlimited how I want

      • Rick Hart

        Thats right!! what carrier?

      • Rigs101

        Verizon I connect my kids iPad with pdanet when on trips or at somebody else’s house and at work straight YouTube break and online movies my bill would have been around $500 a month with the amount of data I use

      • Rick Hart

        pdanet?? yeah sap me here too! love it
        it aint like that don’t make enough money anyways

      • Rigs101

        Yeah pdanet let’s you tether wireless and USB tether you just have to download it on the laptop for the USB tether but wifi tether is easy set up with password too I used to use mywi but it never said it worked with 4glte or iOS 6 but I haven’t checked it in a while last time I used that was with iOS 4

      • Rick Hart

        Works fine on my i5 and on iOS 6 and lte. Where is planet? cydia?

      • Rigs101

        Yeah it’s on cydia modmyi repo

      • Rick Hart

        Thanks

      • Rigs101

        No problem

  • Daniel Hernández

    Att = GREED!!!

    • @dongiuj

      Politicians and corporate pigs = greed!!!

  • Emmanuel Christy

    ATT’s unlimited data plan is not really unlimited you get throttled after 3gb of data on 3g phone and throttled after 5gb on a LTE phone. Verizon will strip you of your unlimited data when you upgrade your phone. In reality most people never use more than 3gb a month anyways. If ATT makes a change to get more money out of the consumer you best believe Verizon will not be far behind. Just like oil companies, gas $4 a gallon because the price per barrel is high but, the companies are making record profits. They don’t care about people, just their pocket books and profits….

    • Rigs101

      True but I kept unlimited data on Verizon by doing the upgrade loophole twice now I watch everything and anything since I switched from iPhone 4(3G) to iPhone 5(4glte)

  • ridonkulous

    Amazing he has the balls to say this while AT&T raked in $3.8billion profit in the 3rd quarter this year…….Unbelievable……