Get your subsidized iPhones while you can, AT&T CEO says the deals can’t last

“AT&T’s CEO Randall Stephenson told investors yesterday that with smartphone penetration approaching 90 percent, the existing business model – where carriers sell highly-subsidized smartphones to drive demand – will have to change,” Ben Lovejoy reports for 9to5Mac.

“‘When you’re growing the business initially, you have to do aggressive device subsidies to get people on the network. 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 said].” Lovejoy reports. “In the UK, where subsidies are much more visible, all carriers offer the option to pay full price for the phone in order to get much cheaper monthly service fees. As an example, I bought my iPhone outright at full retail, and as a result pay just £15 ($24) a month for unlimited voice calls, texts and data. Upgrading every other cycle means I typically save $3-400 over the course of two years.”

Read more in the full article here.


    1. They think they’re in control. We all know that they WON’T reduce prices much. In Canada, for example, Fido offers a Paltry %10 off when you bring your own phone. On a $60 plan that includes 2GB of data and unlimited minutes that’s $144 over 2 years.

      Of course, subsidized you need to opt for an $85/month plan for only 1GB of data and unlimited minutes… so technically… you’re saving $31/month… which is $744 with double the data.

      Unsubsidised, the phone is $730.

    1. “Free Market,” my arse. That’s more like companies deciding that they want to pay makers less, which means that they keep more, and this happens to be one way for them to do so.

      It’s their right, but to attribute to some mythical “Free Market” – which has never existed – is kind of silly.

    1. In the U.S. you can get unlimited voice/texts/data for around $45 per month on a non-contract basis if you avoid the major carriers. In some cases, you will be able to get a modest discount on your phone purchase. And I believe that there is at least one carrier that will gradually reduce the monthly cost if you stay with them for months/years. If you are willing to accept a 300 minute cap on voice minutes (but with unlimited text/data), then there is a plan available for $35 per month. But there is nothing in the U.S. that compares to $25 per month for unlimited voice/texts/data.

  1. I’d say give people the choice – either pay for the phone outright and have a lower monthly bill, or get the subsidized phone and have a “subsidy fee” be part of your monthly bill. Some people might actually take the higher monthly bill to keep their up front out of pocket expenses low, or they might save up or use their tax return to get a new phone outright and pay a lower monthly bill.

    But I’ll tell you this much – if they stop subsidizing iPhones _and_ keep monthly bills as high as they are, AT&T will lose customers to their competitors. Same goes for any other wireless provider who tries that stunt.

  2. This has been a scam forever. You buy a phone from Apple. It is unlocked and lets you go anywhere to get service. But, after paying full price for my phone, I’m stuck with the same high service rates as someone on a contract to pay off a subsidized phone. If I come with a phone I have already paid for I want to see a lower rate for just the service.

    I like having an unlocked phone. It gives me options when I travel and I’m out of the country for maybe 6 months a year. Our carriers are perpetrating a HUGE ripoff.

    1. That’s because you didn’t shop around, but I agree… If you’re going to get an unlocked phone, you definately don’t want the plan. Carriers haven’t provided a discount in the past becuase they don’t want you to realize that the phone is subsidized. They want everyone on a contract. I pay $30 a month for T-Mobile. Unlimited text and web (5GB at “4G”) and 100 talk minutes. I use Skype when I need extra talk time.

  3. I can see this driving the cost of the iPhone down. (Not that it will, but it could.) I always buy the 64Gb iPhone, every other cycle. ~$400 subsidized. If I had to pay $850 for that up front (I won’t buy less that 64Gb) I would only do that every third or fourth cycle. Three or four years between phones is a long time, but doable. Only speaks to my case, but I doubt I’d be alone.

    If the most basic iPhone was suddenly ~$650 and not free with contract, that could precipitate a huge downturn in sales as people made their existing phones last.

    1. This idea of holding on to your phone for longer is a fallacy. Since your contract does not adjust to recognize the fact that you’ve paid for your phone, you’re just give money to the carrier that should be yours.

  4. In Japan, the opposite is happening. Carriers are offering a 0 down price on the iPhone 5S because of competition. Of course, you can pay for it outright, but nobody does that.

    This could actually hurt AT&T if people are more freely able to switch between services.

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