Here’s an interesting one for a Friday afternoon, as Jack Schofield argues at Trusted Reviews for mobile phone subsidies to be stopped. If this were to happen he believes that the true value of both the phone and the usage of the network would be clear, and this would (through market forces) result in more value for customers. What do you think?
Read on in the full article.
I always laugh when reading a story on Engadget or Techcrunch about the latest Android Superphone, more often that not they'll big-up the $99 "price". In reality anyone signing up is committing to paying somewhere between $1,500 to $2,500 over the next two to three years. It's not much better in the UK but generally websites do quote PAYG and unsubsidised prices as well, giving a better idea of the cost.
One possible alternative approach would be to separate the service charges from the phone subsidy. If people realised that the �25 per month is �10 service and �15 towards the financing of the phone that would help.
A lot of countries have this as the standard way of buying phones anyway - with the phone at full price and cut price network costs. It provides a lot of flexibility and cuts down the amount of people who get an expensive contract just for the latest phone then default on it. Of course, people at the lower end of the spectrum are stuck with what they can afford right now, which is a downside, but PAYG options have advanced to the point that they can probably cover other bases.
Personally I'm all in favour of this in the UK market, but I haven't bought a network phone in over a decade, preferring to get SIM free models free of branding and network locks and using them with whatever I want.
The first step is to ban Early Termination Fees. After that happens, the whole facade of subsidies will come crumbling down.
As far as I see it jack Schofield's argument is very sound and one that is dear to my heart. I for one would dearly love to see the end of network subsidy and a law change forcing all phones sold to be unlocked, unbranded phones. In other words, force the MNO's to be nothing other than the carriers/pipes and let the phone manufacturers be the ones who sell the phones.
the guy who wrote the post is no out of his mind.
think of it as if you're buying a discounted pc but as part of it you have to sign into a online service provider; which come with penalties of voiding the contract.
and we all know how phones are looking more and more like computers.
Only problem is, the subsidy enables people who can't fork �500+ up front to get a decent phone - albeit it a cost.
Whilst this might sound like a good idea, I just wonder if it actually is. If people couldn't afford the up-front price, wouldn't that slow the market down? I'm all for transparency but isn't it up to the punter to work out what's best for them? Getting a phone on contract is like a form of credit. You've just got to decide whether you can accept �40pcm for 24 months and no up-front cost or to pay an amount for the phone and a lower monthly charge.
As for me, I'm not convinced by PAYG, especially since the networks have started charging a set amount per day for any amount of data. So if you download 2 bytes every day in a month it's cost you �15 or whatever? And you have forked out �500, plus the cost of any calls or texts?! No ta!
Disclosure: I'm on an "unlimited" data plan with Orange (the one they only did for a few months it seems) and my data tends to vary from 400MB up to 1.6GB!
I totally agree. I have never liked the subsidy system. It is just more 'smoke and mirrors'. I also don't believe in locking phones - it should be made illegal. All phones should be bought as unlocked and then we choose the tariff we want - and none of this 18 month/ 2years rubbish for contracts either !
If some people don't like paying up front for their phone then let them buy it over a period but it should be entirely separate from the service tariff.
Why don't we do the same with housing. End mortgages so you gotta live in a cardboard box while saving the 300 grand.
I don't think anybody is arguing you should not be allowed to use credit to buy a phone, but why should that credit deal be bundled with the services? It's so lacking in transparency that phone buyers can't tell if they are getting a good deal compared to using a credit card or bank loan to buy a phone.
It just seems so stupid to get a phone on a contract, especially a 24 month one. Just by judicious choice I have been able to acquire and run the best phones for next to nothing for years. I just don't understand why people stump up all this cash when there is no need.
Iain Mercer wrote:As for me, I'm not convinced by PAYG, especially since the networks have started charging a set amount per day for any amount of data. So if you download 2 bytes every day in a month it's cost you �15 or whatever? And you have forked out �500, plus the cost of any calls or texts?! No ta!
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Seems that you have not done your homework and researched all the PAYG options.
Several people have hit the nail on the head here. Just because subsidies are removed from the equation doesn't mean that "superphones" become out of reach�there are other forms of financing options detached from MNOs.
We don't buy the latest LCD TV and be tied to a two-year cable contract and we definitely would think hard if financing a car means five years of gas from one petrol brand, so why do we buy phones this way?
What's not discussed is how subsidies affect phone pricing itself. Manufacturers striking deals with MNOs to subsidize the price of phones could be artificially keeping the price of phones high, which is probably why very few manufacturers, if any, are complaining about the current arrangement.
Remember first and foremost, the manufacterers customer is the networks, we the end user are secondary.
Very few phones are succesfull without the networks pushing it through. But we all have the option to go sim free should we wish, whats wrong with choice
the other person mentioning affordability got this right - this is to get more people to buy the phone, even those who can't/won't pay up front. The whole subsidy program is basically a loan program, with an indeterminate interest rate. The real solution is to offer both the contract price with/without this subsidy built in, so that you'll know what's the borrowing cost. But a few chinatown nyc shops can give you the approximate interest cost by giving you a rebate for buying the unsubsidized phone.
-Gene
Unregistered wrote:Seems that you have not done your homework and researched all the PAYG options.
Cool! Which ones would you recommend?
(Iain51 = Iain Mercer but logged in)