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The Phone You're Paying For But Not Getting

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Truth

MadFatMan

Mar 23, 2013, 7:49 PM
Americans won't pay what a device is worth unless the cost is hidden.

Dan Hesse once stated the "sweet spot" for high end phone pricing is $199 and he Iis right on the money with that figure.

Yes, we all know you are financing a phone we as Americans just dont want to talk about it.

I guess Rich intended the article to be a thought provoking call to action of sorts. Correct me if I am wrong but he wants carriers to offer a no contract bring your own phone rate plan theatsubscribers who have completed their commitment could tak3 advantage of the savings as well or have a financed portion of the bill that would itemize phone payments from service payments.

I dont see ither happening. But wow this editorial got alot of traction ...
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Rich Brome

Mar 25, 2013, 10:10 PM
Well, yes and no.

T-Mobile does offer what you describe. And it does allow them to still market high-end phones at $199, and that's exactly what they're doing.
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MadFatMan

Mar 25, 2013, 11:32 PM
I hear you, but the big 3 won't mirror this "best practice".

The margin that you deem as the consumer fleecing is necessary operating capital as apart of acceptable operational margin and is figured with the cost and goods and services rendered.

Are you implying that operating margins and profit margin on the cellular market should be set by regulation? Im afraid that I am not all too comfortable with that notion.

In this market the fair price of anything is what a willing buyer will pay a willing seller and since you're addressing only subcribers that are out of contract, then they are free to take their business elsewhere if they find their getting screwed margin unacceptable.

Rob P.
Cellular Business Data & Compliance Anal...
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Rich Brome

Mar 26, 2013, 6:07 PM
MadFatMan said:
The margin that you deem as the consumer fleecing is necessary operating capital as apart of acceptable operational margin and is figured with the cost and goods and services rendered.

I don't completely agree.

Of course all money a company takes in affects its bottom line. I can't deny that.

But my issue is that the companies try to hide the phone cost (the subsidy) in a way that confuses many consumers. It's possible for savvy consumers to stay completely within the 2-year contract system and not get fleeced. But the ones who get confused get fleeced, and that's not fair. A company's profits shouldn't rely on X percentage of its customers falling for a marketing trick that is blatant...
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mike87

Mar 26, 2013, 8:29 PM
I agree with you to an extent, but:

1.They (AT&T) really don't start making money off an activation for almost two years. Perhaps the price is at the perfect medium for the company factoring in everything and this offets this problem?

2.How would they explain this to EVERY customer that asks why their friend pays $20 less per month? How will they post prices in pamphlets so that the simple easily understand? It's clear that if T-Mobile is finally doing this, pretty much nobody, not even the savvy tech bloggers here, understand it at all. Most people just want a free phone and don't understand the subsidy at all...

I'm not entirely "defending the system", I'm just asking questions.
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Rich Brome

Mar 26, 2013, 11:35 PM
1. Except that some people end up getting a lot less for their money, and the only difference is ignorance of how the system works. A lot of things in this world are like that, but in this case, the carriers are deliberately trying to hide the subsidy so that they can profit from consumer ignorance. In most industries, such business practices are banned.

2. It seems darn simple to me. It's itemized on your bill. The plan is the plan. The phone payments are the phone payments. That's what T-Mobile is doing. People can still have their $99 iPhone 5. I'm not sure who's confused about that after today's T-Mobile event.
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MadFatMan

Mar 26, 2013, 11:03 PM
Okay then... Lets go with this notion..

The equipment, service agreement, and early termination fee are autonomous of the service fee OTHER THAN an to agree to matain servuce for the term of the agreement.

To say your MRC is PAYING for your equipment is speculation and that language exist no where in the service agreement.

You are paying for a service to a device thay is your property that you paid for in part cash and in part a commitment that is again independent of your monthly service fee. To assume anything else is speculation abd hearsay as that verbage is not in the agreement.

Again, what a willing seller of goods and services and a willing buyer/consumer agrees to in a free market
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Rich Brome

Mar 26, 2013, 11:41 PM
You're just describing a subsidy-based traditional contract.

The subsidy isn't "speculation", it's common sense and simple math. No smartphone is actually free. Some major carriers will list a "full price" for their phones. Contracts are two years. Obviously the carrier expects to be paid back the remaining value of the phone over that time.

It doesn't take infinite time to repay the cost of a phone. It takes two years. Therefore your monthly plan should down once your phone is paid off.
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MadFatMan

Mar 27, 2013, 6:58 AM
I like you Rich, been reading you for years and we're rarely disagree.

But you are connecting dots, filling in the blanks, and drawing conclusions based on opinion and personal interpretation of how thinfs "should" be.

In reality, despite the picture you've painted, there is no relationship between the promo pricing that the subcribers receive and their monthly service charges. There are no deceptive practices or pricing models fashioned here. The verbage simply does not exist.

Depspite all else the subcribers are not entitled to a price break upon completion of their commitment.

Subcribers choose to take a contract to offset equipment cost period

If you bring your own phone or satisfy your agreement yay fir you. No et...
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Riuski

Mar 28, 2013, 12:07 PM
I see Rich talking about the spirit of the a service contract as a means to recoup subsidies for the $600+ smartphone, and I see MadFatMan talking about the spirit of the free market. Neither one of you is wrong, and I only hope that more Americans will realize that T-Mobile is in fact offering the most transparent, economical plan, with no limited choices on their range of phones. With the inclusion of the iPhone, if T-Mobile doesn't gain market share from this point, I'd be very surprised.

Disclosure: I've been a T-Mobile customer for a long time now and I hope they do well. The more customers they have the more likely they can improve their service and increase their coverage.
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