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The Phone You're Paying For But Not Getting

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Prepaid vs Postpaid - Oversimplification, but correct

by ecmark00    Mar 20, 2013, 8:14 PM

The article does over simplify the phone subsidy argument, but it certainly is more complicated than slapping a $20.00 value on a phone subsidy. Quite frankly, I think its closer to $30.00.

While comparing prepaid prices to post paid prices seems like a good standard, there is a bigger picture. Prepaid simply does not have the same overhead and risk postpaid plans have. They typically do not have expensive retail stores to maintain, call centers full of upper tier tech support and finance. They also do not have to endure the risk of customers abandoning accounts. Also, prepaid carriers do not have to worry about roaming.

On the flip side, post paid plans get the luxury of overages, late charges, extra charges and features, and quite often, low usage customers. Also, the $650 full retail phone price example doesn't apply to everyone. Sure, that brand new Galaxy S4 might cost you $650, but it does not necessarily cost the carrier that amount. There is a reason why regional carriers struggle to get the latest phones; Buying power. Not all customers get the latest and greatest phone either.

Simply put, everything is marginalized. The name of the game is to keep the stock holders happy. One way or another, they will balance the ship, whether is to capitalize on those who wait a year after their contract is up to upgrade, or those who have those Isheep-phones and only use them for facebook.

In the mean time, i'll continue using my $28.95 prepaid service with my 2 year old smart phone (which by the way, pretty much does everything most of the new phones do) while the rest of the suckers pay $100 a month.

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