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Cellular forums Home > Archive > Alltel Cellular > January 2008 > Contracts. Why?
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| If the cellular companies provided the service and support that their
customers desire and deserve, they would NOT need to lock us in with long,
expensive contracts. Why do we tolerate it?
Discuss...
| |
| Bert Hyman 2008-01-07, 12:33 pm |
| nobody@nobody1.com1 (LHA) wrote in
news:zCsgj.3377$El5.2810@newssvr22.news.prodigy.net:
> If the cellular companies provided the service and support that
> their customers desire and deserve, they would NOT need to lock us
> in with long, expensive contracts. Why do we tolerate it?
When you initially contract with a provider, they usually provide a
phone at no or reduced cost. Similarly, if you renew your contract, you
can usually get a new phone at no or reduced cost.
With no contract, you'd be expected to bring your own phone or pay the
retail price.
--
Bert Hyman | St. Paul, MN | bert@iphouse.com
| |
|
|
LHA wrote:
> If the cellular companies provided the service and support that their
> customers desire and deserve, they would NOT need to lock us in with long,
> expensive contracts. Why do we tolerate it?
>
> Discuss...
>
Huh? I've been month to month for more than eight years.
| |
| Richard B. Gilbert 2008-01-07, 12:33 pm |
| News wrote:
>
>
> LHA wrote:
>
>
>
> Huh? I've been month to month for more than eight years.
Yeah, but sooner or later you need a new phone. . . .
| |
| Fred C. Dobbs 2008-01-07, 3:33 pm |
| "Richard B. Gilbert" <rgilbert88@comcast.net> wrote in message
news:47826BC4.6030500@comcast.net...
> News wrote:
>
> Yeah, but sooner or later you need a new phone. . . .
>
....and he'll jump on Ebay, pick up a nice used one (or buy 2 or 3 so he has
a backup) and he's good to go. Been doing that for years.....and saved a
ton.
| |
| Grant Edwards 2008-01-07, 3:33 pm |
| On 2008-01-07, LHA <nobody@nobody1.com1> wrote:
> If the cellular companies provided the service and support
> that their customers desire and deserve, they would NOT need
> to lock us in with long, expensive contracts.
As long as they're giving you a $200-$300 phone for free,
they're going to require that you guarantee future purchases in
order to cover the cost of that phone.
> Why do we tolerate it?
People tolerate it because they want a "free" phone.
--
Grant Edwards grante Yow! UH-OH!! We're out
at of AUTOMOBILE PARTS and
visi.com RUBBER GOODS!
| |
| Grant Edwards 2008-01-07, 3:33 pm |
| On 2008-01-07, Richard B. Gilbert <rgilbert88@comcast.net> wrote:
> News wrote:
>
> Yeah, but sooner or later you need a new phone. . . .
So go buy one on eBay, newegg, or Craig's List for $30. Nobody
is forcing you to take a "free" phone and sign a contract.
--
Grant Edwards grante Yow! How's the wife?
at Is she at home enjoying
visi.com capitalism?
| |
| DevilsPGD 2008-01-07, 3:33 pm |
| In message <47826BC4.6030500@comcast.net> "Richard B. Gilbert"
<rgilbert88@comcast.net> wrote:
>Yeah, but sooner or later you need a new phone. . . .
So buy one at full price if you prefer. As it turns out, with many
phones the discount is higher then the early termination penalty, so you
really can't lose.
| |
| DevilsPGD 2008-01-07, 3:33 pm |
| In message < Xns9A1E6E232D4E8Veeb
leFetzer@127.0.0.1> Bert Hyman
<bert@iphouse.com> wrote:
>With no contract, you'd be expected to bring your own phone or pay the
>retail price.
Even then, it can be tough to find a contract-less post-paid plan.
Personally, I'm not stressing about the early termination penalty when
bringing my own phone, instead I am planning to just take the free
phone, sell it, and pocket the cash.
If I pay out the contract, I won't be as far behind. If not, I win.
| |
| Joel Koltner 2008-01-07, 3:33 pm |
| "LHA" <nobody@nobody1.com1> wrote in message
news:zCsgj.3377$El5.2810@newssvr22.news.prodigy.net...
> If the cellular companies provided the service and support that their
> customers desire and deserve, they would NOT need to lock us in with long,
> expensive contracts.
Not true. Historically contracts were used by carriers to recover the costs
of phones, which tended to cost much more than most people were willing to
"pony up" for. In other words, the marketing guys figured out it's easier to
sell a phone for $39 and then have them subscribe for, say, $40/mo than sell a
phone for $239 and subscribe for $30/mo.
| |
| Elmo P. Shagnasty 2008-01-07, 3:33 pm |
| In article < 13o53o0omormhab@corp
.supernews.com>,
"Joel Koltner" < zapwireDASHgroups@ya
hoo.com> wrote:
> Historically contracts were used by carriers to recover the costs
> of phones, which tended to cost much more than most people were willing to
> "pony up" for. In other words, the marketing guys figured out it's easier to
> sell a phone for $39 and then have them subscribe for, say, $40/mo than sell
> a
> phone for $239 and subscribe for $30/mo.
So explain why I picked up a couple Verizon InPulse Samsung A870 phones
at Walmart for $50 each. I'm *sure* they're worth more than that.
And I don't do business with Verizon.
Oh, but I do do business with PagePlus....at a rate of about
$30/year.....so even if I do end up using the Verizon network, it's not
for very much at all.
So much for the whole contract idea.
| |
| NoConsequence 2008-01-07, 10:33 pm |
| On Mon, 07 Jan 2008 13:13:24 -0500, "Richard B. Gilbert"
<rgilbert88@comcast.net> wrote:
>News wrote:
>
>Yeah, but sooner or later you need a new phone. . . .
Then pay full price for it - then you won't be under a contract.
That's the only reason why Alltel uses contracts - when you buy a
phone at less than retail price the company loses money since they are
selling the phone at a loss. So, the contract is to offset that loss.
Don't like that? Then do as I suggest: pay full retail for the
phone. Contract negated.
| |
| Diamond Dave 2008-01-07, 10:33 pm |
| On Mon, 07 Jan 2008 16:05:11 -0500, "Elmo P. Shagnasty"
<elmop@nastydesigns.com> wrote:
>And I don't do business with Verizon.
>
>Oh, but I do do business with PagePlus....at a rate of about
>$30/year.....so even if I do end up using the Verizon network, it's not
>for very much at all.
You are doing business with Verizon, but through a third-party
reseller. You are using their network that Page Plus is reselling.
I do recommend them if you want to go the pre-paid route. Very good
service.
Dave
| |
| Jack Hamilton 2008-01-07, 10:33 pm |
| "Elmo P. Shagnasty" <elmop@nastydesigns.com> wrote:
>In article < 13o53o0omormhab@corp
.supernews.com>,
> "Joel Koltner" < zapwireDASHgroups@ya
hoo.com> wrote:
>
>
>So explain why I picked up a couple Verizon InPulse Samsung A870 phones
>at Walmart for $50 each. I'm *sure* they're worth more than that.
I'd be surprised if they cost more than $25 to make, but exact cost
information doesn't seem possible to get. Many people claim that
phones really "cost" the $200-$500 that carriers charge, but I don't
believe it. Why would phones be the only consumer electronics devices
that don't have a huge markup?
| |
| Grant Edwards 2008-01-07, 10:33 pm |
| On 2008-01-08, Jack Hamilton <jfh@acm.org> wrote:
>
> I'd be surprised if they cost more than $25 to make, but exact
> cost information doesn't seem possible to get. Many people
> claim that phones really "cost" the $200-$500 that carriers
> charge, but I don't believe it. Why would phones be the only
> consumer electronics devices that don't have a huge markup?
Of course they have a huge markup. Everything has a huge
markup. Just because it cost $50 to make that TV doesn't mean
you're going to be able to pay less than $250 for it. We
engineers who design stuff like that don't work for free.
Shipping from Asia isn't free. The cost to "make" something is
often trivial compared to the cost to develop it, package it,
ship it, and distribute it. Funny thing, but everywhere along
they way, everybody want's to eat. If you think you can make
and sell cellular phones for $50 and still make a profit
without any of the income stream from the service, then go
ahead and do it. You'll be rich and famous.
--
Grant Edwards grante Yow! I appoint you
at ambassador to Fantasy
visi.com Island!!!
| |
| Elmo P. Shagnasty 2008-01-07, 10:33 pm |
| In article < 13o5u01eckeo0b3@corp
.supernews.com>,
Grant Edwards <grante@visi.com> wrote:
> If you think you can make
> and sell cellular phones for $50 and still make a profit
> without any of the income stream from the service, then go
> ahead and do it. You'll be rich and famous.
That's my point. A couple of $50 phones, and nowhere near the income
stream Verizon planned for those puppies.
Sure, they're on the Verizon network. So whatever use they do see,
there's SOMETHING going to Verizon. But strictly speaking, they're with
an MVNO. So there's a middleman BEFORE the money gets to Verizon.
$50 phones with a contract income stream, sure. $50 phones with cheap
pay as you go? The few bucks they'll get out of me over the next few
years won't come anywhere near subsidizing those phones.
| |
| Uncle_vito 2008-01-08, 7:33 am |
| Buy 2 or 3 phones. Dang I hardly use 1. What do you need 2 or 3 phones
for. A backup? Geez. Being without a phone for a few hours must be like
death. Get a life.
Vito
"Fred C. Dobbs" <noone> wrote in message
news:ytmdnTql6Ndg7R_
anZ2dnUVZ_jGdnZ2d@co
mcast.com...
> "Richard B. Gilbert" <rgilbert88@comcast.net> wrote in message
> news:47826BC4.6030500@comcast.net...
> ...and he'll jump on Ebay, pick up a nice used one (or buy 2 or 3 so he
> has a backup) and he's good to go. Been doing that for years.....and saved
> a ton.
>
>
| |
| Thomas T. Veldhouse 2008-01-08, 7:33 am |
| In alt.cellular.t-mobile Bert Hyman <bert@iphouse.com> wrote:
>
> When you initially contract with a provider, they usually provide a
> phone at no or reduced cost. Similarly, if you renew your contract, you
> can usually get a new phone at no or reduced cost.
>
Sprint PCS and others, will not allow you to activate a phone [that you
purchased elsewhere .. perhaps used] on a new account without a contract.
THAT IS WRONG! They have no investment stake in you if you provide your own
phone. For instance, if you buy a "clear" Sprint PCS phone, used, off of Ebay
and create a new account with Sprint [you are a new customer], they FORCE you
into a one or two year contract in spite of the fact they put exactly zero
investment dollars into subsidation, which is what they claim these contracts
are required for.
> With no contract, you'd be expected to bring your own phone or pay the
> retail price.
>
Yes, that is the way it should be, but that is not the way it is with some
providers. I am not sure if T-Mobile does it this way or not, but I know
Sprint PCS will rope you in [with a noose] to their contract.
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Thomas T. Veldhouse 2008-01-08, 10:33 am |
| In alt.cellular.t-mobile DevilsPGD < spam_narf_spam@crazy
hat.net> wrote:
>
> Personally, I'm not stressing about the early termination penalty when
> bringing my own phone, instead I am planning to just take the free
> phone, sell it, and pocket the cash.
>
> If I pay out the contract, I won't be as far behind. If not, I win.
The problem here is that their is a "glut" of these "free" phones on Ebay and
other sources, so their price is actually artificially deflated. I tend to
doubt you will get $150-$200 in return for the "free phone" to cover the cost
of the early termination fee.
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Thomas T. Veldhouse 2008-01-08, 10:33 am |
| In alt.cellular.t-mobile News <News@group.name> wrote:
>
> Huh? I've been month to month for more than eight years.
But ... you used to be under contract. If you go back far enough and have an
old enough plan, it is possible you bought an unsubsidized phone without
contract and still retain the plan, eh? Airtouch did this in the old Analog
brick and bag phone days ... but then Verizon bought them ;-)
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
|
|
Thomas T. Veldhouse wrote:
> In alt.cellular.t-mobile News <News@group.name> wrote:
>
>
>
> But ... you used to be under contract. If you go back far enough and have an
> old enough plan, it is possible you bought an unsubsidized phone without
> contract and still retain the plan, eh? Airtouch did this in the old Analog
> brick and bag phone days ... but then Verizon bought them ;-)
>
Nope.
SIMs acquired directly from Omnipoint, Voicestream and T-Mobile.
Phones directly from Ericsson and HP.
| |
| Thomas T. Veldhouse 2008-01-08, 10:33 am |
| In alt.cellular.t-mobile Grant Edwards <grante@visi.com> wrote:
>
> So go buy one on eBay, newegg, or Craig's List for $30. Nobody
> is forcing you to take a "free" phone and sign a contract.
>
Sprint PCS does. Try activating a used [ESN clear] phone on a new account;
they won't do it without a contract. Hell, just swapping phones with Sprint
[even an insurance replacement ... any ESN change at all] resets the $150
credit you get towards a new phone every two years. They have the absolute
worst billing system and CRM that I have seen of any company!
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Thomas T. Veldhouse 2008-01-08, 10:33 am |
| In alt.cellular.t-mobile Grant Edwards <grante@visi.com> wrote:
> On 2008-01-07, LHA <nobody@nobody1.com1> wrote:
>
>
> As long as they're giving you a $200-$300 phone for free,
> they're going to require that you guarantee future purchases in
> order to cover the cost of that phone.
>
But they don't. They give you a $150 phone for free. They give you a $300
phone for $150 ... or sometimes if they have a sale on massive inventory or
vendor pricing discounts, they will give you the $300 for $99 or less ... but
the subsidy in this case is still $150 and the rest is money they discount
because of the manufacturer [i.e. Motorola pushing a KRZR] or to reduce
inventory on older models.
>
> People tolerate it because they want a "free" phone.
>
Nothing is free in life and this especially applies to mobile phones.
I love Verizon, but if they don't implement the pro-rated early termination
fees as they promised to do 15+ months ago, then I may take my chances with
AT&T, because at least I can easily switch out phones via the card in the back
of the phone without risking contract changes, albeit, Verizon is pretty good
about not sneaking in contract renewals like Sprint PCS does.
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Thomas T. Veldhouse 2008-01-08, 10:33 am |
| In alt.cellular.t-mobile Elmo P. Shagnasty <elmop@nastydesigns.com> wrote:
> In article < 13o53o0omormhab@corp
.supernews.com>,
> "Joel Koltner" < zapwireDASHgroups@ya
hoo.com> wrote:
>
>
> So explain why I picked up a couple Verizon InPulse Samsung A870 phones
> at Walmart for $50 each. I'm *sure* they're worth more than that.
>
Simple ... it is old inventory that is becoming obsolete and they sell it at a
discount to move it. ALL businesses that cary inventory do this, and
especially businesses that deal with evolving and in-demand technology.
> And I don't do business with Verizon.
>
No, you do business with Walmart [or perhaps the Kiosk vendor as the case may
be].
> Oh, but I do do business with PagePlus....at a rate of about
> $30/year.....so even if I do end up using the Verizon network, it's not
> for very much at all.
>
Ever notice that if you go to the Verizon or any traditional mobile phone
company that does both pre-pay and post-pay that the same phone is more
expensive for pre-pay customers? Well, you see why; they are under no
commitment.
I think "pre-pay" is an invalid term for these customers, as even "post-pay"
customers pre-pay. They only post pay any monthly overage or feature changes.
> So much for the whole contract idea.
>
Never was a contract for pre-pay.
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Thomas T. Veldhouse 2008-01-08, 10:33 am |
| In alt.cellular.t-mobile Jack Hamilton <jfh@acm.org> wrote:
>
> I'd be surprised if they cost more than $25 to make, but exact cost
> information doesn't seem possible to get. Many people claim that
> phones really "cost" the $200-$500 that carriers charge, but I don't
> believe it. Why would phones be the only consumer electronics devices
> that don't have a huge markup?
>
NEW technology has high costs [especially phones with CDMA technology due to
Qualcomm licensing], but once it hits mass production, the price goes down.
Consider prescription drugs. Prilosec, when it was released, was very
expensive yet the same company now sells it over-the-counter quite cheaply.
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Thomas T. Veldhouse 2008-01-08, 10:33 am |
| In alt.cellular.t-mobile Elmo P. Shagnasty <elmop@nastydesigns.com> wrote:
>
> That's my point. A couple of $50 phones, and nowhere near the income
> stream Verizon planned for those puppies.
>
Nah ... you bought relatively old technology and high volume phones .. R&D was
long ago paid for and you are just getting a discount because they need to
reduce inventory to make room for the profitable newcomer.
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Elmo P. Shagnasty 2008-01-08, 10:33 am |
| In article <5uhe54F1hna38U4@mid.individual.net>,
"Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:
>
> Nah ... you bought relatively old technology and high volume phones .. R&D was
> long ago paid for and you are just getting a discount because they need to
> reduce inventory to make room for the profitable newcomer.
Could be. But the a870 seems like solid technology, and a step above
much of the other stuff.
| |
| Elmo P. Shagnasty 2008-01-08, 10:33 am |
| In article <5uhdtoF1hna38U2@mid.individual.net>,
"Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:
>
> No, you do business with Walmart [or perhaps the Kiosk vendor as the case may
> be].
No, I do business with PagePlus.
My point was, Verizon can expect very little annuity stream from these
phones. If they were sold at a "subsidized" price, with Verizon
expecting a suitable amount of income from my using them in order to
offset the cheap price they sold for, then Verizon is in for a surprise.
| |
| Elmo P. Shagnasty 2008-01-08, 10:33 am |
| In article <5uhdtoF1hna38U2@mid.individual.net>,
"Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:
>
> Ever notice that if you go to the Verizon or any traditional mobile phone
> company that does both pre-pay and post-pay that the same phone is more
> expensive for pre-pay customers? Well, you see why; they are under no
> commitment.
Ummm...that was my point. Did you not get the whole thing? I am under
no commitment to pay any usage charges at any level for these phones,
therefore if the phones are subsidized based on Verizon expecting that
I'm going to use them and Verizon will realize income from them, then
Verizon is in for a surprise.
> I think "pre-pay" is an invalid term for these customers, as even "post-pay"
> customers pre-pay. They only post pay any monthly overage or feature changes
Nope. Not with Cingular/AT&T, anyway. I paid AFTER the fact, for
everything. I never paid anything up front. Two years ago I walked
away with a couple of free phones and a contract that said I would pay
so much for service, and my service was available immediately. The bill
for that service was not generated until one month later.
You're wrong about the bills being pre-pay even for contract customers.
| |
| Elmo P. Shagnasty 2008-01-08, 10:33 am |
| In article <5uhdliF1hna38U1@mid.individual.net>,
"Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:
> I love Verizon, but if they don't implement the pro-rated early termination
> fees as they promised to do 15+ months ago, then I may take my chances with
> AT&T, because at least I can easily switch out phones via the card in the back
> of the phone without risking contract changes,
If you want the ability to switch out phones as a fashion statement, and
have several phones to choose from depending on what mood you're in,
then realistically in the US your choice is GSM and the SIM
card--excepting the iPhone, of course.
What you give up, frankly, is network availability and call quality.
| |
| clifto 2008-01-08, 10:33 am |
| Elmo P. Shagnasty wrote:
> "Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:
>
> Nope. Not with Cingular/AT&T, anyway. I paid AFTER the fact, for
> everything. I never paid anything up front. Two years ago I walked
> away with a couple of free phones and a contract that said I would pay
> so much for service, and my service was available immediately. The bill
> for that service was not generated until one month later.
I can't say with certainty that I wasn't charged for my first month of
service when I paid for the phones, now that I think about it.
--
"I am for socialism, disarmament and ultimately for abolishing the state
itself as an instrument of violence and compulsion. I seek social ownership of
property, the abolition of the propertied class, and sole control by those who
produce wealth. Communism is the goal." -- Roger Baldwin, founder, ACLU
| |
| Grant Edwards 2008-01-08, 3:33 pm |
| On 2008-01-08, Thomas T. Veldhouse <veldy71@yahoo.com> wrote:
> In alt.cellular.t-mobile Bert Hyman <bert@iphouse.com> wrote:
>
> Sprint PCS and others, will not allow you to activate a phone [that you
> purchased elsewhere .. perhaps used] on a new account without a contract.
Then pick a provider that _does_ provide the services you want.
> THAT IS WRONG!
IMO it was a mistake that the FCC didn't require the carriers
to 1) allow customers to use outside phones 2) provide
month-to-month service for people with unsubsidized phones.
OTOH, it took 80 years to get wireline carriers to allow
outside phones on their network.
--
Grant Edwards grante Yow! A can of ASPARAGUS,
at 73 pigeons, some LIVE ammo,
visi.com and a FROZEN DAQUIRI!!
| |
| Joel Koltner 2008-01-08, 10:33 pm |
| "Elmo P. Shagnasty" <elmop@nastydesigns.com> wrote in message
news:elmop-D6B31F. 16051107012008@nntp1
.usenetserver.com...
> So explain why I picked up a couple Verizon InPulse Samsung A870 phones
> at Walmart for $50 each. I'm *sure* they're worth more than that.
The pay-as-you-go phones tend to make significantly more money on a "per
minute of usage" basis than "regular" (contract) phones, so the marketing idea
there is that it doesn't take nearly as long for the manufacturer to re-coop
the "discount" they gave you on the phone, so even if you lose or throw away
or otherwise stop using the phone (and go get another one for $50) there's a
decent chance they'll have already made some money off of you overall.
Also consider that those phones are usually a generation or so behind the
current "cutting edge" of technology, so they are cheaper to make in the first
place. That Samsung A870 might not cost more than $100 to make, for instance.
> Oh, but I do do business with PagePlus....at a rate of about
> $30/year.....so even if I do end up using the Verizon network, it's not
> for very much at all.
They're probably losing money on you. All carriers lose money on some
customers, but remember that their goal is to make the biggest return on
investments for their stockholders -- from that perspective it doesn't matter
if they lose money on you if they're making heaps and piles of money on enough
other people.
Smart consumers certainly can use knowledge to their advantage here...
| |
| Joel Koltner 2008-01-08, 10:33 pm |
| "Thomas T. Veldhouse" <veldy71@yahoo.com> wrote in message
news:5uhcbgF1hup2eU1
@mid.individual.net...
> Sprint PCS and others, will not allow you to activate a phone [that you
> purchased elsewhere .. perhaps used] on a new account without a contract.
Supposedly they will let you sign up for a month-to-month contract on a new
account without a contract... but only on some relatively crappy (poor value)
service plans. Realistically, then, it's not an option... and of course in
many stores you'd probably be hard-pressed to find someone who even knew how
to do it.
> THAT IS WRONG!
Yeah, it is Sprint just being a bit greedy there. I guess they can get away
with it because most? all? of the other carriers do it as well, and it's a
rare enough scenario that there isn't a huge outcry to get it changed.
| |
| clifto 2008-01-08, 10:33 pm |
| Joel Koltner wrote:
> The pay-as-you-go phones tend to make significantly more money on a "per
> minute of usage" basis than "regular" (contract) phones, so the marketing idea
> there is that it doesn't take nearly as long for the manufacturer to re-coop
> the "discount" they gave you on the phone, so even if you lose or throw away
> or otherwise stop using the phone (and go get another one for $50) there's a
> decent chance they'll have already made some money off of you overall.
That's hard for me to see, considering T-Mobile wants $30 for 300 minutes
post-pay (use 'em or lose 'em in a month), vs. $100 for 1,000 minutes
pre-pay (use 'em any time in a year).
--
"I am for socialism, disarmament and ultimately for abolishing the state
itself as an instrument of violence and compulsion. I seek social ownership of
property, the abolition of the propertied class, and sole control by those who
produce wealth. Communism is the goal." -- Roger Baldwin, founder, ACLU
| |
| Paul Miner 2008-01-08, 10:33 pm |
| On 8 Jan 2008 13:32:32 GMT, "Thomas T. Veldhouse" <veldy71@yahoo.com>
wrote:
>Sprint PCS and others, will not allow you to activate a phone [that you
>purchased elsewhere .. perhaps used] on a new account without a contract.
>THAT IS WRONG! They have no investment stake in you if you provide your own
>phone. For instance, if you buy a "clear" Sprint PCS phone, used, off of Ebay
>and create a new account with Sprint [you are a new customer], they FORCE you
>into a one or two year contract in spite of the fact they put exactly zero
>investment dollars into subsidation, which is what they claim these contracts
>are required for.
I was under the impression that the cost to acquire a new customer
included more than just the cost of the equipment subsidy.
>Yes, that is the way it should be, but that is not the way it is with some
>providers. I am not sure if T-Mobile does it this way or not, but I know
>Sprint PCS will rope you in [with a noose] to their contract.
Just curious, does anyone know when they stopped calling themselves
Sprint PCS? Was it around the time of the Nextel merger, or before
that? It seems odd to refer to them as Sprint PCS this many years
later.
--
Paul Miner
| |
| Todd Allcock 2008-01-08, 10:33 pm |
| At 08 Jan 2008 17:53:26 -0600 clifto wrote:
> Joel Koltner wrote:
"per[color=darkred]
marketing idea[color=darkred]
coop[color=darkred]
away[color=darkred]
there's a[color=darkred]
>
> That's hard for me to see, considering T-Mobile wants $30 for 300 minutes
> post-pay (use 'em or lose 'em in a month), vs. $100 for 1,000 minutes
> pre-pay (use 'em any time in a year).
But you cherry-picked the most expensive (per minute) rate plan for your
comparison, not to mention the $30/300 minute plan includes free weekends.
T-Mo offers 1000 minutes for $40- a more attractive plan for heavy users- a
700 min./month postpaid user, for example, pays $40/month instead of $70 on
prepaid.
Having said that, unlike most carriers who seem to offer prepaid as a "last
resort" for credit-challenged consumers, and at a price designed not to
cannibalize their bread-n-butter postpaid biz, T-Mo aggressively pursues
the pre-paid market, seeming to assume that anyone their prepaid offering
lures from pstpaid is likely a high enough volume user that it'll be worth
it. That seems to work for them, considering that their prepaid ARPU is
(relatively) high, and their total ARPU is also relatively high considering
their high percentage of prepaid customers compared to other carriers.
| |
| CozmicDebris 2008-01-08, 10:33 pm |
| Todd Allcock < elecconnec@AmericaOn
Line.com> wrote in
news:hLXgj.50$R22.35@fe099.usenetserver.com:
> At 08 Jan 2008 17:53:26 -0600 clifto wrote:
> "per
> marketing idea
> coop
> away
> there's a
>
>
> But you cherry-picked the most expensive (per minute) rate plan for
> your comparison, not to mention the $30/300 minute plan includes free
> weekends. T-Mo offers 1000 minutes for $40- a more attractive plan for
> heavy users- a 700 min./month postpaid user, for example, pays
> $40/month instead of $70 on prepaid.
>
> Having said that, unlike most carriers who seem to offer prepaid as a
> "last resort" for credit-challenged consumers, and at a price designed
> not to cannibalize their bread-n-butter postpaid biz, T-Mo
> aggressively pursues the pre-paid market, seeming to assume that
> anyone their prepaid offering lures from pstpaid is likely a high
> enough volume user that it'll be worth it. That seems to work for
> them, considering that their prepaid ARPU is (relatively) high, and
> their total ARPU is also relatively high considering their high
> percentage of prepaid customers compared to other carriers.
>
>
>
>
Correct me if I'm wrong, but doesn't T-Mo prepaid only work on their
network, while postpaid does roam? That would seem to make the comparison
apples-to-oranges.
| |
| Grant Edwards 2008-01-09, 4:33 am |
| On 2008-01-09, CozmicDebris <isheforreal> wrote:
> Correct me if I'm wrong, but doesn't T-Mo prepaid only work on
> their network, while postpaid does roam? That would seem to
> make the comparison apples-to-oranges.
The last time I was comparing pre-paid plans that was indeed
the case.
--
Grant Edwards grante Yow! By MEER biz doo
at SCHOIN...
visi.com
| |
| Jack Hamilton 2008-01-09, 4:33 am |
| "Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:
>In alt.cellular.t-mobile Grant Edwards <grante@visi.com> wrote:
>
>But they don't. They give you a $150 phone for free.
That's like saying "I charged it, so it was free." They have signed
to a contract that guarantees them a future revenue stream, and that
future revenue stream has a present value.
>They give you a $300
>phone for $150 ...
Assuming that it really cost them $300, which I doubt. Probably some
phones are sold for close to the carriers's retail price, but almost
certainly not all of them. If they weren't making money on the
process, they'd stop doing it.
| |
| CozmicDebris 2008-01-09, 4:33 am |
| Jack Hamilton <jfh@acm.org> wrote in
news:lrm8o3hge1tfcnv
qjv4s8n33bigpbvsfqh@
4ax.com:
> "Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:
>
>
> That's like saying "I charged it, so it was free." They have signed
> to a contract that guarantees them a future revenue stream, and that
> future revenue stream has a present value.
>
>
> Assuming that it really cost them $300, which I doubt. Probably some
> phones are sold for close to the carriers's retail price, but almost
> certainly not all of them. If they weren't making money on the
> process, they'd stop doing it.
>
>
Except that it gives them a healthy loss to write off every quarter for
equipment subsudies.And I'll gurantee that neither the IRS or SEC woudl
allow them to either make up or artificially inflate that number.
| |
| Todd Allcock 2008-01-09, 4:33 am |
| At 08 Jan 2008 22:14:20 -0600 CozmicDebris wrote:
> Correct me if I'm wrong, but doesn't T-Mo prepaid only work on their
> network, while postpaid does roam? That would seem to make the
comparison
> apples-to-oranges.
Good point. That used to be true, but T-Mo opened up their prepaid
coverage to include roaming, including some at 850MHz. It doesn't roam
everywhere a T-Mo postpaid phone does, but the prepaid and postpaid maps
are closer than they used to be.
| |
| Dennis Ferguson 2008-01-09, 4:33 am |
| On 2008-01-09, Grant Edwards <grante@visi.com> wrote:
> On 2008-01-09, CozmicDebris <isheforreal> wrote:
>
>
> The last time I was comparing pre-paid plans that was indeed
> the case.
This might have been the case at some time in the past but it isn't now.
T-Mobile prepaid has a bunch of roaming coverage; just check the prepaid
coverage map at T-Mobile's web site. I've heard that T-Mobile prepaid
has somewhat less roaming coverage than postpaid, but it is hard to find a
difference between the two maps.
Dennis Ferguson
| |
| clifto 2008-01-09, 7:33 am |
| CozmicDebris <isheforreal> wrote:
> Correct me if I'm wrong, but doesn't T-Mo prepaid only work on their
> network, while postpaid does roam? That would seem to make the comparison
> apples-to-oranges.
Whose other networks do they roam on?
--
If John McCain gets the 2008 Republican Presidential nomination,
my vote for President will be a write-in for Jiang Zemin.
| |
| clifto 2008-01-09, 7:33 am |
| Todd Allcock wrote:
> At 08 Jan 2008 17:53:26 -0600 clifto wrote:
>
> But you cherry-picked the most expensive (per minute) rate plan for your
> comparison, not to mention the $30/300 minute plan includes free weekends.
> T-Mo offers 1000 minutes for $40- a more attractive plan for heavy users- a
> 700 min./month postpaid user, for example, pays $40/month instead of $70 on
> prepaid.
The problem with that is that the user can't depend on the 700 minutes.
After he hits the limit, the plan has a price more like $280 per month
($0.40 per minute). So he's going to waste some finite number of minutes
every month to avoid hitting the limit. I suppose it's a matter of skill
or luck as to how few minutes get wasted.
--
If John McCain gets the 2008 Republican Presidential nomination,
my vote for President will be a write-in for Jiang Zemin.
| |
| Todd Allcock 2008-01-09, 10:34 am |
| At 08 Jan 2008 21:32:21 -0800 Jack Hamilton wrote:
>
> That's like saying "I charged it, so it was free." They have signed
> to a contract that guarantees them a future revenue stream, and that
> future revenue stream has a present value.
True, but the use of the phone requires service anyway. As long as the EFT
is equal or less than the subsidy, why not? You aren't really stuck with "
$1000" worth of service (2 years at $40/month), you're stuck with paying
the EFT to cancel- roughly the price of the discount.
>
> Assuming that it really cost them $300, which I doubt.
It doesn't matter what it costs to manufacture or procure- nothing else you
buy is sold for "cost" either. What matters is the difference between what
it will cost you to buy it with or without the contract. (And not
necessarily from the carrier- i.e. if you can get the same phone on eBay,
or a local dealer without contract cheaper.)
> Probably some
> phones are sold for close to the carriers's retail price, but almost
> certainly not all of them. If they weren't making money on the
> process, they'd stop doing it.
True- but they're making money either way; whether you pay the full
unsubsidized price, or re-up for two years. Again, the point is, if the
"Uberfone 5000", or whatever model you really want can be obtained $150-200
cheaper with a contract, why not? If circumstances change and you need to
break the contract, you pay the $150-200 EFT and no harm done- it was the
amount of the discount anyway.
Otherwise, two years later with the same carrier, that full price phone
without contract was $200 more, and you still spent two years with the
carrier- just without a contractual obligation.
| |
| Todd Allcock 2008-01-09, 10:34 am |
| At 09 Jan 2008 05:52:47 -0600 clifto wrote:
users- a[color=darkred]
$70 on[color=darkred]
>
> The problem with that is that the user can't depend on the 700 minutes.
> After he hits the limit, the plan has a price more like $280 per month
> ($0.40 per minute).
Right- that's why I used 700 as my example- the plan actually includes
1000, but it's unrealistic to assume anyone would use all of their minutes
each month. My hypothetical customer leaves 300 minutes "on the table"
every month.
> So he's going to waste some finite number of minutes
> every month to avoid hitting the limit. I suppose it's a matter of skill
> or luck as to how few minutes get wasted.
Maybe- the point was that as long as his average minute cost is _less_ than
$0.10, it's a better deal (for him) than prepaid. That happens when he
hits 400 minutes on the $40 for 1000 minute plan.
| |
| Thomas T. Veldhouse 2008-01-09, 12:33 pm |
| In alt.cellular.verizon Paul Miner <pminer@elrancho.invalid> wrote:
>
> I was under the impression that the cost to acquire a new customer
> included more than just the cost of the equipment subsidy.
>
Same goes for walmart ... you don't sign a contract with them when you walk in
the door saying that you will pay them $X every month or pay $XXX to quit
paying.
The ETF is connected to the reduction in phone price. Any other money spent,
whether it be advertising or paying for good reviews, is not money they have a
right to recoup via a contract.
As far as the cost of activation goes ... they already charge you activate an
account, so no contract needed for that.
> Just curious, does anyone know when they stopped calling themselves
> Sprint PCS? Was it around the time of the Nextel merger, or before
> that? It seems odd to refer to them as Sprint PCS this many years
> later.
>
Sprint split off Sprint PCS years ago so there was a tracking stock and the
main stock. Then, Sprint merged with Nextel and Sprint PCS was rolled back
into the fold leaving Sprint Nextel. As far as when, well, it should be
obvious from the name, eh? :-)
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Thomas T. Veldhouse 2008-01-09, 12:33 pm |
| In alt.cellular.verizon Elmo P. Shagnasty <elmop@nastydesigns.com> wrote:
>
> If you want the ability to switch out phones as a fashion statement, and
> have several phones to choose from depending on what mood you're in,
> then realistically in the US your choice is GSM and the SIM
> card--excepting the iPhone, of course.
>
Actually, you can switch out your phones on Verizon all that you want too [but
currently, you are limitted to Verizon supported phones]. That doesn't
affect your ability to get a discount on a new phone in one or two years and
it doesn't affect your contract term.
With Sprint PCS, and perhaps only with Sprint PCS, if you change phones, your
discount on a new phone is reset to two years out. They trigger the discount
on two years from your last ESN switch. That is absolutely ridiculous and is
a sign of just how poor the programmers who set that system up were (or still
are!). In fact, it is this reason alone [and the customer service that
followed the flaw] that led me to leave Sprint PCS after about five years.
> What you give up, frankly, is network availability and call quality.
>
Verizon has a GREAT network and their plans have excellent coverage [including
roaming] for post pay customers. I won't go into the reasons why I think CDMA
is a better technology for voice than GSM (but let's say multipath is
particular beneficial in downtown areas) but I think there are many with
relatively fewer benefits going to GSM. I often hear my coworkers who use
T-Mobile and AT&T complain that the person on the other end can't hear them
.... or the other way around. I don't think that has ever happened to me on a
CDMA phone. Since I hate Sprint PCS now [for good reasons enumerated hear
more than a year ago], Verizon is my only real option here unless I decide to
tolerate AT&T and live with what AT&T offers, which is GSM and higher prices
:-(
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Thomas T. Veldhouse 2008-01-09, 12:33 pm |
| In alt.cellular.verizon CozmicDebris <isheforreal> wrote:
>
> Except that it gives them a healthy loss to write off every quarter for
> equipment subsudies.And I'll gurantee that neither the IRS or SEC woudl
> allow them to either make up or artificially inflate that number.
>
They better not be writing it off as a loss ... it clearly is NOT. It is an
investment [I don't get to write off my investments ... in fact, I have to pay
taxes on the earnings when I get them]. They "invest" $150 in your phone so
that the phone is cheaper for you, and in return, they over charge you by a
certain amount for one or two years to make up that money ... and if you quit
early, they charge you more than the $150 the initially invested in you, so
they still get a profit.
That is why I say it shouldn't be legal. Plan prices should be lower if a
person is not on contract and they should be able to activate a non-subsidized
phone, whether new or used, without a contract and without paying the rates
created for "subsidy recovery". The best deal in the world for these
companies is somebody coming in with a used phone, activating it on a new plan
and charging them the same monthly rate that they charge others who are paying
off their subsidy AND creating a profit for the carrier. In short, these
people are probably the most profitable ... yet, they don't allow it in a lot
of cases ... or want to charge you MORE per month to start a phone on a new
plan without a contract [I think Sprint used to charge $10 / month for this].
Someday, it will be all wireless data, and you can pick your VoIP provider and
phone ... then we will be complaining about data contracts instead of these
blasted subsidy rip-offs.
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Thomas T. Veldhouse 2008-01-09, 12:33 pm |
| In alt.cellular.verizon Todd Allcock < elecconnec@americaon
line.com> wrote:
>
> True- but they're making money either way; whether you pay the full
> unsubsidized price, or re-up for two years. Again, the point is, if the
> "Uberfone 5000", or whatever model you really want can be obtained $150-200
> cheaper with a contract, why not? If circumstances change and you need to
> break the contract, you pay the $150-200 EFT and no harm done- it was the
> amount of the discount anyway.
>
This is precisely what I was trying to say, except that their EFT is usually
MORE than the subsidy, so the carrier comes out ahead ... and they don't lower
the price of your monthly plan when the subsidy is paid up ... which means you
should threaten churn to keep your money, as otherwise it is pure profit for
them ... a greedy model.
I would rather have the option to buy a phone that is not locked to any
carrier and buy that phone at full price. Then I should be able to activate
it with any carrier and not pay the plan price that subsidized buyers pay.
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Thomas T. Veldhouse 2008-01-09, 12:33 pm |
| In alt.cellular.verizon Elmo P. Shagnasty <elmop@nastydesigns.com> wrote:
>
> My point was, Verizon can expect very little annuity stream from these
> phones. If they were sold at a "subsidized" price, with Verizon
> expecting a suitable amount of income from my using them in order to
> offset the cheap price they sold for, then Verizon is in for a surprise.
>
Obviously Verizon did not sell the phone with contractual commitment, you
would have heard from them by now. You bought their excess inventory and
they are probably very glad you paid retail price for it rather than them
having to write it off and give them to charity or sell them in bulk to Ebay
sellers ;-)
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Thomas T. Veldhouse 2008-01-09, 12:33 pm |
| In alt.cellular.verizon Elmo P. Shagnasty <elmop@nastydesigns.com> wrote:
> In article <5uhdtoF1hna38U2@mid.individual.net>,
> "Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:
>
>
> Ummm...that was my point. Did you not get the whole thing? I am under
> no commitment to pay any usage charges at any level for these phones,
> therefore if the phones are subsidized based on Verizon expecting that
> I'm going to use them and Verizon will realize income from them, then
> Verizon is in for a surprise.
>
>
>
>
> Nope. Not with Cingular/AT&T, anyway. I paid AFTER the fact, for
> everything. I never paid anything up front. Two years ago I walked
> away with a couple of free phones and a contract that said I would pay
> so much for service, and my service was available immediately. The bill
> for that service was not generated until one month later.
>
> You're wrong about the bills being pre-pay even for contract customers.
>
Prepaid phones are NOT subsidized. You bought a prepay phone, otherwise known
as commitment free. If you had bought it on a subsidized contract, the phone
would probably have been free. You just helped them unload excess inventory.
Feel good that you got what you consider a fair price. You won't be finding a
Motorola Q anytime soon at Walmart for a similar price without commitment ...
and you know why.
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Todd Allcock 2008-01-09, 3:33 pm |
| At 09 Jan 2008 05:52:31 -0600 clifto wrote:
:
comparison[color=dar
kred]
>
> Whose other networks do they roam on?
Small regional carriers, mostly- Unicell in parts of New England, Iowa
Wireless, Viero in Colorado and Nebraska, Western Wireless (now owned by
Alltel, IIRC, who left up some GSM capacity for the roaming revenue.)
In VERY limited areas, T-Mo customers can roam on AT&T- I'm not sure if
it's a leftover part of the old West Coast/NY T-Mo/Cingular sharing
agreement or legacy agreements AT&T got stuck with when they acquired other
carriers.
| |
| Thomas T. Veldhouse 2008-01-09, 3:33 pm |
| In alt.cellular.verizon Joel Koltner < zapwireDASHgroups@ya
hoo.com> wrote:
>
> The pay-as-you-go phones tend to make significantly more money on a "per
> minute of usage" basis than "regular" (contract) phones, so the marketing idea
> there is that it doesn't take nearly as long for the manufacturer to re-coop
> the "discount" they gave you on the phone, so even if you lose or throw away
> or otherwise stop using the phone (and go get another one for $50) there's a
> decent chance they'll have already made some money off of you overall.
>
And what I have been saying is they don't really discount those prepaid phones
at all ... or very rarely. Most are phones that were high volume sellers and
became excess inventory, so they sell those as prepaid [or offer them as
"free" to subsidized customers]. Clearing excess inventory that they would
otherwise write off because they need room for newer more profitable models
makes a lot of sense ... and thus, the prepaid companies tend to be
subsideries or completely different companies altogether that got to buy these
phones on clearance. I bet buying one of those $30 prepaid phones provided
a net revenue of $15 for the carrier offering the pre-paid phone, even if it
is never activated ... because the phone is not worth $30 to them, but, in teh
case of my example, only $15.
BTW ... it is such inventory price depreciation that they write off, not the
subsidies ... just referencing another part of the thread.
They didn't lose money on that Sanyo phone the sold this guy because the phone
isn't worth to them as much as he paid for it in the first place [hence they
made a profit]. That is why the cheap comittment free pre-paid phones are
older models [or some current models where inventory is well in excess of what
it should be], the phone is now worth less to them, so they sell them for
less. The goal is to not have to write off any losses at all and that is what
these phones do for the carriers; they take a loss due to depreciation not due
to some pre-paid guy buying the phone and using it on another carrier ... the
goal was to get rid of the phone, not whether it was activated or not.
To the guy who bought the Samsung at Walmart ... did you ever price that phone
to what is available on Ebay as new for the same model? I bet the price was
similar or even higher at Walmart.
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Thomas T. Veldhouse 2008-01-09, 3:33 pm |
| In alt.cellular.verizon clifto <clifto@gmail.com> wrote:
>
> That's hard for me to see, considering T-Mobile wants $30 for 300 minutes
> post-pay (use 'em or lose 'em in a month), vs. $100 for 1,000 minutes
> pre-pay (use 'em any time in a year).
>
You get roaming for free on the post-pay plan ... there is no roaming on
pre-pay plans. Thus, you get less coverage for the $1. You probably don't
get unlimitted nights and weekends either ... or free mobile to mobile, etc.
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Thomas T. Veldhouse 2008-01-09, 3:33 pm |
| In alt.cellular.verizon CozmicDebris <isheforreal> wrote:
>
> Correct me if I'm wrong, but doesn't T-Mo prepaid only work on their
> network, while postpaid does roam? That would seem to make the comparison
> apples-to-oranges.
you are absolutely correct. And there are mobile-mobile minutes, nights and
weekends, etc.
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Elmo P. Shagnasty 2008-01-09, 3:33 pm |
| In article <5ukj3oF1hksu8U2@mid.individual.net>,
"Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:
>
> You get roaming for free on the post-pay plan ... there is no roaming on
> pre-pay plans. Thus, you get less coverage for the $1. You probably don't
> get unlimitted nights and weekends either ... or free mobile to mobile, etc.
The no roaming and less coverage is exactly why the T-Mo pay as you go
plan sucks.
| |
| Paul Miner 2008-01-09, 3:33 pm |
| On 9 Jan 2008 17:48:17 GMT, "Thomas T. Veldhouse" <veldy71@yahoo.com>
wrote:
>In alt.cellular.verizon Paul Miner <pminer@elrancho.invalid> wrote:
>
>Sprint split off Sprint PCS years ago so there was a tracking stock and the
>main stock. Then, Sprint merged with Nextel and Sprint PCS was rolled back
>into the fold leaving Sprint Nextel. As far as when, well, it should be
>obvious from the name, eh? :-)
Ok, so mid-2005. Then why do you still call them Sprint PCS?
--
Paul Miner
| |
| Elmo P. Shagnasty 2008-01-09, 3:33 pm |
| In article <5ukivtF1hksu8U1@mid.individual.net>,
"Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:
> To the guy who bought the Samsung at Walmart ... did you ever price that phone
> to what is available on Ebay as new for the same model? I bet the price was
> similar or even higher at Walmart.
As an indicator, right now the very first "new, never used" unit on Ebay
in the "buy it now" category is $80 shipped to my door.
And as the auction says, "box is not included to save on shipping
weight". So in other words, it's not "new in box". And he has 4 of
them available.
I paid $50 at a brick and mortar store, locally, where if there was a
problem with the unit I could take it back. And it was new in box.
Previously owned with a few "nicks and scratches" seems to be $65
shipped.
$50, new in box, Walmart.
I'm guessing someone bought a few at Walmart and is trying to take
advantage of stupid people who go to Ebay and never bother to see what
the price and availability is locally.
| |
| Elmo P. Shagnasty 2008-01-09, 3:33 pm |
| In article <5ukhosF1gqpq4U5@mid.individual.net>,
"Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:
> Prepaid phones are NOT subsidized. You bought a prepay phone, otherwise known
> as commitment free. If you had bought it on a subsidized contract, the phone
> would probably have been free. You just helped them unload excess inventory.
> Feel good that you got what you consider a fair price. You won't be finding a
> Motorola Q anytime soon at Walmart for a similar price without commitment ...
> and you know why.
Have you ever gone to Walmart to see?
There are PLENTY of good phones, even Qs, for prepaid.
| |
| Elmo P. Shagnasty 2008-01-09, 3:33 pm |
| In article <5ukhk0F1gqpq4U4@mid.individual.net>,
"Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:
> In alt.cellular.verizon Elmo P. Shagnasty <elmop@nastydesigns.com> wrote:
>
> Obviously Verizon did not sell the phone with contractual commitment, you
> would have heard from them by now. You bought their excess inventory and
> they are probably very glad you paid retail price for it rather than them
> having to write it off and give them to charity or sell them in bulk to Ebay
> sellers ;-)
>
> -
You mean, there are people who have to have the latest 'n' greatest
RIGHT NOW, and there are people who just want a phone that works and
doesn't care if AG Bell himself built it?
I don't go to movies, either. I wait the 6 months for it to hit DVD,
then I borrow it from my local public library.
| |
| Paul Miner 2008-01-09, 3:33 pm |
| On 9 Jan 2008 18:04:27 GMT, "Thomas T. Veldhouse" <veldy71@yahoo.com>
wrote:
>With Sprint PCS, and perhaps only with Sprint PCS, if you change phones, your
>discount on a new phone is reset to two years out. They trigger the discount
>on two years from your last ESN switch. That is absolutely ridiculous and is
>a sign of just how poor the programmers who set that system up were (or still
>are!). In fact, it is this reason alone [and the customer service that
>followed the flaw] that led me to leave Sprint PCS after about five years.
As a handset tester from 2000-2006, I switched my handset many dozens
of times during that period and never once did they reset my discount
date, contract date, or any other date. Perhaps there's another aspect
to it, besides a simple ESN swap on an existing account, that triggers
what you were seeing?
--
Paul Miner
| |
| Elmo P. Shagnasty 2008-01-09, 3:33 pm |
| In article <5ukglbF1gqpq4U1@mid.individual.net>,
"Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:
>
> Verizon has a GREAT network
Did you read what I said? That was my point. GSM and SIM card
switching is nice; you can change phones as often as you change your
underwear (or more) if you like. What you give up, frankly, is network
availability and call quality. Neither of the US GSM operators is very
good in those respects.
At least T-Mo admits it on their extensive coverage map.
| |
| Todd Allcock 2008-01-09, 3:33 pm |
| At 09 Jan 2008 18:23:25 +0000 Thomas T. Veldhouse wrote:
>
> Prepaid phones are NOT subsidized.
Sure they are. We're probably splitting hairs, but the carriers subsidize
prepaid handsets to spur signups in a sort of "giveaway the razor to sell
the blades" fashion. Tracfone offers handsets for $15 and Virgin for $20;
the included batteries and chargers cost more than that!
> You bought a prepay phone,
> otherwise known as commitment free.
"Committment" and "subsidy" aren't necessarily related...
| |
| Thomas T. Veldhouse 2008-01-09, 3:33 pm |
| In alt.cellular.sprintpcs Paul Miner <pminer@elrancho.invalid> wrote:
>
> Ok, so mid-2005. Then why do you still call them Sprint PCS?
>
Because I feel like it ... it is the name of this group isn't it?
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Todd Allcock 2008-01-09, 10:33 pm |
| At 09 Jan 2008 18:16:52 +0000 Thomas T. Veldhouse wrote:
200[color=darkred]
to[color=darkred]
the[color=darkred]
>
> This is precisely what I was trying to say, except that their EFT is
usually
> MORE than the subsidy, so the carrier comes out ahead ...
I guess that depends on your POV. I find the subsidy and EFT are in each
other's ballpark, at least.
> and they don't lower
> the price of your monthly plan when the subsidy is paid up ... which
means you
> should threaten churn to keep your money, as otherwise it is pure profit
for
> them ... a greedy model.
You also are no longer under contract, either. I liken it to a magazine
subscription- a subscription is cheaper per issue than the "no committment"
newsstand price. Instead of a service discount for your two-year
"subscription" you get a phone subsidy.
> I would rather have the option to buy a phone that is not locked to any
> carrier and buy that phone at full price. Then I should be able to
activate
> it with any carrier and not pay the plan price that subsidized buyers pay.
I agree fully. On the other hand, it's probably better for the free market
to eventually come to that conclusion that through forced regulation.
Plus, you never know what you as an individual can negotiate. When T-Mo
was out of stock on a particular handset I wanted in April 2006, (my
current WinMo phone,) I convinced them to apply a $200 "subsidy" directly
to my account in exchange for a one-year committment so I could buy the
handset I wanted from an independent dealer who had it in stock. It took a
bit of convincing, but I managed to get them to do it. (I did have to fax
them a receipt to "prove" I bought the handset before they applied the $200
credit.)
While I agree with your previous post that CDMA offers certain
technological advantages over GSM, GSM offers certain practical advantages-
namely it's not used by Verizon or Sprint, so GSM users aren't bound by
those carrier's oppressive handset policies! ;-)
| |
| Todd Allcock 2008-01-09, 10:33 pm |
| At 09 Jan 2008 18:44:13 +0000 Thomas T. Veldhouse wrote:
> And what I have been saying is they don't really discount those prepaid
phones
> at all ... or very rarely.
I strongly disagree. Often the prepaid models are the same current models
the carriers offer to contract customers (although typically low-end,
understandably- there's little point offering mobile TV enabled phones to
customers who can't buy the TV service on prepaid plans!)
> Most are phones that were high volume sellers and
> became excess inventory, so they sell those as prepaid [or offer them as
> "free" to subsidized customers]. Clearing excess inventory that they
would
> otherwise write off because they need room for newer more profitable
models
> makes a lot of sense ... and thus, the prepaid companies tend to be
> subsideries or completely different companies altogether that got to buy
these
> phones on clearance.
Look at Virgin's or Tracfone's offerings- these are handsets that were
never sold by the underlying carrier, and have custom UIs to support the
MVNO. There's no way Tracfone is buying those $15 retail Motos for less
than the $10 they sell them to Target or Walmart for. According to the
trade papers, the lowest end phones currently manufactured wholesale for
$30-40US, and these are featureless monochromatic-display models you and I
will never see at WalMart- they're built for carriers in emerging nations.
> I bet buying one of those $30 prepaid phones provided
> a net revenue of $15 for the carrier offering the pre-paid phone, even if
it
> is never activated ...
Unlikely- an MSRP $30-40 prepaid phone probably is sold to the mass market
retailer for 60-70% of that (Walmart wants to make a buck as well!) T
ere's no accounting depreciation trickery that can make it profitable to
sell a new handset to WalMart for $20 without the expectation of future
airtime purchases.
> because the phone is not worth $30 to them, but, in teh
> case of my example, only $15.
Not a chance.
> BTW ... it is such inventory price depreciation that they write off, not
the
> subsidies ... just referencing another part of the thread.
I'm not so sure. Customer acquisition cost, including a subsidy, is a
legitimate cost of doing business, not a capital invenstment, and could be
written off- not as a depreciation, but as a loss- it's not a lease- it's a
sale. (At least that's how I did it when I was a cellular dealer- I sold
the "free" phone at a $200 loss, which was offset by the $300 commission
from my carrier, resulting in a $100 profit.)
> They didn't lose money on that Sanyo phone the sold this guy because the
phone
> isn't worth to them as much as he paid for it in the first place [hence
they
> made a profit]. That is why the cheap comittment free pre-paid phones are
> older models [or some current models where inventory is well in excess of
what
> it should be], the phone is now worth less to them, so they sell them for
> less.
You're overthinking this- prepaid phones (at least those sold outside a
carrier's own corporate stores) are packaged in different retail packaging,
with different manuals ad inserts, often with different (fewer) included
accessories- they aren't excess inventory reboxed in blister packs to sell
at Walmart- these particular phones were always intended to be sold as
prepaid models.
> The goal is to not have to write off any losses at all and that is what
> these phones do for the carriers; they take a loss due to depreciation
not due
> to some pre-paid guy buying the phone and using it on another carrier ...
the
> goal was to get rid of the phone, not whether it was activated or not.
Not true, particularly in the case of a carrier like Verizon with
"exclusive" models. Look at Verizon's low-end- twenty virtually indentical
sub-$50 retail (subsidized) flip phones from a variety of manufacturers
with virtually identical (lack of) features. These phones' mothers
couldn't tell them apart. Now look t Verizon's retail prepaid low-end
(sub $50) one blister-packed model in "Verizon InPulse" packaging- a
Samsung (or is it Starcom, I forget?) recently replaced a Nokia 26-
something that held the niche for a year. If your theory was correct, we'd
see a steady rotation of discontinued or overstock product as the low-end
prepaid model du jour, but we don't- the prepaid lineup is stable, and
bears little relation to the current postpaid lineup.
> To the guy who bought the Samsung at Walmart ... did you ever price that
phone
> to what is available on Ebay as new for the same model? I bet the price
was
> similar or even higher at Walmart.
Actually I found the opposite- when I wanted to buy a low-end Verizon phone
to use on PagePlus prepaid) eBay's prices were similar or higher than
Walmart's. Luckily I stumbled upon a good deal on an old Samsung WinMo
smartphone on eBay, since PagePlus (and Verizon, I suspect) are offering
free 1X data on prepaid (most likely by accident) which allows me
Contacts/Calendar sync with my Exchange server and IMAP e-mail access,
which the low-end prepaid phones wouldn't.
To summarize, prepaid handsets ARE subsidized, but to a lesser extent than
postpaid obviously. Rather than using a contract to "enforce" recouping
the subsidy, Verizon relies on "incompatibility" with other carriers (Sprint,
Virgin, etc. won't activate Verizon handsets, AT&T and T-Mo can't), and GSM
carriers use SIM locks to enforce use of prepaid handsets on the "right"
network. Undoubtedly, some handsets end up on the "wrong" network,
resulting in the "loss" of the subsidy, but this represents a small number.
What will be interesting is how the prepaid landscape changes in this new
supposed era of "open" networks (which I'll believe when I actually see it!)
I suspect prepaid models will become far more crippled than their
postpaid counterparts (i.e. data capabilities disabled) to discourage use
on other networks. For example, some T-Mo prepaid phones have the ability
to edit the GPRS access point disabled, so even if SIM-unlocked, would work
for voice only if used on AT&T or overseas, greatly limiting their appeal
if used off-network.
| |
| Todd Allcock 2008-01-09, 10:33 pm |
| At 09 Jan 2008 13:55:43 -0500 Elmo P. Shagnasty wrote:
don't[color=darkred]
etc.[color=darkred]
>
> The no roaming and less coverage is exactly why the T-Mo pay as you go
> plan sucks.
There IS roaming on T-Mo's prepaid plans. A couple of slightly more
expensive (to T-Mo) carriers are not available to prepaid users (mostly in
the midwest) but T-Mo prepaid and contract users have virtually identical
coverage. (This hasn't always been the case however- prepaid roaming was
added two or three years ago.)
| |
| CozmicDebris 2008-01-09, 10:33 pm |
| "Thomas T. Veldhouse" <veldy71@yahoo.com> wrote in
news:5ukh4pF1gqpq4U2
@mid.individual.net:
> In alt.cellular.verizon CozmicDebris <isheforreal> wrote:
>
> They better not be writing it off as a loss ... it clearly is NOT. It
> is an investment [I don't get to write off my investments ... in fact,
> I have to pay taxes on the earnings when I get them]. They "invest"
> $150 in your phone so that the phone is cheaper for you, and in
> return, they over charge you by a certain amount for one or two years
> to make up that money ... and if you quit early, they charge you more
> than the $150 the initially invested in you, so they still get a
> profit.
>
It is clearly a loss. The monthly charge paid to the company is for
services rendered to use the phone, not equipment subsidized. This is
clearly stated in every service agreement.
In any event, every carrier reports the loss as a seperate line item on
their quarterly financials, and has done so for years. The government
(specifically the IRS and SEC) do not share your opinion. Grocery stores
and other big box stores get to right off the loss on their loss leaders
(products sold below cost to generate traffic)- this is no different.
| |
| sylvan butler 2008-01-09, 10:33 pm |
| On Tue, 08 Jan 2008 20:50:32 -0700, Todd Allcock < elecconnec@AmericaOn
Line.com> wrote:
> Having said that, unlike most carriers who seem to offer prepaid as a "last
> resort" for credit-challenged consumers, and at a price designed not to
> cannibalize their bread-n-butter postpaid biz, T-Mo aggressively pursues
> the pre-paid market, seeming to assume that anyone their prepaid offering
> lures from pstpaid is likely a high enough volume user that it'll be worth
> it. That seems to work for them, considering that their prepaid ARPU is
> (relatively) high, and their total ARPU is also relatively high considering
> their high percentage of prepaid customers compared to other carriers.
The cost to T-Mo for a prepaid customer is probably a lot lower than
their cost per post-paid customer. There is a customer support
organization for both, but all the freebies, billing, billing support,
payment processing, collections, etc. are only for post-paid.
The only ongoing costs for a "glove box" phone on prepaid are the
minutes that are actually used, and a tiny bit of the amortized
infrastructure necessary to deliver service (from the cell tower to
providing a means to refill the minutes). Probably the most expensive
(costly) t-mo prepaid customer is the one that buys a phone, uses the
allotted minutes just before they expire, then replaces the phone.
sdb
--
What's seen on your screen? http://PcScreenWatch.com
sdbuse1 on mailhost bigfoot.com
| |
| Thomas T. Veldhouse 2008-01-10, 3:33 pm |
| In alt.cellular.sprintpcs CozmicDebris <isheforreal> wrote:
>
> It is clearly a loss. The monthly charge paid to the company is for
> services rendered to use the phone, not equipment subsidized. This is
> clearly stated in every service agreement.
>
You know very well that a subsidy is not a loss on the balance sheet; it is an
expense. To make a profit, they have to earn more revenue than they put out
in expenses [which include the subsidy, labor, infrastructure and other fixed
costs]. A loss is only if they fail to net a profit. Another write off [or
loss] is depreciation, and that clearly is a category that a subsidy does NOT
fall into [although it is a category their inventory of phones can fall into].
> In any event, every carrier reports the loss as a seperate line item on
> their quarterly financials, and has done so for years. The government
> (specifically the IRS and SEC) do not share your opinion. Grocery stores
> and other big box stores get to right off the loss on their loss leaders
> (products sold below cost to generate traffic)- this is no different.
>
Yes, it is for depreciation of depreciable assets. Company vehicles,
depritiating inventory, even infrastructure all allow for that kind of loss.
A subsidy, however, is NOT a loss, it is an expense.
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Thomas T. Veldhouse 2008-01-10, 3:33 pm |
| In alt.cellular.sprintpcs Todd Allcock < elecconnec@americaon
line.com> wrote:
>
> I guess that depends on your POV. I find the subsidy and EFT are in each
> other's ballpark, at least.
>
It really depends. Some of the phones they give away for "free" when you sign
up, are often old inventory that they want to clear for newer models and are
perhaps worth $30 to them on the balance sheet. So, you get a free phone that
is worth perhaps $30 to the carrier, but to quit you owe them $175, well, that
is quite a deal for the carrier no matter how you look at it. Basically, if
you buy new high end models in demand, then you are probably closer to that
equitable case where ETF is close to the subsidy.
> You also are no longer under contract, either. I liken it to a magazine
> subscription- a subscription is cheaper per issue than the "no committment"
> newsstand price. Instead of a service discount for your two-year
> "subscription" you get a phone subsidy.
It is really a source of revenue to the carrier ... they really hope users
keep the same phone for years or upgrade hardware, plans and re-contract.
It is this reason why the retention department is usually able to accomodate
you, because they know that it is free revenue anyway.
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| Thomas T. Veldhouse 2008-01-10, 10:33 pm |
| Sorry for the top post here, but it is easier to address all your comments in
one place.
First, yes, it is possible there are a few subsidized pre-paid model phones
[carrier locked], but it is also clear that the business model is such that it
is not the case for the vast majority of cases. In fact, if it was, a
competitor could simply buy all the retail assets of a smaller competitor and
not activate service and quickly put them out of business. A company can not
operate under such a business model.
What you failed to do was address depreciated inventory along the entire
supply chain. I illustrated this for the carrier only, but not the
manufacturer or any other part of the supply chain. Any part of the supply
chain will, at some point, find it has significant quantities of depreciated
inventory, and it is this that turns into the "free" or very low cost phones
used to capture new customers (i.e. buy this phone and get three free) for
pre and post paid customers. The difference is that the subsidy is part of
the business model for post paid, because they have a contract with ETF
penalties to support it. With pre-paid, they largely rely upon the inventory
depreciation [somewhere along the supply chain] to offer low cost phones.
In summary, any subsidies on pre-paid contractless phones are almost certainly
not the standard business model [especially for GSM based phones and carriers
where unlocking a phone is common place], it exposes a carrier to a lot
of risk that a phone will be purchased and not used on their plan (Grandma has
her E911 backup in her car).
In alt.cellular.sprintpcs Todd Allcock < elecconnec@americaon
line.com> wrote:
> At 09 Jan 2008 18:44:13 +0000 Thomas T. Veldhouse wrote:
>
> phones
>
> I strongly disagree. Often the prepaid models are the same current models
> the carriers offer to contract customers (although typically low-end,
> understandably- there's little point offering mobile TV enabled phones to
> customers who can't buy the TV service on prepaid plans!)
>
> would
> models
> these
>
> Look at Virgin's or Tracfone's offerings- these are handsets that were
> never sold by the underlying carrier, and have custom UIs to support the
> MVNO. There's no way Tracfone is buying those $15 retail Motos for less
> than the $10 they sell them to Target or Walmart for. According to the
> trade papers, the lowest end phones currently manufactured wholesale for
> $30-40US, and these are featureless monochromatic-display models you and I
> will never see at WalMart- they're built for carriers in emerging nations.
>
> it
>
> Unlikely- an MSRP $30-40 prepaid phone probably is sold to the mass market
> retailer for 60-70% of that (Walmart wants to make a buck as well!) T
> ere's no accounting depreciation trickery that can make it profitable to
> sell a new handset to WalMart for $20 without the expectation of future
> airtime purchases.
>
>
>
> Not a chance.
>
> the
>
>
> I'm not so sure. Customer acquisition cost, including a subsidy, is a
> legitimate cost of doing business, not a capital invenstment, and could be
> written off- not as a depreciation, but as a loss- it's not a lease- it's a
> sale. (At least that's how I did it when I was a cellular dealer- I sold
> the "free" phone at a $200 loss, which was offset by the $300 commission
> from my carrier, resulting in a $100 profit.)
>
>
> phone
> they
> what
>
> You're overthinking this- prepaid phones (at least those sold outside a
> carrier's own corporate stores) are packaged in different retail packaging,
> with different manuals ad inserts, often with different (fewer) included
> accessories- they aren't excess inventory reboxed in blister packs to sell
> at Walmart- these particular phones were always intended to be sold as
> prepaid models.
>
> not due
> the
>
>
> Not true, particularly in the case of a carrier like Verizon with
> "exclusive" models. Look at Verizon's low-end- twenty virtually indentical
> sub-$50 retail (subsidized) flip phones from a variety of manufacturers
> with virtually identical (lack of) features. These phones' mothers
> couldn't tell them apart. Now look t Verizon's retail prepaid low-end
> (sub $50) one blister-packed model in "Verizon InPulse" packaging- a
> Samsung (or is it Starcom, I forget?) recently replaced a Nokia 26-
> something that held the niche for a year. If your theory was correct, we'd
> see a steady rotation of discontinued or overstock product as the low-end
> prepaid model du jour, but we don't- the prepaid lineup is stable, and
> bears little relation to the current postpaid lineup.
>
>
> phone
> was
>
> Actually I found the opposite- when I wanted to buy a low-end Verizon phone
> to use on PagePlus prepaid) eBay's prices were similar or higher than
> Walmart's. Luckily I stumbled upon a good deal on an old Samsung WinMo
> smartphone on eBay, since PagePlus (and Verizon, I suspect) are offering
> free 1X data on prepaid (most likely by accident) which allows me
> Contacts/Calendar sync with my Exchange server and IMAP e-mail access,
> which the low-end prepaid phones wouldn't.
>
> To summarize, prepaid handsets ARE subsidized, but to a lesser extent than
> postpaid obviously. Rather than using a contract to "enforce" recouping
> the subsidy, Verizon relies on "incompatibility" with other carriers (Sprint,
> Virgin, etc. won't activate Verizon handsets, AT&T and T-Mo can't), and GSM
> carriers use SIM locks to enforce use of prepaid handsets on the "right"
> network. Undoubtedly, some handsets end up on the "wrong" network,
> resulting in the "loss" of the subsidy, but this represents a small number.
>
> What will be interesting is how the prepaid landscape changes in this new
> supposed era of "open" networks (which I'll believe when I actually see it!)
> I suspect prepaid models will become far more crippled than their
> postpaid counterparts (i.e. data capabilities disabled) to discourage use
> on other networks. For example, some T-Mo prepaid phones have the ability
> to edit the GPRS access point disabled, so even if SIM-unlocked, would work
> for voice only if used on AT&T or overseas, greatly limiting their appeal
> if used off-network.
>
>
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| CozmicDebris 2008-01-10, 10:33 pm |
| "Thomas T. Veldhouse" <veldy71@yahoo.com> wrote in
news:5unabiF1imehhU5
@mid.individual.net:
> In alt.cellular.sprintpcs CozmicDebris <isheforreal> wrote:
>
> You know very well that a subsidy is not a loss on the balance sheet;
> it is an expense. To make a profit, they have to earn more revenue
> than they put out in expenses [which include the subsidy, labor,
> infrastructure and other fixed costs]. A loss is only if they fail to
> net a profit. Another write off [or loss] is depreciation, and that
> clearly is a category that a subsidy does NOT fall into [although it
> is a category their inventory of phones can fall into].
All fine and dandy- none of it applies here. And I don't need the
accounting lesson, so you can save it for someone that does.
>
>
>
> Yes, it is for depreciation of depreciable assets. Company vehicles,
> depritiating inventory, even infrastructure all allow for that kind of
> loss. A subsidy, however, is NOT a loss, it is an expense.
>
No- that is another seperate line item. You should look at a few 10-Q's
and then come back when you know what I'm speaking of.
And trying to convince me of your point of view is useless- I don't make up
the accounting rules for the industry. I simply stated a very publiv piece
of knowledge.
| |
| Thomas T. Veldhouse 2008-01-10, 10:33 pm |
| In alt.cellular.sprintpcs CozmicDebris <isheforreal> wrote:
>
> No- that is another seperate line item. You should look at a few 10-Q's
> and then come back when you know what I'm speaking of.
>
> And trying to convince me of your point of view is useless- I don't make up
> the accounting rules for the industry. I simply stated a very publiv piece
> of knowledge.
Really? Very public? How about a link?
--
Thomas T. Veldhouse
America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.
| |
| CozmicDebris 2008-01-10, 10:33 pm |
| "Thomas T. Veldhouse" <veldy71@yahoo.com> wrote in
news:5uo4hbF1ja9eqU1
@mid.individual.net:
> In alt.cellular.sprintpcs CozmicDebris <isheforreal> wrote:
>
> Really? Very public? How about a link?
>
www.sprint.com
www.verizon.com
www.att.com
Go to any of their investor pages and pull up any one of their quarterly
reprts that are filed with the SEC. Each and every one will have a line
item for equipment subsidies.
It doesn't get any more public than that. And you can argue the semantics
of the terminology used all you want- that's not going to change the
reality of the situation.
| |
| Todd Allcock 2008-01-10, 10:33 pm |
| At 10 Jan 2008 21:44:50 +0000 Thomas T. Veldhouse wrote:
> First, yes, it is possible there are a few subsidized pre-paid model
phones
> [carrier locked], but it is also clear that the business model is such
that it
> is not the case for the vast majority of cases.
Go to the website of any major carrier, and compare the prices of their
prepaid phones to the same models unsubsidized without contract. The
prepaid version is less- usually far less.
According to posts on Howard Foums (I'm not a Verizon customer so I have no
first-hand knowledge) Verizon recently instituted a policy (at corporate
stores) when you can buy any Verizon phone at the one-year contract price
(not the lower two-year) if you activate it prepaid on the spot. If that's
not a direct subsidy, what is?
> In fact, if it was, a
> competitor could simply buy all the retail assets of a smaller competitor
and
> not activate service and quickly put them out of business.
How? Send a memo and tell every company employee to buy every competitor's
prepaids and bin them? We're talking about major carriers like T-Mo,
Verizon and AT&T. How could one of those guys retailiate on the others in
that fashion?
Due to prepaid subsidies, most, if not all, carriers institute purchase
limits. T-Mo's website only allows two prepaid purchases per person at a
time, and only so many (5 or 10- I forget- I'm only at 3 so far in the last
12 months) to any person/address per year. AT&T also has a yearly limit
(as FatWallet.com customers constantly complain!) WalMart limits prepaid
phone purchases per visit.
If selling these handsets at $15-40 was so lucrative, why would companies
care if I bought 50 and stored them in my garage? Could it be that they'd
actually incur a loss?
> A company can not
> operate under such a business model.
Sure they can, if the abuse is small enough as to not upset the total
profits. How many people are going to buy prepaid handsets and not use them,
or use them on other carriers? How many as a percentage of customers who
activate service "properly?"
Prepaid is an insanely profitable business. As soon as one carrier
discounts handsets to spur adoption rates, the others have tofollow suit to
conpete. It was Tracfone- a company with expensive airtime, that started
the downward spiral. They cripple their phones with custom firmware which
is difficult to "unTracfone" and prevents it's use on other networks. In
fact, Tracfone's biggest problem with retail sales is "accessory theft."
People can buy a complete $15 Motorola phone cheaper than they can buy a
battery or spare charger for the same model! You could buy the phone, take
the battery, and throw the rest away and Be $5 ahead (a replacement battery
for the $15 phone at WalMart is $19.99!)
> What you failed to do was address depreciated inventory along the entire
> supply chain. I illustrated this for the carrier only, but not the
> manufacturer or any other part of the supply chain. Any part of the
supply
> chain will, at some point, find it has significant quantities of
depreciated
> inventory, and it is this that turns into the "free" or very low cost
phones
> used to capture new customers (i.e. buy this phone and get three free) for
> pre and post paid customers. The difference is that the subsidy is part
of
> the business model for post paid, because they have a contract with ETF
> penalties to support it. With pre-paid, they largely rely upon the
inventory
> depreciation [somewhere along the supply chain] to offer low cost phones.
That's true of certain promotional models, perhaps, but it's not the norm-
it doesn't explain how carriers introduce the same NEW model to pre- and
post-paid at the same time- i.e. T-Mo's Nokia 2610, Sidekicks or Samsung
Stripe. The difference is that the prepid models tend to hng around
longer, but that's attributable to the separate packaging- they may guess
how many they need for say, a year, and guess badly. (Carriers don't
repack a retail prepaid phone for postpaid sales or vice-versa, if one
model sells out before the other.)
> In summary, any subsidies on pre-paid contractless phones are almost
certainly
> not the standard business model [especially for GSM based phones and
carriers
> where unlocking a phone is common place] | | |