Reduced carrier subsidies increase sales of separate smartphones
Linked by Thom Holwerda on Fri 17th Aug 2012 22:48 UTC
PDAs, Cellphones, Wireless I always see The Netherlands - my home country - as a small, easily graspable version of other, larger and more important western countries and even the west as a whole. In light of this, Tweakers.net's Arnoud Wokke points to a very interesting report about the Dutch telecommunications market. This reports notes a trend that, if present in the rest of the world, could have serious effects for phone makers.
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RE: Why
by kenji on Mon 20th Aug 2012 16:43 UTC in reply to "Why"
kenji
Member since:
2009-04-08

At least for the USA the subsidies make a lot of sense and I don't think they are likely to disappear.

1) People tend to underestimate how much phone quality matters in their overall enjoyment of their cell phone plan

2) Enjoyment correlates heavily with usage

3) Customers are more willing to spend money month by month than all at once.

_____

Therefore:

If customers buy there own phones they use substantially less data,minutes and texts than if they given more expensive phones than they would buy for themselves. Those more expensive phones are easily absorbed by the carrier's monthly bills. Moving to something like the prepay model will substantially drop the total phone expenses for the average American as they cut back on their usage.

Increasing subsidies and phone quality makes sense. The carriers via huge subsidies were able move 40% of Americans from dumb phones to smart phones (with $30 / mo or more data costs). That during bad economic times. Why would they want to move away from this model?

Typical American Economics.

Consumers spend more when the true cost of the phone is 'hidden' in the monthly bill. Basic math is beyond the skill set of the average consumer.

The problem is that "SIM only" type phone plans are cheaper but AFAIK t-mobile is the only major carrier to offer this in the US. Also the low cost carriers require that you buy a full priced phone from them to sign up so a used or unlocked phone is not an option.

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