Subsidized Phones

[wp-user]

The CEO of AT&T said recently that the carriers could no longer continue to subsidize the price of smartphones. T-Mobile has already discontinued doing so. All the major US carriers currently have a payment plan option in place.

So, will at&t quit subsidizing phones in 2014?

Will they do it before the next round of phones (S5, Note 4, HTC One.2)??

Will they announce it in advance of the end date or drop it like a bad habit???

 

[Troy Tiscareno]

T-Mobile isn't "subsidizing" phones anymore, but they are still financing the phones for most customers. The difference is that the process is much more transparent, AND that the subsidy cost was decoupled from the monthly service fee. People who bring a compatible device never have to pay the subsidy.

AT&T is now doing much the same thing, though when they decoupled the subsidy fee, they only lowered the service price $15 instead of $20, and their plans are higher across the board. Still, it's a big step in the right direction. Again, they'll continue to finance phones for the foreseeable future, it's just that the loan payments for the phone will be a separate line item as they always should have been.

I don't expect Verizon or Sprint to follow this trend immediately; as long as CDMA is still around, it's easy for them to deny allowing phones on their networks that weren't originally bought from them. It won't be until LTE and VoLTE takes over nationwide, and the legacy CDMA networks are shut down, that these carriers will be forced to adapt to the BYOD possibility that GSM users have always enjoyed. For now, you still have to buy your phone from them, and they like it that way. Make no mistake, they subsidize because it's to their advantage to do so. AT&T has recently been losing a lot of potential customers to T-Mobile, who has seen tremendous growth since the UnCarrier campaign started, so they were under pressure to respond. The CDMA carriers still have a bit more insulation from "switchers", so they'll respond more slowly.