Comments on: European carriers are moving away from handset subsidies, analysts find

By: Scott

Scott — Wed, 27 Mar 2013 20:36:18 +0000

Carriers should be band from selling phones this would allow the consumer not only to see the real cost of the phone but also be able to switch carriers

By: bogdan247

bogdan247 — Tue, 19 Mar 2013 12:47:01 +0000

A question – how is offering financing plans different for operators from offering subsidies? I mean, they still need to buy the phone in advance from the manufacturer and they still get their investment back over time? Or I am getting it wrong?

By: William

William — Tue, 19 Mar 2013 10:22:45 +0000

“— something operators have to consider anyway due to new consumer protection laws in countries such as Denmark —” And links to a finnish site.

By: David Meyer

David Meyer — Tue, 19 Mar 2013 09:29:15 +0000

But only relatively recently. In the “west”, subsidies encouraged smartphone takeup when such devices were newer, helping create the scale that eventually made it possible to introduce smartphone functionality at the low end of the market. That’s why people in China and India are now able to buy sub-$100 smartphones.

By: One

One — Tue, 19 Mar 2013 09:18:44 +0000

“Absorbing handset costs into the associated monthly contract payments creates the illusion of the handsets being cheap or even free. This illusion has been handy in some ways — perhaps the smartphone revolution would not have been possible at scale without it — but ultimately it distorts the market.”

I’m afraid that isn’t quite true.

China and India don’t have much in the way of cell phone subsidies and they’ve shown massive growth in smartphone penetration.

By: David Meyer

David Meyer — Tue, 19 Mar 2013 08:58:16 +0000

Telefonica didn’t reverse its abandonment of subsidies – in fact, despite having taken an early hit from its move, just last month it was crowing about having saved half a billion euros in 2012 by not subsidizing handsets (see http://uk.reuters.com/article/2013/02/28/telefonica-subsidy-idUKL6N0BSFUT20130228).

Vodafone, which followed Telefonica in the first place, did reverse its decision. That said, Spain isn’t generally a great example for testing consumer behavior right now, given its economic situation.

By: 186k

186k — Tue, 19 Mar 2013 07:03:54 +0000

err, not sure about that last paragraph, it reads a bit like the world according to David Meyer. Interesting that you fail to mention the big experiment in ending subsidies in Spain that ended up with two of the proponents reversing their decision, Vodafone & Telefonica as they lost significant share of gross adds to Orange

By: Andre Goulet

Andre Goulet — Tue, 19 Mar 2013 01:42:11 +0000

But will the cost go down in proportion to this? If I bring my own phone to my carrier, there is no special deal or discount price because they aren’t subsidizing the phone. The only difference to me is that I can change my bundle at will.

Even staying on top of their cheaper packages at a reasonable rate, say, twice a year, I can only see saving about $200 – $300 over the same 3-year time span as a contract would have been, but I need to spend $650+ for a phone.

If that stays true, then the end of subsidies doesn’t mean savings to me, it means more profit for them.