T-Mobile Breaks the Covenant

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T-Mobile Breaks the Covenant

Postby sardia » Sat Apr 06, 2013 6:35 pm UTC

http://www.nytimes.com/2013/04/04/techn ... technology
T-mobile has just announced they will now charge phones for their actual cost, and after you pay it off, your cell phone bill goes down. No contract, no overages, no secret throttling or hard limits. Why did they break this sacred money machine that is the covenant? They have nothing to lose, they're in last place.
Even if you don't have T-mobile or are locked in, this has repercussions because of competition. How long can the other big providers keep their higher fees when the public knows the truth behind the true cost of phones.

FYI: It wasn't obvious to me until someone explained why 2 year contracts with a "cheap" down payment was so outrageous. Take this metaphor in the article: If you put a down payment down for a house, how much is your monthly payment after you pay off your loan? 0$. How much did your phone bill go down after your 2 year loan/contract? See the problem? You already paid off the installment payments for your phone, but your bill remains the same. Pure profit for the cell phone carriers.
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Re: T-Mobile Breaks the Covenant

Postby SlyReaper » Sat Apr 06, 2013 7:31 pm UTC

sardia wrote:http://www.nytimes.com/2013/04/04/technology/personaltech/t-mobile-breaks-free-of-cellphone-contracts-and-penalties.html?pagewanted=2&ref=technology
T-mobile has just announced they will now charge phones for their actual cost, and after you pay it off, your cell phone bill goes down. No contract, no overages, no secret throttling or hard limits. Why did they break this sacred money machine that is the covenant? They have nothing to lose, they're in last place.
Even if you don't have T-mobile or are locked in, this has repercussions because of competition. How long can the other big providers keep their higher fees when the public knows the truth behind the true cost of phones.

FYI: It wasn't obvious to me until someone explained why 2 year contracts with a "cheap" down payment was so outrageous. Take this metaphor in the article: If you put a down payment down for a house, how much is your monthly payment after you pay off your loan? 0$. How much did your phone bill go down after your 2 year loan/contract? See the problem? You already paid off the installment payments for your phone, but your bill remains the same. Pure profit for the cell phone carriers.

Do people not negotiate a new contract when their first one runs out?
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Re: T-Mobile Breaks the Covenant

Postby gametaku » Sat Apr 06, 2013 7:42 pm UTC

SlyReaper wrote:
sardia wrote:http://www.nytimes.com/2013/04/04/technology/personaltech/t-mobile-breaks-free-of-cellphone-contracts-and-penalties.html?pagewanted=2&ref=technology
T-mobile has just announced they will now charge phones for their actual cost, and after you pay it off, your cell phone bill goes down. No contract, no overages, no secret throttling or hard limits. Why did they break this sacred money machine that is the covenant? They have nothing to lose, they're in last place.
Even if you don't have T-mobile or are locked in, this has repercussions because of competition. How long can the other big providers keep their higher fees when the public knows the truth behind the true cost of phones.

FYI: It wasn't obvious to me until someone explained why 2 year contracts with a "cheap" down payment was so outrageous. Take this metaphor in the article: If you put a down payment down for a house, how much is your monthly payment after you pay off your loan? 0$. How much did your phone bill go down after your 2 year loan/contract? See the problem? You already paid off the installment payments for your phone, but your bill remains the same. Pure profit for the cell phone carriers.

Do people not negotiate a new contract when their first one runs out?


No, but then again most people get new phones and get a new contract after two years.

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Re: T-Mobile Breaks the Covenant

Postby Game_boy » Sat Apr 06, 2013 11:57 pm UTC

It's not a rip-off if you're paying for it.

As a consumer you have two choices: BUY, in which case you think it's worth the price, and DON'T BUY, if you do not. Since you're whining about phone contracts you chose to buy, therefore it's a price the market is willing to bear.

The truth about the cost of phones is that people are willing to pay $500 for a phone and $50/m data plan, when they have the perfectly good choice of a Nokia brick phone from 1995 for almost no cost and a minimal plan.
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Re: T-Mobile Breaks the Covenant

Postby Tyndmyr » Sun Apr 07, 2013 1:16 am UTC

I won't lie, this is damned tempting after my current contract expires. Paying way too much for a smartphone(though at least I'm grandfathered in under an old unlimited bandwidth plan), and frankly, always figured it for kind of a scam, but didn't see another way except using a dumb phone*.

I believe T mobile was in last place before this announcement, but I have high hopes for the results. Being able to buy a completely unlocked phone without jailbreaking, paying a reasonable cost, no interest financing...it sounds pretty damned nice, tbh.

*Not a terrible option cost wise, but I love my smart phone.

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Re: T-Mobile Breaks the Covenant

Postby cerbie » Sun Apr 07, 2013 1:46 am UTC

SlyReaper wrote:Do people not negotiate a new contract when their first one runs out?
:lol: :lol: :lol:

:cry: :cry: :cry:

When your contract is up, you pay month to month, the same rate. Every telecom does this (well, until now <dramatic pause goes here>). They're the phone company. You can get a new contract, but why? All it will do is lock you in for another 1-2 years. In the U.S., you typically save money by not getting new contracts. The telcos typically have a given monthly rate for some set of services, and then a discount on various subsidized phones.

By keeping your old plan, you avoid getting screwed by the new plans, because the new plans are almost always a worse value than whatever you have (FI, buying new phones 3rd-party, swapping your SIM card, to keep unlimited data from AT&T, which you lose if you get a new contract). The major telecoms tend to change their rates and bundling options all about the same time, so when you see one advertising how their new rates will save you money (where, "you," is someone way at one end of the bell curve), you not only know they're basically lying, but that at least two other telcos will follow up with similar changes in a few months.

Many people upgrade their phones when they're contract is up, because they don't actually pay any less by not having a subsidized phone, anymore. They pay the same rate, either way.
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Re: T-Mobile Breaks the Covenant

Postby SlyReaper » Sun Apr 07, 2013 9:02 am UTC

Upgrade is what I was talking about, alternatively cancel the contract and go back to a pay as you go deal. I know the monthly cost stays the same after the contract expires if you do nothing, so I thought the normal thing to do was to either upgrade or cancel.
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Re: T-Mobile Breaks the Covenant

Postby (╯°□°)╯︵ ┻━┻ » Sun Apr 07, 2013 12:12 pm UTC

I have T-Mobile and my contract is up this month and I've been trying to decide what to do about it. I wonder if staying with T-Mobile and negotiating down is now a thing I can expect. When I last called, there were really only 2 options for me to get some kind of a phone plan. WTF? Honestly, I don't have a smart phone and turns out, getting a family plan without a data plan? The company doesn't understand that. They're like, "how can you have eggs without spam?"
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Re: T-Mobile Breaks the Covenant

Postby CorruptUser » Sun Apr 07, 2013 2:51 pm UTC

If ye don't eat yer meat, you can't have any pudding! How can ye have any pudding if ye don't eat yer meat?

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Re: T-Mobile Breaks the Covenant

Postby Darryl » Sun Apr 07, 2013 3:01 pm UTC

sardia wrote:http://www.nytimes.com/2013/04/04/technology/personaltech/t-mobile-breaks-free-of-cellphone-contracts-and-penalties.html?pagewanted=2&ref=technology
T-mobile has just announced they will now charge phones for their actual cost, and after you pay it off, your cell phone bill goes down. No contract, no overages, no secret throttling or hard limits. Why did they break this sacred money machine that is the covenant? They have nothing to lose, they're in last place.

Great news, but minor annoyance in how you linked it. I wish people would quit linking to the last page of the article, and instead link to the first page.
Last edited by Darryl on Sun Apr 07, 2013 3:12 pm UTC, edited 1 time in total.
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Re: T-Mobile Breaks the Covenant

Postby Yakk » Sun Apr 07, 2013 3:06 pm UTC

SlyReaper wrote:Upgrade is what I was talking about
That hasn't changed. Now, T-Mobile is offering the option to not upgrade, and save money if you do so.
alternatively cancel the contract and go back to a pay as you go deal.
The pay as you go deal will cost as much as the contract plan with a phone quite often. Except you don't have a contract, so you can cancel any time.

What T-Mobile is doing is offering a "pay as you go" deal that is cheaper for the same services than their "buy a phone and sign on for 2-3 years" deal.

This is news, because despite the perfect competition of the US telecom companies, for some reason their pricing plans lined up and next to nobody offered such a deal.

On top of that, despite it looking like a tech industry with rapidly decreasing costs of replacement, cell phones are actually government organized monopolies where the monopoly bids on the right to a spectrum, and they then work out how to use that monopoly to maximize profits. In order to compete with a cell phone company in the US, you have to first spend billions on enough spectrum to do so, and you generally have to do so on a national basis, and the size of your spectrum determines how many customers you can have in a given area. You are basically forced to go national, or go home.
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Re: T-Mobile Breaks the Covenant

Postby Vash » Sun Apr 07, 2013 7:15 pm UTC

Game_boy wrote:It's not a rip-off if you're paying for it.

As a consumer you have two choices: BUY, in which case you think it's worth the price, and DON'T BUY, if you do not. Since you're whining about phone contracts you chose to buy, therefore it's a price the market is willing to bear.

The truth about the cost of phones is that people are willing to pay $500 for a phone and $50/m data plan, when they have the perfectly good choice of a Nokia brick phone from 1995 for almost no cost and a minimal plan.


People make compromise choices. For me, I stuck to regular phones for as long as possible. What changed my mind was GPS, and the chance to finally be organized again after I got rid of my PDA for a cellphone a few years earlier.

If I have a choice, I'm switching to T-Mobile on principle. However, I'm on a family plan, and there are reasons why another switch (did one before about 3 years ago) would not be helpful to other people on the plan.

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Re: T-Mobile Breaks the Covenant

Postby sardia » Sun Apr 07, 2013 7:17 pm UTC

Here's the upside to those who don't switch, like me. The mere fact that someone broke the covenant means that others will break it too lest they lose customers. You know, the free market thing that we all used to believe in.

Also I fixed the link.

PS Game boy: I used to think like you, and then I realized that the only reason I never needed a smart phone was because my normal phone didn't do anything. Therefore, nothing I did used my phone. It's like the internet, why are people paying for high bandwidth internet? You could have kept dialup and stayed with it forever...Except with higher bandwidths, we started using pictures, and then video, and so on. Each increase in bandwidth brings more possibilities within reach. Why are you on a fancy forum like this one? The pictures that we post would take dialup ages to load. Hell, even the article, which you somehow read, is full of pictures. Did you click the link, and go out for some coffee waiting for it to load? No, you clicked a link, and read it right now.

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Re: T-Mobile Breaks the Covenant

Postby Garm » Mon Apr 08, 2013 6:05 pm UTC

I'm on T-Mobile and am about to experience the joys of their quasi-contractless deals when I finish paying off my phone next month ($20 drop in bill!). I'm very tempted by the Galaxy S4, however. I'm a terrible person.
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Re: T-Mobile Breaks the Covenant

Postby Iulus Cofield » Tue Apr 09, 2013 12:43 am UTC

Garm wrote:I'm on T-Mobile and am about to experience the joys of their quasi-contractless deals when I finish paying off my phone next month ($20 drop in bill!). I'm very tempted by the Galaxy S4, however. I'm a terrible person.


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Re: T-Mobile Breaks the Covenant

Postby Xeio » Tue Apr 09, 2013 2:41 am UTC

Garm wrote:I'm very tempted by the Galaxy S4, however. I'm a terrible person.
Eh, if that makes you a terrible person... well... that's not good for me.

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Re: T-Mobile Breaks the Covenant

Postby Darryl » Tue Apr 09, 2013 3:56 am UTC

Garm wrote:I'm on T-Mobile and am about to experience the joys of their quasi-contractless deals when I finish paying off my phone next month ($20 drop in bill!). I'm very tempted by the Galaxy S4, however. I'm a terrible person.

Eh, I'm still kinda stuck on the Note myself.
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Re: T-Mobile Breaks the Covenant

Postby Telchar » Tue Apr 09, 2013 4:27 am UTC

The cellphone companies have long been subsidizing the costs of phones in order to make cellphones more appealing and making their money up on the back end with services, accessories, and higher fees in contracts.

With other companies offering cheaper cellphones, combined with an apparent willingness from the public to pay for new cellphones w/o the discount or use old phones, then it isn't surprising that one of the retailers finally just left the subsidy up to the others.
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Re: T-Mobile Breaks the Covenant

Postby sardia » Tue Apr 09, 2013 1:33 pm UTC

Telchar wrote:The cellphone companies have long been subsidizing the costs of phones in order to make cellphones more appealing and making their money up on the back end with services, accessories, and higher fees in contracts.

With other companies offering cheaper cellphones, combined with an apparent willingness from the public to pay for new cellphones w/o the discount or use old phones, then it isn't surprising that one of the retailers finally just left the subsidy up to the others.

It's not a subsidy... It's a loan. It's not like you're not paying the full price of a smart phone, you are. It's just built into the phone payments...Except the installment payments don't end, ever.

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Re: T-Mobile Breaks the Covenant

Postby eSOANEM » Tue Apr 09, 2013 1:55 pm UTC

Sim only contracts have been a thing for a while now. It looks like all this is doing is making it possible/easier for people to change onto them.
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Re: T-Mobile Breaks the Covenant

Postby Chen » Tue Apr 09, 2013 2:43 pm UTC

sardia wrote:It's not a subsidy... It's a loan. It's not like you're not paying the full price of a smart phone, you are. It's just built into the phone payments...Except the installment payments don't end, ever.


Are you claiming this due to the way its itemized on your bill or something? Here if I sign up for a plan I get a phone for X cost and I have to pay a rate of Y for the service. It never says part of that Y is me paying off the phone. In fact I'm pretty sure I pay Y amount even if I don't get a new phone. I can't see how that's a loan. Its paying for a service.

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Re: T-Mobile Breaks the Covenant

Postby sardia » Tue Apr 09, 2013 6:54 pm UTC

Chen wrote:
sardia wrote:It's not a subsidy... It's a loan. It's not like you're not paying the full price of a smart phone, you are. It's just built into the phone payments...Except the installment payments don't end, ever.


Are you claiming this due to the way its itemized on your bill or something? Here if I sign up for a plan I get a phone for X cost and I have to pay a rate of Y for the service. It never says part of that Y is me paying off the phone. In fact I'm pretty sure I pay Y amount even if I don't get a new phone. I can't see how that's a loan. Its paying for a service.

If I label a duck a chicken, is it no longer a duck? Same thing, they changed the name of the bill to make it look like all cell phone charges are that high. It doesn't ahve to be, TMobile is proving that right now.

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Re: T-Mobile Breaks the Covenant

Postby Telchar » Tue Apr 09, 2013 7:56 pm UTC

sardia wrote:
Chen wrote:
sardia wrote:It's not a subsidy... It's a loan. It's not like you're not paying the full price of a smart phone, you are. It's just built into the phone payments...Except the installment payments don't end, ever.


Are you claiming this due to the way its itemized on your bill or something? Here if I sign up for a plan I get a phone for X cost and I have to pay a rate of Y for the service. It never says part of that Y is me paying off the phone. In fact I'm pretty sure I pay Y amount even if I don't get a new phone. I can't see how that's a loan. Its paying for a service.

If I label a duck a chicken, is it no longer a duck? Same thing, they changed the name of the bill to make it look like all cell phone charges are that high. It doesn't ahve to be, TMobile is proving that right now.


Right, they aren't just going to lose money on selling you a phone and not try to recoup it. Does that seem like a reasonable business practice to you? Yes, they don't have to charge you as much for your data plan but then they do have to charge you more than double for your cellphone. That's appealing to some people and not appealing to others.

I'm glad T-Mobile is doing this because I think it's a valuable service to a lot of people and the fact that most people have a cellphone already will make this plan more appealing.

I'm also glad places like Verizon are willing to continue the subsidy of hardware for people with more disposable income monthly but who like gadgets.

Only having one of these services is bad because it limits consumer choice but having both is a good thing.
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Re: T-Mobile Breaks the Covenant

Postby Chen » Tue Apr 09, 2013 9:09 pm UTC

sardia wrote:If I label a duck a chicken, is it no longer a duck? Same thing, they changed the name of the bill to make it look like all cell phone charges are that high. It doesn't ahve to be, TMobile is proving that right now.


Of course the charges don't have to be that high. The company could give me the service for free if they liked losing money. Where I am now whether I chose to buy a phone and sign a contract or just sign a new contract I'm paying the same amount per month for the same service. Now looking at the big picture, yes there is some amount of that service fee that I'm paying them that is being used to subsidize discounted phones. I'm not sure where you draw the line at that though. If a store sells something and makes 80% profit on it, is it reasonable to tell them to lower the price even though they're using that profit to keep their store running because the vast majority of what they sell they only make 20% profit on (numbers clearly inflated just to make a point)?

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Re: T-Mobile Breaks the Covenant

Postby Xeio » Wed Apr 10, 2013 12:07 am UTC

Chen wrote:
sardia wrote:If I label a duck a chicken, is it no longer a duck? Same thing, they changed the name of the bill to make it look like all cell phone charges are that high. It doesn't ahve to be, TMobile is proving that right now.
Of course the charges don't have to be that high. The company could give me the service for free if they liked losing money. Where I am now whether I chose to buy a phone and sign a contract or just sign a new contract I'm paying the same amount per month for the same service. Now looking at the big picture, yes there is some amount of that service fee that I'm paying them that is being used to subsidize discounted phones. I'm not sure where you draw the line at that though. If a store sells something and makes 80% profit on it, is it reasonable to tell them to lower the price even though they're using that profit to keep their store running because the vast majority of what they sell they only make 20% profit on (numbers clearly inflated just to make a point)?
What are you talking about? The point is that they're charging you enough to upgrade your phone every two years (or whatever contract length) even if you don't actually want to upgrade, no matter if you got a new expensive and highly "subsidised" phone or a relatively mediocre or dumbphone (though a dumbphone has the benefit of no data costs).

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Re: T-Mobile Breaks the Covenant

Postby Darryl » Wed Apr 10, 2013 3:06 am UTC

Telchar wrote:
sardia wrote:
Chen wrote:
sardia wrote:It's not a subsidy... It's a loan. It's not like you're not paying the full price of a smart phone, you are. It's just built into the phone payments...Except the installment payments don't end, ever.


Are you claiming this due to the way its itemized on your bill or something? Here if I sign up for a plan I get a phone for X cost and I have to pay a rate of Y for the service. It never says part of that Y is me paying off the phone. In fact I'm pretty sure I pay Y amount even if I don't get a new phone. I can't see how that's a loan. Its paying for a service.

If I label a duck a chicken, is it no longer a duck? Same thing, they changed the name of the bill to make it look like all cell phone charges are that high. It doesn't ahve to be, TMobile is proving that right now.


Right, they aren't just going to lose money on selling you a phone and not try to recoup it. Does that seem like a reasonable business practice to you? Yes, they don't have to charge you as much for your data plan but then they do have to charge you more than double for your cellphone. That's appealing to some people and not appealing to others.

I'm glad T-Mobile is doing this because I think it's a valuable service to a lot of people and the fact that most people have a cellphone already will make this plan more appealing.

I'm also glad places like Verizon are willing to continue the subsidy of hardware for people with more disposable income monthly but who like gadgets.

Only having one of these services is bad because it limits consumer choice but having both is a good thing.

Have you actually looked at their prices? Because I did, and they're continuing to offer the "here, get a discount off the bat, but we'll actually stop making you pay the extra to subsidize your phone when you've paid it off."

e.g.: A phone costs, normally, 500 bucks. Since the highest per month they'll do is 20, extending it over the 2 years they offer covers $480 of the $500. So you pay 20 up front, and add 20/month to the bill.

Or, a phone costs $300. You pay nothing down, and $12.50/month over the course. Alternately, pay the $300 up front and pay the base cost of 50-70 on your bill.

So if I get a "subsidized" (or pay over time, if you prefer in this case) iPhone, I'm paying $90/month for unlimited everything on my bill. And I have the option to pay more toward my phone payment at any time.
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Re: T-Mobile Breaks the Covenant

Postby Yakk » Wed Apr 10, 2013 10:41 pm UTC

Sure. But when every company in an industry with monopoly leanings uses nearly the exact same pricing model with regards to handsets subsidies?

That doesn't seem suspicious?
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Re: T-Mobile Breaks the Covenant

Postby Technical Ben » Thu Apr 11, 2013 10:36 am UTC

I'm sure these contracts have existed in the UK for years. We have had everything from full free phone and expensive calls. To expensive phone and lower cost calls (though most avoid too low, so as to cover overheads). The last of the "same price for life" contracts ended about a decade ago though, as they soon realized selling calls at 5p a min on a sim for life might hit a snag when inflation and costs rise later down the line. Now contracts have a clause saying prices might rise, or they are only fixed for each 12 month period, then reviewed after.

Pay as you go, or one month rolling contracts can be cheep too.

PS, I also used the renewal sales pitch on the company them selves. When they called to give me a discount on an upgrade/renewal to keep me as a customer, I said "fine, I'll have the full discount on my account, and a downgrade" etc, they nearly ended up paying me for the contract. :D Now it's low enough on a rolling contract for me not to bother changing it for a long time.
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Re: T-Mobile Breaks the Covenant

Postby eSOANEM » Thu Apr 11, 2013 10:48 am UTC

You say that, but contracts might be going back that way in the UK.

If you look on the EE website, all the contracts are unlimited texts, unlimited minutes, you simply choose how much data you want and the phone you want. They don't offer SIM only contracts.

O2 on the other hand offer SIM only contracts, PaYG and the usual unlimited texts X many minutes Y amount of data.
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Re: T-Mobile Breaks the Covenant

Postby Yakk » Thu Apr 11, 2013 1:31 pm UTC

Yes, but the UK phone companies are regulated differently.
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Telchar
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Re: T-Mobile Breaks the Covenant

Postby Telchar » Fri Apr 12, 2013 5:56 am UTC

Darryl wrote:
Telchar wrote:
sardia wrote:
Chen wrote:
sardia wrote:It's not a subsidy... It's a loan. It's not like you're not paying the full price of a smart phone, you are. It's just built into the phone payments...Except the installment payments don't end, ever.


Are you claiming this due to the way its itemized on your bill or something? Here if I sign up for a plan I get a phone for X cost and I have to pay a rate of Y for the service. It never says part of that Y is me paying off the phone. In fact I'm pretty sure I pay Y amount even if I don't get a new phone. I can't see how that's a loan. Its paying for a service.

If I label a duck a chicken, is it no longer a duck? Same thing, they changed the name of the bill to make it look like all cell phone charges are that high. It doesn't ahve to be, TMobile is proving that right now.


Right, they aren't just going to lose money on selling you a phone and not try to recoup it. Does that seem like a reasonable business practice to you? Yes, they don't have to charge you as much for your data plan but then they do have to charge you more than double for your cellphone. That's appealing to some people and not appealing to others.

I'm glad T-Mobile is doing this because I think it's a valuable service to a lot of people and the fact that most people have a cellphone already will make this plan more appealing.

I'm also glad places like Verizon are willing to continue the subsidy of hardware for people with more disposable income monthly but who like gadgets.

Only having one of these services is bad because it limits consumer choice but having both is a good thing.

Have you actually looked at their prices? Because I did, and they're continuing to offer the "here, get a discount off the bat, but we'll actually stop making you pay the extra to subsidize your phone when you've paid it off."

e.g.: A phone costs, normally, 500 bucks. Since the highest per month they'll do is 20, extending it over the 2 years they offer covers $480 of the $500. So you pay 20 up front, and add 20/month to the bill.

Or, a phone costs $300. You pay nothing down, and $12.50/month over the course. Alternately, pay the $300 up front and pay the base cost of 50-70 on your bill.

So if I get a "subsidized" (or pay over time, if you prefer in this case) iPhone, I'm paying $90/month for unlimited everything on my bill. And I have the option to pay more toward my phone payment at any time.


I think you're are conflating subsidize with loan. When I say subsidize, I mean they sell a phone to you at a loss. If you buy a phone with incentive pricing the company you are buying it from is probably taking a substantial loss in order to sell you that phone and get you under contract, where they more than make up for that loss over the generally 2 years you are required to have service.

This was a completely reasonable business model to have back when few people had cellphones and the carriers needed to get more into the market to be profitable. It's a similar practice in console gaming. But at this point it seems somewhat archaic since most people in their market probably have a cellphone. I'm sure people who love gadgets or who go gaga over the new Iphone love that they do this but it's very inconvenient for some and I'm glad those people have a better option than Boost mobile or some other shitty carrier (TMobile is still shitty for most people unfortunately but it at least starts putting pressure in other, better companies to follow suit...).
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Darryl
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Re: T-Mobile Breaks the Covenant

Postby Darryl » Fri Apr 12, 2013 6:12 am UTC

Telchar wrote:
Darryl wrote:
Telchar wrote:
sardia wrote:
Chen wrote:
sardia wrote:It's not a subsidy... It's a loan. It's not like you're not paying the full price of a smart phone, you are. It's just built into the phone payments...Except the installment payments don't end, ever.


Are you claiming this due to the way its itemized on your bill or something? Here if I sign up for a plan I get a phone for X cost and I have to pay a rate of Y for the service. It never says part of that Y is me paying off the phone. In fact I'm pretty sure I pay Y amount even if I don't get a new phone. I can't see how that's a loan. Its paying for a service.

If I label a duck a chicken, is it no longer a duck? Same thing, they changed the name of the bill to make it look like all cell phone charges are that high. It doesn't ahve to be, TMobile is proving that right now.


Right, they aren't just going to lose money on selling you a phone and not try to recoup it. Does that seem like a reasonable business practice to you? Yes, they don't have to charge you as much for your data plan but then they do have to charge you more than double for your cellphone. That's appealing to some people and not appealing to others.

I'm glad T-Mobile is doing this because I think it's a valuable service to a lot of people and the fact that most people have a cellphone already will make this plan more appealing.

I'm also glad places like Verizon are willing to continue the subsidy of hardware for people with more disposable income monthly but who like gadgets.

Only having one of these services is bad because it limits consumer choice but having both is a good thing.

Have you actually looked at their prices? Because I did, and they're continuing to offer the "here, get a discount off the bat, but we'll actually stop making you pay the extra to subsidize your phone when you've paid it off."

e.g.: A phone costs, normally, 500 bucks. Since the highest per month they'll do is 20, extending it over the 2 years they offer covers $480 of the $500. So you pay 20 up front, and add 20/month to the bill.

Or, a phone costs $300. You pay nothing down, and $12.50/month over the course. Alternately, pay the $300 up front and pay the base cost of 50-70 on your bill.

So if I get a "subsidized" (or pay over time, if you prefer in this case) iPhone, I'm paying $90/month for unlimited everything on my bill. And I have the option to pay more toward my phone payment at any time.


I think you're are conflating subsidize with loan. When I say subsidize, I mean they sell a phone to you at a loss. If you buy a phone with incentive pricing the company you are buying it from is probably taking a substantial loss in order to sell you that phone and get you under contract, where they more than make up for that loss over the generally 2 years you are required to have service.

This was a completely reasonable business model to have back when few people had cellphones and the carriers needed to get more into the market to be profitable. It's a similar practice in console gaming. But at this point it seems somewhat archaic since most people in their market probably have a cellphone. I'm sure people who love gadgets or who go gaga over the new Iphone love that they do this but it's very inconvenient for some and I'm glad those people have a better option than Boost mobile or some other shitty carrier (TMobile is still shitty for most people unfortunately but it at least starts putting pressure in other, better companies to follow suit...).

Okay, the previous person basically said "T-Mobile's thing is great if you can drop $600 on an iPhone immediately". I said "No, actually, you can still get similar upfront prices to the other carriers, the formerly subsidized portion will now just be itemized on your bill instead of rolled in with the plan cost. Picking at the difference between subsidizing and a loan at that point is pure, and meaningless, semantics.

ESPECIALLY WHEN YOU ARE PICKING AT LANGUAGE CHOICE I GAVE TWO OPTIONS FOR IN THE POST.
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Technical Ben
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Re: T-Mobile Breaks the Covenant

Postby Technical Ben » Wed Apr 17, 2013 11:27 am UTC

Not sure if this has been offered in the US yet, and I think I've only really seen it here with appliances and not phones, but this is relevant.
http://www.theregister.co.uk/2013/04/17/o2_refresh/

Looks like they are putting more transparency on the bill. You could see what pays off the "load/credit" for the phone, and what pays off the cost or calls in your bill.
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