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Markets exist where SIM locking has been prohibited for a long time (Wikipedia says Canada, Chile, China, Israel, and Singapore at least). Financing still exist

by yyyfb 2y ago

Markets exist where SIM locking has been prohibited for a long time (Wikipedia says Canada, Chile, China, Israel, and Singapore at least). Financing still exists in these countries. The phone is absolutely not "collateral". The carrier does not take it back if you default (even if they could, they wouldn't be able to get anything of value for it). Unlocking is just an inconvenience that prevents enough people from churning that it lowers the risk of financing.

icepat 2y ago
Yes, because in Canada at least, if you terminate your contract, you have to pay out the phone. That's how it's done. Really, it's not a complicated solution.
- WD-42 2y ago
  Sounds like a reasonable thing consumers should be able to do.
  - icepat 2y ago
    Consumer protections in Canada are terrible, but in the very least they're not anti-consumer.
lbourdages 2y ago
Yes. In Canada, the phones are not locked, but if you terminate your contract before the term (max 2 years) you have to pay the remaining cost.
- Amezarak 2y ago
  What happens if you don’t pay? I ask this out of genuine curiosity - I’m not sure what happens in the US either, I don’t believe they brick carrier-locked phones that a customer stops paying for but I’m not sure. But I’ve enough experiences with enough people to know this is probably actually a fairly common scenario and I wonder what the consequences are. (A surprising amount of the time, there are no real consequences.)
  - lbourdages 2y ago
    A phone contract is on one's credit report. If they don't pay, the phone company will try to recover the debt like any other debt (via nagging, and then selling the debt to a collection agency). It's not fundamentally different from not paying the bill at the end of the month.
dawnerd 2y ago
They'd still make you pay off the full amount before you could close off your account. Pretty standard in the US. Locking is just an evil way to add more friction.
- toomuchtodo 2y ago
  People with nothing don’t care if they get sent to collections, hence the need to have some control over the device while monies are owed for it. Just like vehicle interlocks for subprime auto notes. Until you pay off the collateral, it isn’t your ownership, simply permission to use while servicing the debt.
  - dv_dt 2y ago
    Then the companies should not extend that loan/credit
    - toomuchtodo 2y ago
      Then a lot of folks who finance phones on cheap or free installment plans currently won’t get phones, simple as that. If regulators are fine with that, that’s a reasonable position I suppose. Carriers aren’t a charity to take on aggressive credit risk in these financial consumer populations. Incentives->outcomes.
      - normaler 2y ago
        What are free installment plans? Currently the most used phones in the US are iphones. If the actual cost is not hidden behind monthly payments anymore, but some users can not afford iphones, people might start to consider cheaper phone options.
      - 999900000999 2y ago
        Alot of folks won't have iPhones. You can get a darn decent Android for 200$ unlocked, and if your really struggling a 50$ phone will get the job done. No one will suffer if they can't get an iPhone. A lot of folks also can't do math. I pay about $20 a month for my phone plan, and I paid $700 for my phone up front. AT&t isn't giving phones away, you end up on a more expensive plan that's around $80 or so and then they'll tack on 30 bucks for the phone. If you're lucky the bill credits will cover the entire cost of the phone, but over two years you've still spent an addition 700$.
yftsui 2y ago
I believe he meant financing will become more expensive, which may actually increase the consumer cost over a fixed period (if the carriers are not willing to decrease the plan prices which are jacked up to compensate the contracts).
Detrytus 2y ago
And in EU, it is technically not prohibited, but haven't really been a thing for a long time. One caveat: carriers do not really pay for your phones. Your phone bill would list two separate charges: service charge, for calls, internet use, etc., and then the monthly payment for your phone. If you add all those monthly payments over the whole contract period you get maybe 5-10% discount to the regular market price.
- pipodeclown 2y ago
  Yes but what is prohibited in Europe is to hide the cost of the phone in the payments of the cell plan. They must make clear exactly what part of your monthly payment is to pay off the phone and what part is the cell plan. That has basically blown up subsidised phones in Europe..
- kirenida 2y ago
  It seems that Croatian operators didn't get the memo about the discount. Here the phones that you can get from your carrier and pay off on a monthly basis often end up costing more than in retail.
Molitor5901 2y ago
It's purely anti-competitive and anti-consumer.
- yyyfb 2y ago
  There's been kind of a silver lining consumer benefit, historically. In early years, SIM locking allowed carriers in Europe to subsidize device cost based on expected revenue, effectively offering financing outside of the financial system, and benefiting a set of customers who wouldn't otherwise have been eligible for normal credit.
Zak 2y ago
Collateral has two functions: 1. Incentivize the borrower to continue paying so as to not lose the collateral. 2. Allow the lender to recover some of the value of the loan. A locked phone serves the first purpose because the lender can disable its primary function.

by yyyfb 2y ago

icepat 2y ago

Yes, because in Canada at least, if you terminate your contract, you have to pay out the phone. That's how it's done. Really, it's not a complicated solution.

WD-42 2y ago
Sounds like a reasonable thing consumers should be able to do.
- icepat 2y ago
  Consumer protections in Canada are terrible, but in the very least they're not anti-consumer.

lbourdages 2y ago

Yes. In Canada, the phones are not locked, but if you terminate your contract before the term (max 2 years) you have to pay the remaining cost.

Amezarak 2y ago
What happens if you don’t pay? I ask this out of genuine curiosity - I’m not sure what happens in the US either, I don’t believe they brick carrier-locked phones that a customer stops paying for but I’m not sure. But I’ve enough experiences with enough people to know this is probably actually a fairly common scenario and I wonder what the consequences are. (A surprising amount of the time, there are no real consequences.)
- lbourdages 2y ago
  A phone contract is on one's credit report. If they don't pay, the phone company will try to recover the debt like any other debt (via nagging, and then selling the debt to a collection agency). It's not fundamentally different from not paying the bill at the end of the month.

dawnerd 2y ago

They'd still make you pay off the full amount before you could close off your account. Pretty standard in the US. Locking is just an evil way to add more friction.

toomuchtodo 2y ago
People with nothing don’t care if they get sent to collections, hence the need to have some control over the device while monies are owed for it. Just like vehicle interlocks for subprime auto notes. Until you pay off the collateral, it isn’t your ownership, simply permission to use while servicing the debt.
- dv_dt 2y ago
  Then the companies should not extend that loan/credit
  - toomuchtodo 2y ago
    Then a lot of folks who finance phones on cheap or free installment plans currently won’t get phones, simple as that. If regulators are fine with that, that’s a reasonable position I suppose. Carriers aren’t a charity to take on aggressive credit risk in these financial consumer populations. Incentives->outcomes.
    - normaler 2y ago
      What are free installment plans? Currently the most used phones in the US are iphones. If the actual cost is not hidden behind monthly payments anymore, but some users can not afford iphones, people might start to consider cheaper phone options.
    - 999900000999 2y ago
      Alot of folks won't have iPhones. You can get a darn decent Android for 200$ unlocked, and if your really struggling a 50$ phone will get the job done. No one will suffer if they can't get an iPhone. A lot of folks also can't do math. I pay about $20 a month for my phone plan, and I paid $700 for my phone up front. AT&t isn't giving phones away, you end up on a more expensive plan that's around $80 or so and then they'll tack on 30 bucks for the phone. If you're lucky the bill credits will cover the entire cost of the phone, but over two years you've still spent an addition 700$.

yftsui 2y ago

I believe he meant financing will become more expensive, which may actually increase the consumer cost over a fixed period (if the carriers are not willing to decrease the plan prices which are jacked up to compensate the contracts).

Detrytus 2y ago

And in EU, it is technically not prohibited, but haven't really been a thing for a long time. One caveat: carriers do not really pay for your phones. Your phone bill would list two separate charges: service charge, for calls, internet use, etc., and then the monthly payment for your phone. If you add all those monthly payments over the whole contract period you get maybe 5-10% discount to the regular market price.

pipodeclown 2y ago
Yes but what is prohibited in Europe is to hide the cost of the phone in the payments of the cell plan. They must make clear exactly what part of your monthly payment is to pay off the phone and what part is the cell plan. That has basically blown up subsidised phones in Europe..
kirenida 2y ago
It seems that Croatian operators didn't get the memo about the discount. Here the phones that you can get from your carrier and pay off on a monthly basis often end up costing more than in retail.

Molitor5901 2y ago

It's purely anti-competitive and anti-consumer.

yyyfb 2y ago
There's been kind of a silver lining consumer benefit, historically. In early years, SIM locking allowed carriers in Europe to subsidize device cost based on expected revenue, effectively offering financing outside of the financial system, and benefiting a set of customers who wouldn't otherwise have been eligible for normal credit.

Zak 2y ago

Collateral has two functions: 1. Incentivize the borrower to continue paying so as to not lose the collateral. 2. Allow the lender to recover some of the value of the loan. A locked phone serves the first purpose because the lender can disable its primary function.