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They aren’t though. Subsidized phones are like monthly car payments drive up costs and are targeted at people bad at math. If consumers paid out of pocket for

They aren’t though. Subsidized phones are like monthly car payments drive up costs and are targeted at people bad at math. If consumers paid out of pocket for their phones then they would be more picky about upgrading and plan prices. It would also make upselling shitty plan features harder so the carriers would loose a lot of money.

christophilus 2y ago
Monthly car payments can be good, though, as opposed to paying cash, assuming you can get a reasonable rate of return by conservatively investing the cash in a fairly liquid investment.
- johnnyanmac 2y ago
  They type of people they target don't even have money saved for an emergency. Let alone money to invest.
- ryandrake 2y ago
  Current (risk free) 5 year TIPS real yield is 1.65%... Not sure if there are many car loans offered at a lower rate. If you were thinking a different investment, you'd of course need to adjust it for risk, inflation, and liquidity before comparing to the car loan.
- i80and 2y ago
  There are economic environments where this is true, but I think they tend to be the exception, not the rule. Car loan rates right now are quite steep.
cmeacham98 2y ago
I would agree with you (financing small purchases like a phone is a bad idea and causes people to spend money they shouldn't), but that doesn't make the clickbait acceptable. Ars Technica should accurately report the claims of the telco industry.
- DaiPlusPlus 2y ago
  Most people don’t live in your affluent bubble where, apparently, a $500 to $2,000 expense is a “small purchase”.
  - Always42 2y ago
    You don’t need to pay $500 to $2000 for a phone. I don’t think I have ever paid that much.
    - Symbiote 2y ago
      As you are probably aware, popular phones like the iPhone 15 and Samsung Galaxy S24 (#1 and #2 in the USA) are in that range, costing $700 and $1300 for the 'basic' models.
      - throwaway48476 2y ago
        Somehow the rest of the world gets by with much cheaper phones.
        givinguflac 2y ago
        I love this take- Sure, let’s just ignore the disastrous adware, bloatware etc that also “subsidize” these cheaper phones, to say nothing of the actual capabilities or user experience of said devices.
        ahartmetz 2y ago
        No such crap on Motorola phones. Posting from a five years old Moto One Vision. It's... a smartphone. It has a decent CPU, screen, camera, storage, NFC, etc. I couldn't say what's missing. The only thing I'd get excited about in a new phone is a faster CPU.
        refurb 2y ago
        Much of the world “gets by” on outdoor toilets, but we put value on indoor plumbing don’t we?
mattmaroon 2y ago
I don’t know, my phone carrier charges me zero interest to “buy” my phone on a 36 month loan because of it. It’s not a huge financial windfall by any means, but it’s absolutely money in my pocket.
- actionablefiber 2y ago
  My family (parents, siblings) are asking me "How did our T-mobile phone bill balloon so much in the past decade?" and I can point to the slow creep and the plan changes they made that (without them knowing or anyone telling them) un-grandfathered them out of a favorable promotional plan. For instance my sister needed to increase her data cap about a few months before they moved our data to unlimited. It pushed her out of the promo and now the family plan costs $35/mo extra even though her line is getting the exact same things as mine, which is still on the promo pricing. Then I tell them they'd be better served by switching to an MVNO offering significantly better rates and they come back and tell me they're locked in for a while because they just financed new devices. I'm souring on the ways we create systems where you have to be super savvy and walk on eggshells with how you use the service and utter the right incantations or else you get hosed.
  - treyd 2y ago
    > I'm souring on the ways we create systems where you have to be super savvy and walk on eggshells with how you use the service and utter the right incantations or else you get hosed. These systems rely on intentionally leaving people in the dark to manufacture legitimacy under the guise that well-educated consumers can avoid the hidden fees and restrictions. It's the expected end state when these shady schemes are allowed to exist.
    - tkluck 2y ago
      Yes. It's the canonical (and, I think, original) example of a https://en.wikipedia.org/wiki/Confusopoly https://en.wikipedia.org/wiki/Confusopoly .
- __MatrixMan__ 2y ago
tedunangst 2y ago
There's a multitude of false claims that phone companies can make, but we should still expect journalists to report those claims accurately.
MarkusWandel 2y ago
I've had a couple of people who are decidedly good at math (engineers) explain to me that, at least here in Canada, for at least one carrier, for at least one kind of phone (recent, high-end model iphones) if you get out of the carrier contract the moment you can (2 years I think), you do get the phone for less than if you bought it outright and went on a market rate prepaid plan right away. Not even considering the interest free "instalment plan" that they are essentially buying it on. I guess the carriers still make money because once habituated, especially if they've never done the port-number-to-new-carrier thing, people stay in the high priced plan longer than necessary. Like the three years until they've truly paid the above-market price for the phone, and are now eligible for another "free" phone which they may not even take advantage of. For what it's worth, carrier locking phones has been illegal here for some years (and any phone from the locked era had to be unlocked for free for the asking after the law was changed) and it hasn't changed anything in terms of these rent-to-buy type carrier plans. So I don't know what the fuss is about. A contract is a contract.
- sourcepluck 2y ago
  Yeah, just like the supermarket club cards are good for shoppers. A similar psychological thing is going on in both cases I feel - some minority will manage to emerge winners due to a mixture of persistence, intelligence, luck, greed, etc. And the majority will get squeezed, or else how would such large percentages of marketing budgets continue to be pumped into club card and subscription schemes.
- aceofspades19 2y ago
  Yeah as a fellow Canadian, I agree. When the unlocking policy was first discussed here, people had the same fears and that people would just run off with the phones. It turns out that people generally don't like being banned from a carrier or getting the hit on their credit. I don't see why its different than a car really. While some dealerships are adding GPS trackers nowadays, there is nothing stopping you from buying a car on credit and driving it to Mexico and hiding it in a locked garage. It's going to be very difficult to buy another car if you do that though, and that's enough of a deterrence for most people as they have to continue living their lives and eventually buy a new car.
afavour 2y ago
It's a little more nuanced than you're making out. I spent way, way too long working out the totals from the various methods of getting a new phone and getting the free phone as part of a 24/36 month agreement ended up being cheaper than many alternatives, primarily because you're paying the monthly plan amount whether you take the free phone or not. I personally think upgrading my phone after three years is a reasonable timeframe, but of course everyone is different. It wasn't cheaper than all alternatives. There were a bunch of virtual operators offering better monthly rates than the big networks but I've personally had bad experiences with network deprioritization on them. Depends very much on your individual circumstance, I'm in NYC and the network is clearly pretty saturated.
- nothercastle 2y ago
  Try att prepaid. Its like 300$ a year you can’t beat that or at least not by much
  - from-nibly 2y ago
    Mint mobile for $180?
    - Mistletoe 2y ago
      I got my whole family on Mint Mobile and they have never looked back. Everything else is ridiculously priced compared to Mint.
      - nothercastle 2y ago
        If their plan works in your area absolute steal
        grepfru_it 2y ago
        As soon as I drive outside of city limits I lose all practical cell coverage. One of the main reasons I stick to Verizon
refurb 2y ago
Yes they are. If you were going to buy a plan from AT&T anyways at $60/month, they are willing to give you a $800 phone for “free” if they can lock you into a 2 year contract. Buying your own phone for $800 and paying $60/month isn’t a better deal but it does give you flexibility to drop the carrier whenever you want. Consumers can decide. Banning a consumer option sounds anti-consumer, not pro.

christophilus 2y ago

Monthly car payments can be good, though, as opposed to paying cash, assuming you can get a reasonable rate of return by conservatively investing the cash in a fairly liquid investment.

johnnyanmac 2y ago
They type of people they target don't even have money saved for an emergency. Let alone money to invest.
ryandrake 2y ago
Current (risk free) 5 year TIPS real yield is 1.65%... Not sure if there are many car loans offered at a lower rate. If you were thinking a different investment, you'd of course need to adjust it for risk, inflation, and liquidity before comparing to the car loan.
i80and 2y ago
There are economic environments where this is true, but I think they tend to be the exception, not the rule. Car loan rates right now are quite steep.

cmeacham98 2y ago

I would agree with you (financing small purchases like a phone is a bad idea and causes people to spend money they shouldn't), but that doesn't make the clickbait acceptable. Ars Technica should accurately report the claims of the telco industry.

DaiPlusPlus 2y ago
Most people don’t live in your affluent bubble where, apparently, a $500 to $2,000 expense is a “small purchase”.
- Always42 2y ago
  You don’t need to pay $500 to $2000 for a phone. I don’t think I have ever paid that much.
  - Symbiote 2y ago
    As you are probably aware, popular phones like the iPhone 15 and Samsung Galaxy S24 (#1 and #2 in the USA) are in that range, costing $700 and $1300 for the 'basic' models.
    - throwaway48476 2y ago
      Somehow the rest of the world gets by with much cheaper phones.
      - givinguflac 2y ago
        I love this take- Sure, let’s just ignore the disastrous adware, bloatware etc that also “subsidize” these cheaper phones, to say nothing of the actual capabilities or user experience of said devices.
        ahartmetz 2y ago
        No such crap on Motorola phones. Posting from a five years old Moto One Vision. It's... a smartphone. It has a decent CPU, screen, camera, storage, NFC, etc. I couldn't say what's missing. The only thing I'd get excited about in a new phone is a faster CPU.
      - refurb 2y ago
        Much of the world “gets by” on outdoor toilets, but we put value on indoor plumbing don’t we?

mattmaroon 2y ago

I don’t know, my phone carrier charges me zero interest to “buy” my phone on a 36 month loan because of it. It’s not a huge financial windfall by any means, but it’s absolutely money in my pocket.

actionablefiber 2y ago
My family (parents, siblings) are asking me "How did our T-mobile phone bill balloon so much in the past decade?" and I can point to the slow creep and the plan changes they made that (without them knowing or anyone telling them) un-grandfathered them out of a favorable promotional plan. For instance my sister needed to increase her data cap about a few months before they moved our data to unlimited. It pushed her out of the promo and now the family plan costs $35/mo extra even though her line is getting the exact same things as mine, which is still on the promo pricing. Then I tell them they'd be better served by switching to an MVNO offering significantly better rates and they come back and tell me they're locked in for a while because they just financed new devices. I'm souring on the ways we create systems where you have to be super savvy and walk on eggshells with how you use the service and utter the right incantations or else you get hosed.
- treyd 2y ago
  > I'm souring on the ways we create systems where you have to be super savvy and walk on eggshells with how you use the service and utter the right incantations or else you get hosed. These systems rely on intentionally leaving people in the dark to manufacture legitimacy under the guise that well-educated consumers can avoid the hidden fees and restrictions. It's the expected end state when these shady schemes are allowed to exist.
  - tkluck 2y ago
    Yes. It's the canonical (and, I think, original) example of a https://en.wikipedia.org/wiki/Confusopoly https://en.wikipedia.org/wiki/Confusopoly .
__MatrixMan__ 2y ago

tedunangst 2y ago

There's a multitude of false claims that phone companies can make, but we should still expect journalists to report those claims accurately.

MarkusWandel 2y ago

I've had a couple of people who are decidedly good at math (engineers) explain to me that, at least here in Canada, for at least one carrier, for at least one kind of phone (recent, high-end model iphones) if you get out of the carrier contract the moment you can (2 years I think), you do get the phone for less than if you bought it outright and went on a market rate prepaid plan right away. Not even considering the interest free "instalment plan" that they are essentially buying it on. I guess the carriers still make money because once habituated, especially if they've never done the port-number-to-new-carrier thing, people stay in the high priced plan longer than necessary. Like the three years until they've truly paid the above-market price for the phone, and are now eligible for another "free" phone which they may not even take advantage of. For what it's worth, carrier locking phones has been illegal here for some years (and any phone from the locked era had to be unlocked for free for the asking after the law was changed) and it hasn't changed anything in terms of these rent-to-buy type carrier plans. So I don't know what the fuss is about. A contract is a contract.

sourcepluck 2y ago
Yeah, just like the supermarket club cards are good for shoppers. A similar psychological thing is going on in both cases I feel - some minority will manage to emerge winners due to a mixture of persistence, intelligence, luck, greed, etc. And the majority will get squeezed, or else how would such large percentages of marketing budgets continue to be pumped into club card and subscription schemes.
aceofspades19 2y ago
Yeah as a fellow Canadian, I agree. When the unlocking policy was first discussed here, people had the same fears and that people would just run off with the phones. It turns out that people generally don't like being banned from a carrier or getting the hit on their credit. I don't see why its different than a car really. While some dealerships are adding GPS trackers nowadays, there is nothing stopping you from buying a car on credit and driving it to Mexico and hiding it in a locked garage. It's going to be very difficult to buy another car if you do that though, and that's enough of a deterrence for most people as they have to continue living their lives and eventually buy a new car.

afavour 2y ago

It's a little more nuanced than you're making out. I spent way, way too long working out the totals from the various methods of getting a new phone and getting the free phone as part of a 24/36 month agreement ended up being cheaper than many alternatives, primarily because you're paying the monthly plan amount whether you take the free phone or not. I personally think upgrading my phone after three years is a reasonable timeframe, but of course everyone is different. It wasn't cheaper than all alternatives. There were a bunch of virtual operators offering better monthly rates than the big networks but I've personally had bad experiences with network deprioritization on them. Depends very much on your individual circumstance, I'm in NYC and the network is clearly pretty saturated.

nothercastle 2y ago
Try att prepaid. Its like 300$ a year you can’t beat that or at least not by much
- from-nibly 2y ago
  Mint mobile for $180?
  - Mistletoe 2y ago
    I got my whole family on Mint Mobile and they have never looked back. Everything else is ridiculously priced compared to Mint.
    - nothercastle 2y ago
      If their plan works in your area absolute steal
      - grepfru_it 2y ago
        As soon as I drive outside of city limits I lose all practical cell coverage. One of the main reasons I stick to Verizon

refurb 2y ago

Yes they are. If you were going to buy a plan from AT&T anyways at $60/month, they are willing to give you a $800 phone for “free” if they can lock you into a 2 year contract. Buying your own phone for $800 and paying $60/month isn’t a better deal but it does give you flexibility to drop the carrier whenever you want. Consumers can decide. Banning a consumer option sounds anti-consumer, not pro.