6 ms·

See now this is an example of how US cell phone consumers have been successfully brainwashed. A $50 difference on the subsidized cost of a handset is not "aggre

by cletus 14y ago

See now this is an example of how US cell phone consumers have been successfully brainwashed. A $50 difference on the subsidized cost of a handset is not "aggressive" discounting; it's inconsequential. Chances are you'll be paying $60-100/month for 24 months when you take out any smartphone service (or less if you go with T-Mobile or Sprint). Assuming $80 that's: $199 + 24 * $80 = $2119 vs $149 + 24 * $80 = $2069 which is less than a 3% discount. Now the service obviously costs something and you may not have it for 24 months (which probably means you're paying an ETF anyway) but that should definitely be how the consumer looks at it: would you rather pay $2119 for an iPhone and service or $2069 for a Lumia and service? Even worse, I see people who will pay $2119 for the iPhone 5 and $2019 for the iPhone 4. It makes no sense. Here's another way of looking at it: that $199 iPhone 5 costs ~$650 unsubsidized. Your ETF is (IIRC) $350 (-$10/month on the contract). If you terminate immediately you've paid $200 + $350 + probably $80 so basically full price anyway. If you do so after a year you pay $200 + $230 + whatever you've spent on service. $430 from $650 means they've discounted the phone $220 for you but you've also spent $960 on service. To compare: when I got my iPhone 4 in Australia the 64G model was A$1000 at the time (the exchange rate was at the time a lot worse than it is now). Also, that includes tax (10% GST). Instead I bought the phone on a Telstra Business 24 month contract which was $50/month and $299 for the phone with a $100 store voucher (from JB Hifi), so $199 + $50 * 24 = $1399 - $1000 retail cost means I really only paid $400 for 2 years of service or alternatively the phone was discounted $800. Either way that is "aggressive" discounting. Seriously, cell phones are an utter ripoff in the US. It still astounds me how expensive it is. Oh and in the US you pay to receive calls. Not true in Australia and most of Europe that I'm aware of (certainly not the UK, Germany or Switzerland).

PeterisP 14y ago
The most common cellphone plan here in eastern europe is $10 per month with unlimited voice/sms and 0.5gb of data. If you want an included iPhone and more data, then it's like $40 since the phone is expensive, but how can you get up to $80 is quite a mystery that only monopolist lobbying could explain.
beagle3 14y ago
You are absolutely correct about everything. Two additional points: 1. While the brainwashing is there, and is very effective, the major carriers (AT&T, Verizon) will make you pay the same monthly charge whether you bought a "subsidized" phone from them or not. So instead of subsidized phone vs. unsubsidized phone (the way you have it in most of the world), what you have in the US is sucker-with-a-lower-price-tag ($200), vs. sucker-with-a-higher-price-tag (e.g. $650 if bought from Apple) - your service cost will be the same (with the exception that if you brought your own phone, you won't pay an ETF if you leave early). 2. Yes, it is exclusively in the US that you pay for incoming - and that's for historical reasons. Unlike essentially everywhere else, there is no special area code for mobile, so you can't tell if you're calling a mobile phone, so -- back in the days when calls to mobile cost more everywhere -- there was no other way to handle this. But the US public has gotten used to it, so no company is thinking of changing that - people here think its normal to pay for a received text message (SMS) as well... Mobile phone service in the US is a ripoff, but it will not change because the public is not aware that is the case, and congress is bought and paid for.
- jacalata 14y ago
  I'm pretty sure that the 'no special code for mobile' and 'recipient pays' concepts were part of the same plan - companies worried that nobody would call a mobile if they knew it was different or more expensive, so they made it look exactly the same to call one, and make the assumed 'high powered exec' cover the cost difference in order to receive calls. I'm not sure why this only happened in the US - was it the first country to have consumer mobile phones?
  - beagle3 14y ago
    I have no first hand knowledge, but I'd assume there's no malice involved. In the US, every state has a different area code, and calling within your area code (and possibly a few others) is "local", and other area codes are "long distance". At the time, the infrastructure wasn't there for a US national mobile area code - the installations were state local, and as a result, mobile numbers were state local. And it all follows from there. The US phone infrastructure (both landline and mobile) was there first, and as a result, suffered from a lot of legacy that the European system was able to avoid by virtue of having more time to think about it, observe how it was done wrong, and do it right.
aik 14y ago
$80/month? AT&T has $40/month with 1gb/month for the iPhone. So with $199 for the phone, that ends up around $1160. Concerning Australia: Last time I walked in to (I think Telstra, and the same at Optus and Vodafone), I asked about the cost of cancelling a 2/yr contract. They said I'd have to pay out the entire contract ($50+/month for 750mb/month). So $1200+ in any case. With who were you able to cancel and not have to pay out the full? In any case, my initial question was basically: Why $149 and not the $199 like the other top-end phones?
- mikelward 14y ago
  Where is this $40 plan? If you're referring to the new "mobile share" plan, you also have to pay a $45 per month device fee, making it $85.
- batiudrami 14y ago
  You're right - if you cancel before the end of your contract you're up for the entire remainder of your contract. The poster didn't actually mention canceling the contract (he was doing the sums over the life of the contract). The best value in Australia is actually to buy the phone from a grey importer (though this works best with Android phones as iPhones aren't discounted much - a GS3 an be had for ~$530, iPhone 5 for ~$770), and going with a VMNO such as LiveConnected (http://www.liveconnected.com.au/mobile-plans http://www.liveconnected.com.au/mobile-plans) - a plan with ~600 minutes and 2GB of data only sets you back $17 a month, and you're not on a contract.
  - aik 14y ago
    Interesting. Have you used LiveConnected? Know why they can be so inexpensive? Also, where you can you find a grey importer? (by the way the author does mention terminating the contract.)
    - batiudrami 14y ago
      I personally don't use it (I'm with Vodafone on a month to month contract as I used to work for them and have quite a good deal, and I know how they value long-tenure customers) but I know some friends who do. They've had no problems, but I've heard that if you do there is next-to no customer support on their end - if porting a number goes wrong, for instance. A middle-ground would be TPG Mobile who have some customer support if you need it. In terms of a grey importer, the best option is to keep your eye on OzBargain (www.ozbargain.com.au). Otherwise Staticice.com.au is a good aggregator if you're looking for a less popular model, or need one immediately. And perhaps I'm struggling with reading comprehension (it is Monday, after all!), but I still can't see him mention terminating the Australian contract early - only the US one.
pyre 14y ago
The difference between your US and AU example are: 1) The initial retail cost of the phone is higher in Australia. $1399 - $650 would be less of a discount. 2) The cost of the service is cheaper in Australia. It would be interesting to compare and contrast what your $50/month plan gave you when compared against a $80/month US plan.
- 2muchcoffeeman 14y ago
  Good thing the AUD is almost at parity with the USD. AT&T http://www.att.com/shop/wireless/plans/mobileshare.html#planlist-ptip_sku6220463 http://www.att.com/shop/wireless/plans/mobileshare.html#plan... Telstra https://onlineshop.telstra.com.au/?ti=TR:TR:newshop:mobileplans:banner:690x200 https://onlineshop.telstra.com.au/?ti=TR:TR:newshop:mobilepl... How do you factor in things like coverage and actual speeds? Telstra is generally seen as expensive in AU, but I've been on the other carriers. Telstra's coverage and network speeds were worth the extra cost for me.
natrius 14y ago
It's not brainwashing. $50 up front makes a significant difference for most Americans. I bought my last two phones (Galaxy Nexus and Nexus S) at sticker price and got a cheaper T-Mobile plan. That's not an option for everyone. Even accounting for inflation, having money today is more valuable than having it in two years. Any calculation that doesn't account for that is invalid.
- orangecat 14y ago
  $50 up front makes a significant difference for most Americans If that's the case, then most Americans should devote much more effort toward lowering their monthly bills relative to getting cheaper phones. I bought my last two phones (Galaxy Nexus and Nexus S) at sticker price and got a cheaper T-Mobile plan. That's not an option for everyone. It is for the large majority. Even if you have to put the phone on a credit card at 20% interest, you probably still come out ahead.
  - CodeCube 14y ago
    Many americans, the ones being discussed here do not think that way. No matter how many times you try to explain how to "save in the long run", up front cost is by far the biggest decision factor. A better way to describe it is not that it's not an option for everyone, but it's that not everyone will see it as the better option.

by cletus 14y ago

PeterisP 14y ago

The most common cellphone plan here in eastern europe is $10 per month with unlimited voice/sms and 0.5gb of data. If you want an included iPhone and more data, then it's like $40 since the phone is expensive, but how can you get up to $80 is quite a mystery that only monopolist lobbying could explain.

beagle3 14y ago

You are absolutely correct about everything. Two additional points: 1. While the brainwashing is there, and is very effective, the major carriers (AT&T, Verizon) will make you pay the same monthly charge whether you bought a "subsidized" phone from them or not. So instead of subsidized phone vs. unsubsidized phone (the way you have it in most of the world), what you have in the US is sucker-with-a-lower-price-tag ($200), vs. sucker-with-a-higher-price-tag (e.g. $650 if bought from Apple) - your service cost will be the same (with the exception that if you brought your own phone, you won't pay an ETF if you leave early). 2. Yes, it is exclusively in the US that you pay for incoming - and that's for historical reasons. Unlike essentially everywhere else, there is no special area code for mobile, so you can't tell if you're calling a mobile phone, so -- back in the days when calls to mobile cost more everywhere -- there was no other way to handle this. But the US public has gotten used to it, so no company is thinking of changing that - people here think its normal to pay for a received text message (SMS) as well... Mobile phone service in the US is a ripoff, but it will not change because the public is not aware that is the case, and congress is bought and paid for.

jacalata 14y ago
I'm pretty sure that the 'no special code for mobile' and 'recipient pays' concepts were part of the same plan - companies worried that nobody would call a mobile if they knew it was different or more expensive, so they made it look exactly the same to call one, and make the assumed 'high powered exec' cover the cost difference in order to receive calls. I'm not sure why this only happened in the US - was it the first country to have consumer mobile phones?
- beagle3 14y ago
  I have no first hand knowledge, but I'd assume there's no malice involved. In the US, every state has a different area code, and calling within your area code (and possibly a few others) is "local", and other area codes are "long distance". At the time, the infrastructure wasn't there for a US national mobile area code - the installations were state local, and as a result, mobile numbers were state local. And it all follows from there. The US phone infrastructure (both landline and mobile) was there first, and as a result, suffered from a lot of legacy that the European system was able to avoid by virtue of having more time to think about it, observe how it was done wrong, and do it right.

aik 14y ago

$80/month? AT&T has $40/month with 1gb/month for the iPhone. So with $199 for the phone, that ends up around $1160. Concerning Australia: Last time I walked in to (I think Telstra, and the same at Optus and Vodafone), I asked about the cost of cancelling a 2/yr contract. They said I'd have to pay out the entire contract ($50+/month for 750mb/month). So $1200+ in any case. With who were you able to cancel and not have to pay out the full? In any case, my initial question was basically: Why $149 and not the $199 like the other top-end phones?

mikelward 14y ago
Where is this $40 plan? If you're referring to the new "mobile share" plan, you also have to pay a $45 per month device fee, making it $85.
batiudrami 14y ago
You're right - if you cancel before the end of your contract you're up for the entire remainder of your contract. The poster didn't actually mention canceling the contract (he was doing the sums over the life of the contract). The best value in Australia is actually to buy the phone from a grey importer (though this works best with Android phones as iPhones aren't discounted much - a GS3 an be had for ~$530, iPhone 5 for ~$770), and going with a VMNO such as LiveConnected (http://www.liveconnected.com.au/mobile-plans http://www.liveconnected.com.au/mobile-plans) - a plan with ~600 minutes and 2GB of data only sets you back $17 a month, and you're not on a contract.
- aik 14y ago
  Interesting. Have you used LiveConnected? Know why they can be so inexpensive? Also, where you can you find a grey importer? (by the way the author does mention terminating the contract.)
  - batiudrami 14y ago
    I personally don't use it (I'm with Vodafone on a month to month contract as I used to work for them and have quite a good deal, and I know how they value long-tenure customers) but I know some friends who do. They've had no problems, but I've heard that if you do there is next-to no customer support on their end - if porting a number goes wrong, for instance. A middle-ground would be TPG Mobile who have some customer support if you need it. In terms of a grey importer, the best option is to keep your eye on OzBargain (www.ozbargain.com.au). Otherwise Staticice.com.au is a good aggregator if you're looking for a less popular model, or need one immediately. And perhaps I'm struggling with reading comprehension (it is Monday, after all!), but I still can't see him mention terminating the Australian contract early - only the US one.

pyre 14y ago

The difference between your US and AU example are: 1) The initial retail cost of the phone is higher in Australia. $1399 - $650 would be less of a discount. 2) The cost of the service is cheaper in Australia. It would be interesting to compare and contrast what your $50/month plan gave you when compared against a $80/month US plan.

2muchcoffeeman 14y ago
Good thing the AUD is almost at parity with the USD. AT&T http://www.att.com/shop/wireless/plans/mobileshare.html#planlist-ptip_sku6220463 http://www.att.com/shop/wireless/plans/mobileshare.html#plan... Telstra https://onlineshop.telstra.com.au/?ti=TR:TR:newshop:mobileplans:banner:690x200 https://onlineshop.telstra.com.au/?ti=TR:TR:newshop:mobilepl... How do you factor in things like coverage and actual speeds? Telstra is generally seen as expensive in AU, but I've been on the other carriers. Telstra's coverage and network speeds were worth the extra cost for me.

natrius 14y ago

It's not brainwashing. $50 up front makes a significant difference for most Americans. I bought my last two phones (Galaxy Nexus and Nexus S) at sticker price and got a cheaper T-Mobile plan. That's not an option for everyone. Even accounting for inflation, having money today is more valuable than having it in two years. Any calculation that doesn't account for that is invalid.

orangecat 14y ago
$50 up front makes a significant difference for most Americans If that's the case, then most Americans should devote much more effort toward lowering their monthly bills relative to getting cheaper phones. I bought my last two phones (Galaxy Nexus and Nexus S) at sticker price and got a cheaper T-Mobile plan. That's not an option for everyone. It is for the large majority. Even if you have to put the phone on a credit card at 20% interest, you probably still come out ahead.
- CodeCube 14y ago
  Many americans, the ones being discussed here do not think that way. No matter how many times you try to explain how to "save in the long run", up front cost is by far the biggest decision factor. A better way to describe it is not that it's not an option for everyone, but it's that not everyone will see it as the better option.