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Not sure about Russia, but in other countries there are tight regulations for phone subsidies (treating them for what they are: dumping of retail price with the

by muyuu 13y ago

Not sure about Russia, but in other countries there are tight regulations for phone subsidies (treating them for what they are: dumping of retail price with the purpose of locking in users - a blatantly anticompetitive practice that would be illegal in most industries). Strong competition has a similar effect. If the SIM free contracts are good enough, people are not going to get into lengthy, expensive contracts. This doesn't happen in places like the US because there's a very strong cartel/oligopoly there that affords them the right to simply deny you a terminal if it's not under the carrier's conditions. If Apple is selling for cheaper than the carriers can afford to sell, then they will simply do what they are doing: stop selling it.

jdminhbg 13y ago
> dumping of retail price with the purpose of locking in users - a blatantly anticompetitive practice that would be illegal in most industries What? There are scores of industries that use loss-leaders to get customers to commit to long-term contracts. Razors, satellite/cable TV, etc. > This doesn't happen in places like the US because there's a very strong cartel/oligopoly there that affords them the right to simply deny you a terminal if it's not under the carrier's conditions. This isn't true at all, and I don't know why you would think it was. Here's a counterexample: https://ting.com/ https://ting.com/
- PeterisP 13y ago
  Exactly, forcing a lock-in is illegal in all those industries as well. For razors: you are allowed to manufacture and market blades that are compatible with competitors; so people are (both legally and practically) allowed to buy a loss-leader razor from company A, and cheaper razorblades from company B. For satellite/cable TV: in places with decent consumer rights laws there are practical, massively used ways to get out of long-term lock-ins; so such deals work only as long as consumers like the deal. If customer walks away, there may be a contract-breaking fee involved, but as soon as you want to change the contract the slightest bit not to customer's favor (increase price by a dollar or drop a TV channel, which you may need to do) - bam; the customer can walk away with no fees.
- kvb 13y ago
  Loss leading may actually be harmful to consumers. See http://afinetheorem.wordpress.com/2013/07/12/loss-leading-as-an-exploitative-practice-z-chen-p-rey-2012/ http://afinetheorem.wordpress.com/2013/07/12/loss-leading-as... for one readable explanation.
Dylan16807 13y ago
How is selling you something on credit 'anticompetitive'?
- abrahamsen 13y ago
  Danish (and I believe EU) regulation has a comprise. Subsidized phones are legal, but 1) the longest time you can be bound by a "plan" is 6 month, and 2) all advertising must include the total cost of ownership in the binding period. This makes it blatantly obvious to the consumer that the unsubsidized phones are cheaper.
- pessimizer 13y ago
  Because that's not what they're doing? I can buy a car on credit, and it has nothing to do with my wireless service. I don't have to commit for the next two years to only buying gasoline from a particular type of station, either.
- PeterisP 13y ago
  Selling on credit is different than offering a loss leader and making it up elsewhere. If they are "selling you the phone on credit", then it would be obvious to require (a) in bill, separate items for the telecommunications and for the phone payment; (b) in advertising, note the full price of the phone, including the all monthly payments+interest; (c) when the phone is paid in full (24 months?), then stop charging for it... rather than continuing the same bill forever.

by muyuu 13y ago

jdminhbg 13y ago

> dumping of retail price with the purpose of locking in users - a blatantly anticompetitive practice that would be illegal in most industries What? There are scores of industries that use loss-leaders to get customers to commit to long-term contracts. Razors, satellite/cable TV, etc. > This doesn't happen in places like the US because there's a very strong cartel/oligopoly there that affords them the right to simply deny you a terminal if it's not under the carrier's conditions. This isn't true at all, and I don't know why you would think it was. Here's a counterexample: https://ting.com/ https://ting.com/

PeterisP 13y ago
Exactly, forcing a lock-in is illegal in all those industries as well. For razors: you are allowed to manufacture and market blades that are compatible with competitors; so people are (both legally and practically) allowed to buy a loss-leader razor from company A, and cheaper razorblades from company B. For satellite/cable TV: in places with decent consumer rights laws there are practical, massively used ways to get out of long-term lock-ins; so such deals work only as long as consumers like the deal. If customer walks away, there may be a contract-breaking fee involved, but as soon as you want to change the contract the slightest bit not to customer's favor (increase price by a dollar or drop a TV channel, which you may need to do) - bam; the customer can walk away with no fees.
kvb 13y ago
Loss leading may actually be harmful to consumers. See http://afinetheorem.wordpress.com/2013/07/12/loss-leading-as-an-exploitative-practice-z-chen-p-rey-2012/ http://afinetheorem.wordpress.com/2013/07/12/loss-leading-as... for one readable explanation.

Dylan16807 13y ago

How is selling you something on credit 'anticompetitive'?

abrahamsen 13y ago
Danish (and I believe EU) regulation has a comprise. Subsidized phones are legal, but 1) the longest time you can be bound by a "plan" is 6 month, and 2) all advertising must include the total cost of ownership in the binding period. This makes it blatantly obvious to the consumer that the unsubsidized phones are cheaper.
pessimizer 13y ago
Because that's not what they're doing? I can buy a car on credit, and it has nothing to do with my wireless service. I don't have to commit for the next two years to only buying gasoline from a particular type of station, either.
PeterisP 13y ago
Selling on credit is different than offering a loss leader and making it up elsewhere. If they are "selling you the phone on credit", then it would be obvious to require (a) in bill, separate items for the telecommunications and for the phone payment; (b) in advertising, note the full price of the phone, including the all monthly payments+interest; (c) when the phone is paid in full (24 months?), then stop charging for it... rather than continuing the same bill forever.