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But the upfront cost is the entire cost of the phone to the customer, as in the customer has title to the phone immediately they pay that cost. You're implying

But the upfront cost is the entire cost of the phone to the customer, as in the customer has title to the phone immediately they pay that cost. You're implying that you only want contract phones to be sold on a hire-purchase basis, which has its own problems.

nazgulnarsil 13y ago
if it is illegal to modify the phone until the contract is over you don't have title to it.
rahimnathwani 13y ago
the upfront cost is the entire cost of the phone to the customer No, it's not. The up-front cost, plus the agreement to sign an x (x~=2) year contract is the cost to the consumer. The consumer would not have been induced to sign this contract without the advertised price of the phone so, clearly, the obligations in that contract are not ones that the consumer would be willing to undertake for free (i.e. without a subsidised phone). the customer has title to the phone immediately they pay that cost That may be the case, but let me share two examples: 1) If I get an iPhone from AT&T, at a subsidised price because I committed to a 2-year contract, that phone will be locked to AT&T until I request that it is unlocked. They will only unlock the phone if I have satisfied the conditions of the contract (i.e. paid my 24 months' bill). So, although I have title to the phone from day 1 (in the sense that I can throw it down the toilet if I want) I don't really own it in the sense of being able to do whatever I want with it (like use it on a different network) until 2 years' later. It doesn't seem that different from hire purchase. 2) If I buy an iPhone from China Unicom (the 2nd largest mobile provider in China), I pay a deposit up-front (roughly the unsubsidised price of the phone, less the advertised up-front price) and 1/24th of that deposit is credited to my bill each month for the next 2 years. The only practical differences vs. the AT&T example are (i) they don't lock the phone and (ii) they are more protected than AT&T are if I don't hold up my end of the bargain.
michaelt 13y ago
Here in the UK, when buying vehicle insurance I have the option to pay for the year upfront, or to pay monthly. Paying monthly costs more as you effectively get a loan for the upfront fee and pay off the loan over the course of a year. So the documents often present it like so: Pay Upfront: £57.16 Pay Monthly: Deposit: £5.45 Installments: (11 x £5.45) Total: £65.40 APR: 35.3%
- rschmitty 13y ago
  You get that in the US too, however I wouldn't call it a loan because if you sign for a 1 year term and then cancel or switch providers after a month you get your money back It's more like a SaaS offering you a discount for paying yearly
alkonaut 13y ago
No, the cost of the phone is just spread out over 12 or 24 months. It's like saying a new car has the cost of a small down payment, it's completely absurd. A contract phone is just a regular purchase with a payment plan over 24 months AND hopefully a rebate compared to buying the phone cash, since you are bound to the specific company for a period of time. As an example, an iPhone might cost $1 when you sign a $50/mo contract for 24 months. If that contract would be $25 if I keeps my old phone, then the cost of the iPhone is 24 x $25. The bottom line is: the total cost should be easy to calculate, specified on monthly bills (how much is phone payments vs. call costs), and obfuscating the phone payments by masking it as e.g more expensive pre-paid minutes must be outlawed as it makes it impossible to compare the contract to the equivalent contract without the phone.

nazgulnarsil 13y ago

if it is illegal to modify the phone until the contract is over you don't have title to it.

rahimnathwani 13y ago

the upfront cost is the entire cost of the phone to the customer No, it's not. The up-front cost, plus the agreement to sign an x (x~=2) year contract is the cost to the consumer. The consumer would not have been induced to sign this contract without the advertised price of the phone so, clearly, the obligations in that contract are not ones that the consumer would be willing to undertake for free (i.e. without a subsidised phone). the customer has title to the phone immediately they pay that cost That may be the case, but let me share two examples: 1) If I get an iPhone from AT&T, at a subsidised price because I committed to a 2-year contract, that phone will be locked to AT&T until I request that it is unlocked. They will only unlock the phone if I have satisfied the conditions of the contract (i.e. paid my 24 months' bill). So, although I have title to the phone from day 1 (in the sense that I can throw it down the toilet if I want) I don't really own it in the sense of being able to do whatever I want with it (like use it on a different network) until 2 years' later. It doesn't seem that different from hire purchase. 2) If I buy an iPhone from China Unicom (the 2nd largest mobile provider in China), I pay a deposit up-front (roughly the unsubsidised price of the phone, less the advertised up-front price) and 1/24th of that deposit is credited to my bill each month for the next 2 years. The only practical differences vs. the AT&T example are (i) they don't lock the phone and (ii) they are more protected than AT&T are if I don't hold up my end of the bargain.

michaelt 13y ago

Here in the UK, when buying vehicle insurance I have the option to pay for the year upfront, or to pay monthly. Paying monthly costs more as you effectively get a loan for the upfront fee and pay off the loan over the course of a year. So the documents often present it like so: Pay Upfront: £57.16 Pay Monthly: Deposit: £5.45 Installments: (11 x £5.45) Total: £65.40 APR: 35.3%

rschmitty 13y ago
You get that in the US too, however I wouldn't call it a loan because if you sign for a 1 year term and then cancel or switch providers after a month you get your money back It's more like a SaaS offering you a discount for paying yearly

alkonaut 13y ago

No, the cost of the phone is just spread out over 12 or 24 months. It's like saying a new car has the cost of a small down payment, it's completely absurd. A contract phone is just a regular purchase with a payment plan over 24 months AND hopefully a rebate compared to buying the phone cash, since you are bound to the specific company for a period of time. As an example, an iPhone might cost $1 when you sign a $50/mo contract for 24 months. If that contract would be $25 if I keeps my old phone, then the cost of the iPhone is 24 x $25. The bottom line is: the total cost should be easy to calculate, specified on monthly bills (how much is phone payments vs. call costs), and obfuscating the phone payments by masking it as e.g more expensive pre-paid minutes must be outlawed as it makes it impossible to compare the contract to the equivalent contract without the phone.