13 ms·

> it makes a lot of sense to move from subscriptions to short-time payments It makes sense for the consumer, but I don't think that's in the financial interest

> it makes a lot of sense to move from subscriptions to short-time payments It makes sense for the consumer, but I don't think that's in the financial interest of the companies who have worked hard to make long-term service agreements for you phone something that is colloquially accepted in North America. I'm with you, I'd like to see the market change. Just.. don't hold your breath. I understnad Pay-As-You-Go is much bigger in the UK, I wonder if that's because the companies there never tried to push long-term agreements of if they've actually found PAYG more profitable.

mikeash 12y ago
T-Mobile has moved off long-term contracts almost entirely. AT&T is pushing their Next program hard, which decouples phone buying from the subscription (I believe you have to pay off the phone if you cancel, but the payments are separate and you don't lose out on a subsidy). Things seem to be moving pretty fast in that direction, and I'm hopeful.
- jschwartzi 12y ago
  T-Mobile does something basically equivalent, where they give you a line item on your bill for the device payment plus a line item for your subscription. If this kind of card gets common I may have to buy one if I do any serious business travel again. It would be nice to never have to roam again, and instead simply make arrangements with a local carrier myself via the card.
  - pktgen 12y ago
    This is kind of unclear, but are you saying T-Mobile's model is equivalent to the traditional carrier subsidy model? It really isn't, precisely because of the separation you mention - you can choose not to buy a new phone and you won't pay for it every month. With the traditional subsidy model, since the subsidy is included in the base price, you're paying for the subsidy whether or not you're using it.
soylentcola 12y ago
I think the real issue is that US customers (at least) have been conditioned to think of a smart phone as something that costs between $0 and $300 due to the common use of contracts and subsidies. Even if a carrier offers a non-contract plan, they are often not that much better as far as price (with some exceptions like TMobile and some MVNOs), so they balk at paying $650-850 for a handset. That was one of the things I liked most about the Nexus 5 when it came out. Even unlocked you were getting a current gen phone, unlocked, worked with three major carriers and many MVNOs, and only cost $350. At that point, it's not as tough to make the jump and ditch the contract. Without the contract, you can just leave if a competitor offers a better deal or if your carrier screws you over. Even with this new SIM, I imagine you're still either gonna pay full price or you're gonna get it subsidized with a contract and then have the option of flipping over to some secondary plan when needed. Might be good for smaller carriers with good rates but less coverage. Phone works great at home but drops off when you go to another town? Just flip to a prepaid SIM from a cheap prepaid carrier with service in the area.
- Igglyboo 12y ago
  Yep, no one is going to want to pay $600+ for a phone(in the US). TBH, over $200 for a phone on contract is really high as well.
  - rconti 12y ago
    shrug Just paid $750 for an iPhone 6, unlocked. The alternative was renting it from my carrier for a similar amount, divided into 24 months, and being handcuffed to them for unlocks and the like. By using BYOD pricing on my ATT plan, I pay less every month than I would on a subsidy. Yeah, I'm not everyone, but arguing that "most people" won't do what I did is kind of missing the point-- they already DO pay that much, just not all at once. It's kind of crazier when you realize what people are paying without knowing it. The subsidies are going away -- ATT and Verizon in the US are forcing people into their monthly payment plans -- which is kind of nice, because people actually see what they're paying instead of just seeing it "bundled".
    - 12y ago
justincormack 12y ago
PAYG and contract both exist in the uk. Initially you had to be able to get credit to get a contract, so eg kids got PAYG. The carriers preferred contracts as it was guaranteed income. Its a bit more flexible now, people choose what they want.
spiralpolitik 12y ago
Originally in the UK market contracts were the norm. Then Pay-As-You-Go opened the cellphone market up to teenagers, people on a limited budget, and people who used cellphones infrequently. That combined with the release of the Nokia 5150 and Nokia 3310 phones drove the market away from contracts. Plus in the UK the regulator is much more active in promoting competition (VNOs, Number Portability, tariff changes are all things the regulator has done to promote competition). In the US the regulator couldn't care less.
- lanaius 12y ago
  The first successful MVNO in the US came only 3 years after the first successful MVNO in the UK and mobile number portability was put into law in 2003 for both the US and the UK. The additional benefit is that because mobile numbers and wired numbers share the same area code base in the US, US number portability is basically universal. I don't see the basis based upon your listed criteria for saying that the FCC cares any less or that Ofcom cares any more about promoting competition.
  - Ntrails 12y ago
    Slightly unrelated but I find the idea of a mobile phone sharing an area code with landlines utterly bewildering. A phone, that by definition has no fixed abode, is now tied to a location and subject to long distance charges based on that location (As it was explained to me in Canada at least).
    - lanaius 12y ago
      In a time when mobile phones were scarce, putting them on a local area code ensures that a large portion of their usage (calling to and from landlines within a geographic space that actually IS limited) doesn't require additional long distance charges for everyone. These days it may seem like a quirk, but really what 20-year-old technology decision doesn't?

mikeash 12y ago

T-Mobile has moved off long-term contracts almost entirely. AT&T is pushing their Next program hard, which decouples phone buying from the subscription (I believe you have to pay off the phone if you cancel, but the payments are separate and you don't lose out on a subsidy). Things seem to be moving pretty fast in that direction, and I'm hopeful.

jschwartzi 12y ago
T-Mobile does something basically equivalent, where they give you a line item on your bill for the device payment plus a line item for your subscription. If this kind of card gets common I may have to buy one if I do any serious business travel again. It would be nice to never have to roam again, and instead simply make arrangements with a local carrier myself via the card.
- pktgen 12y ago
  This is kind of unclear, but are you saying T-Mobile's model is equivalent to the traditional carrier subsidy model? It really isn't, precisely because of the separation you mention - you can choose not to buy a new phone and you won't pay for it every month. With the traditional subsidy model, since the subsidy is included in the base price, you're paying for the subsidy whether or not you're using it.

soylentcola 12y ago

I think the real issue is that US customers (at least) have been conditioned to think of a smart phone as something that costs between $0 and $300 due to the common use of contracts and subsidies. Even if a carrier offers a non-contract plan, they are often not that much better as far as price (with some exceptions like TMobile and some MVNOs), so they balk at paying $650-850 for a handset. That was one of the things I liked most about the Nexus 5 when it came out. Even unlocked you were getting a current gen phone, unlocked, worked with three major carriers and many MVNOs, and only cost $350. At that point, it's not as tough to make the jump and ditch the contract. Without the contract, you can just leave if a competitor offers a better deal or if your carrier screws you over. Even with this new SIM, I imagine you're still either gonna pay full price or you're gonna get it subsidized with a contract and then have the option of flipping over to some secondary plan when needed. Might be good for smaller carriers with good rates but less coverage. Phone works great at home but drops off when you go to another town? Just flip to a prepaid SIM from a cheap prepaid carrier with service in the area.

Igglyboo 12y ago
Yep, no one is going to want to pay $600+ for a phone(in the US). TBH, over $200 for a phone on contract is really high as well.
- rconti 12y ago
  shrug Just paid $750 for an iPhone 6, unlocked. The alternative was renting it from my carrier for a similar amount, divided into 24 months, and being handcuffed to them for unlocks and the like. By using BYOD pricing on my ATT plan, I pay less every month than I would on a subsidy. Yeah, I'm not everyone, but arguing that "most people" won't do what I did is kind of missing the point-- they already DO pay that much, just not all at once. It's kind of crazier when you realize what people are paying without knowing it. The subsidies are going away -- ATT and Verizon in the US are forcing people into their monthly payment plans -- which is kind of nice, because people actually see what they're paying instead of just seeing it "bundled".
  - 12y ago

justincormack 12y ago

PAYG and contract both exist in the uk. Initially you had to be able to get credit to get a contract, so eg kids got PAYG. The carriers preferred contracts as it was guaranteed income. Its a bit more flexible now, people choose what they want.

spiralpolitik 12y ago

Originally in the UK market contracts were the norm. Then Pay-As-You-Go opened the cellphone market up to teenagers, people on a limited budget, and people who used cellphones infrequently. That combined with the release of the Nokia 5150 and Nokia 3310 phones drove the market away from contracts. Plus in the UK the regulator is much more active in promoting competition (VNOs, Number Portability, tariff changes are all things the regulator has done to promote competition). In the US the regulator couldn't care less.

lanaius 12y ago
The first successful MVNO in the US came only 3 years after the first successful MVNO in the UK and mobile number portability was put into law in 2003 for both the US and the UK. The additional benefit is that because mobile numbers and wired numbers share the same area code base in the US, US number portability is basically universal. I don't see the basis based upon your listed criteria for saying that the FCC cares any less or that Ofcom cares any more about promoting competition.
- Ntrails 12y ago
  Slightly unrelated but I find the idea of a mobile phone sharing an area code with landlines utterly bewildering. A phone, that by definition has no fixed abode, is now tied to a location and subject to long distance charges based on that location (As it was explained to me in Canada at least).
  - lanaius 12y ago
    In a time when mobile phones were scarce, putting them on a local area code ensures that a large portion of their usage (calling to and from landlines within a geographic space that actually IS limited) doesn't require additional long distance charges for everyone. These days it may seem like a quirk, but really what 20-year-old technology decision doesn't?