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I'm not sure why everyone seems to think carrier subsidies are a con. Amazon isn't getting that $1000+, they get whatever the non-contract price is of the phone

by IBM 12y ago

I'm not sure why everyone seems to think carrier subsidies are a con. Amazon isn't getting that $1000+, they get whatever the non-contract price is of the phone. Carriers subsidize some of that cost in-exchange for some guaranteed cash flow for 2 years.

eropple 12y ago
The full freight of the phone, plus the cost of off-contract service with somebody like Straight Talk ($50/month for unlimited everything for me, they throttle me to 128Kbps after 5GB of data), is much, much cheaper than the initial buy-in plus the delta of the monthly carrier bill. The situations where carrier lock-in makes sense are few and far between (generally around large family plans), and outside of those situations you're paying hundreds of dollars extra over the life of the phone and the contract.
- IBM 12y ago
  I've tried MVNOs in the past and they were always a sub-par experience. I've found it's "you get what you pay for" compared to Verizon.
- drawkbox 12y ago
  Pretty soon with all this throttling, people aren't going to be able to have meetings, do large code pushes, video chats etc at the end of the month when everyone's rigged data plans dry up. The last few days of the month for me online is always spotty, slow, and pretty much unusable. We are being held hostage by our telecoms, slowing business to a crawl because they want you to upgrade. I have upgraded to my broadband highest tier and still get throttled, the extra speeds cause faster depletion of that bandwidth limit on purpose. Speed and limits both need to increase.
lukeschlather 12y ago
The con is that you're forced to pay the replacement cost for your phone in instalments every 2 years whether you get a new phone or not.
nkurz 12y ago
I'm not sure why everyone seems to think carrier subsidies are a con. I don't think it's a con, and I understand why the carriers price the phones this way: it works! But I'm baffled why consumers and reporters seem comfortable comparing the 'with contract' prices of phones as if the upfront difference between 99 cents, $99, $199, and $299 is the best way to decide with which company to sign a $2000 two-year contract. Amazon isn't getting that $1000+, they get whatever the non-contract price is of the phone. Carriers subsidize some of that cost in-exchange for some guaranteed cash flow for 2 years. Yes, Amazon collects whatever amount they convince the customer to pay for the phone, plus a much larger 'kickback' from the carrier in return for getting them to sign a two-year contract. My expectation was that an article in a financially oriented magazine about the losses Amazon was experiencing might make some mention of the several hundred dollars[1] Amazon collects from the carrier rather than concentrating only on the '99 cent' sticker price. I had a confused conversation last week with someone who expressed delight that her new iPhone 6 cost about the same as my "no contract" Moto G. She was surprised to learn that if she broke or lost her phone it would cost more than the "discount" price to replace. And she's a very savvy consumer, has a science PhD, and her husband works for Apple! She probably would have 'bought' the same phone in either case, but if the details of the arrangement weren't clear to her, I doubt that most consumers have a very good understanding of how phone pricing works. My lament was that after reading this Fortune article neither she nor anyone else would have an improved understanding. [1] What is the actual amount that Amazon collects from the carrier?

by IBM 12y ago

eropple 12y ago

The full freight of the phone, plus the cost of off-contract service with somebody like Straight Talk ($50/month for unlimited everything for me, they throttle me to 128Kbps after 5GB of data), is much, much cheaper than the initial buy-in plus the delta of the monthly carrier bill. The situations where carrier lock-in makes sense are few and far between (generally around large family plans), and outside of those situations you're paying hundreds of dollars extra over the life of the phone and the contract.

IBM 12y ago
I've tried MVNOs in the past and they were always a sub-par experience. I've found it's "you get what you pay for" compared to Verizon.
drawkbox 12y ago
Pretty soon with all this throttling, people aren't going to be able to have meetings, do large code pushes, video chats etc at the end of the month when everyone's rigged data plans dry up. The last few days of the month for me online is always spotty, slow, and pretty much unusable. We are being held hostage by our telecoms, slowing business to a crawl because they want you to upgrade. I have upgraded to my broadband highest tier and still get throttled, the extra speeds cause faster depletion of that bandwidth limit on purpose. Speed and limits both need to increase.

lukeschlather 12y ago

The con is that you're forced to pay the replacement cost for your phone in instalments every 2 years whether you get a new phone or not.

nkurz 12y ago

I'm not sure why everyone seems to think carrier subsidies are a con. I don't think it's a con, and I understand why the carriers price the phones this way: it works! But I'm baffled why consumers and reporters seem comfortable comparing the 'with contract' prices of phones as if the upfront difference between 99 cents, $99, $199, and $299 is the best way to decide with which company to sign a $2000 two-year contract. Amazon isn't getting that $1000+, they get whatever the non-contract price is of the phone. Carriers subsidize some of that cost in-exchange for some guaranteed cash flow for 2 years. Yes, Amazon collects whatever amount they convince the customer to pay for the phone, plus a much larger 'kickback' from the carrier in return for getting them to sign a two-year contract. My expectation was that an article in a financially oriented magazine about the losses Amazon was experiencing might make some mention of the several hundred dollars[1] Amazon collects from the carrier rather than concentrating only on the '99 cent' sticker price. I had a confused conversation last week with someone who expressed delight that her new iPhone 6 cost about the same as my "no contract" Moto G. She was surprised to learn that if she broke or lost her phone it would cost more than the "discount" price to replace. And she's a very savvy consumer, has a science PhD, and her husband works for Apple! She probably would have 'bought' the same phone in either case, but if the details of the arrangement weren't clear to her, I doubt that most consumers have a very good understanding of how phone pricing works. My lament was that after reading this Fortune article neither she nor anyone else would have an improved understanding. [1] What is the actual amount that Amazon collects from the carrier?