Not True at All

Well RCR does another one. ‘A for effort’ with the tag line that unsubsidized phones will not be the consumer choice. A peek –

The move also gives consumers an idea of what devices would cost if the carrier did not subsidize the price of the handset, which it then recoups during the term of the contract.

However, consumers have been brought up not expecting to have to pay for their devices, and with the current economic crisis slowly encompassing the country, showcasing higher prices for a phone probably will have little impact on consumers. Numerous analyst reports have shown that consumers typically pay less than $50 for their mobile phones, and in most cases consumers walk out of retail stores with a free handset, while at the same time complaining about the terms of attached contracts.

First let me lead with on the whole the article is balanced. Mr. Meyer give the nuts and bolts of the Verizon buy phone - MTM model. He then leaps to the blinding assumption that folks won’t go for it as they have been turned into mindless drones on cheap prices of subsidized phones. To a point I will buy the argument. But then again –

• First thing to point out is that carriers are not subsidizing the phone. A subsidy means that an actual price reduction is offered the consumer at the expense of someone else. Like crop subsidies on peanuts or sugar. But all the carriers are doing is spreading out the phones costs over a period of payments and in many cases adding the NPV costs plus some to the monthly rate.
• If the carrier is truthful for the actual carrier network sans the subsidization people can see the advantages.
• The market for phones would become more equalized. As it is right now a good chunk of used phones here head overseas. Those phones could be reused here on the same networks they were attached to just months ago. Just on a different account and user. When that happens, that it is easy and common for phones to be, using a used asset the price points of new phones will stall. That will force the mfrs to lower prices and meet new competition from overseas with cheaper and better products.
• Longer life use of a device would actually be good for the environment.

My observation is that this article views a world little different from 4 years ago. I see a world in the not too distant future where price pressures, bad economy, cheap imports and open systems like Android rewrite the landscape. If it happens Mr. Meyers article is but another fluff of bits wasted.

Linky.