Cellular carriers claim that their contracts offset heavy subsidies on handsets. They claim they'd love to sell phones contract-free at retail--you're just not interested. But there's a problem with this story: these "full price" handsets are grossly overpriced, suggesting that they want consumers in the contract rat trap after all. As hard as it is to prove, discount handsets often reveal the absurdity of list pricing. For example, Motorola's Renew, free with a 2-year agreement, is listed as $160 full-price at T-Mobile. Amazon has it for $70 unlocked, however, and Manufacturer Motorola charges just $50.
On the claimed prices of cellphones
Leave a comment
More items
Greenpeace ads featuring aged politicians in 2020 apologizing for climate change
Darren sez, "Greenpeace is running a clever ad campaign in the Copenhagen airport in preparation for the Copenhagen climate negotiations that start on Dec. 7. They're a series of ads featuring Photoshopped images of sad-looking world leaders, apologizing for not addressing climate change when they ... More.
On the claimed prices of cellphones
Cellular carriers claim that their contracts offset heavy subsidies on handsets. They claim they'd love to sell phones contract-free at retail--you're just not interested. But there's a problem with this story: these "full price" handsets are grossly overpriced, suggesting that they want consumers i... More.
FDA approves implantable total ankle replacement
Medgadget reports that the FDA approved Small Bone Innovations' implantable ankle. This implantable total ankle replacement system is intended for use in patients where there is severe arthritis or other deformities that hinder the range of motion of the joint. Small Bone Innovations claims that... More.
Surprised Kitten: The Boing Boing True Hollywood Story
Surprised Kitten, which was the subject of much squealing in a Boing Boing post, can haz a backstory. Aude Baron, the French journalist who previously wrote about YouTube star Tsimfuckus (the child who has Progeria and loves gangsta rap) contacted the mother of the teen who captured the kitteh th... More.
UFOs meet American bureaucracy
Next year, residents of Denver will get to vote on whether or not the city should set up a seven-member commission for the study of UFOs and extraterrestrial sightings. UFO advocate Jeff Peckman collected 10,000 signatures in order to get his proposed commission on the ballot. If approved, the commi... More.
RSS Feed
Why, oh why do you have to buy your handset from the damn service provider?
I keep hearing about how the advent of the iPhone is loosening the stranglehold that mobile operators have over the US market; don't Motorola or any of the others have branded stores where you can buy a phone over the counter?
Even Nokia's a global giant except for the US where they opened the NY Flagship store only a couple of years back.
This is the equivalent of buying your cars from Exxon-Mobil or Chevron or whatever.
Here, in India, Apple tried the same stunt of launching the iPhone 3G using the 2 biggest operators- Airtel and Vodafone, and it was a total flop, priced at Rs. 30k ($650), while neither network supports 3G!
A few people have gotten jailbroken iPhones from the grey market at half of the above price, but by and large we've been using Nokias for years that have far better features and don't lock you into anything.
Can't you just get a handset anywhere and then get a contract with any provider? This has become pretty common over in the Netherlands. Some resellers would subsidize the cost of the contract with the fee they get from the provider. Usually the fee goes towards getting you a handset, but if you already own one, why not get a cheap (sometimes VERY cheap) contract?
It's become so common that the providers have started to offer this themselves. It's called sim-only. Does something similar exist in the USA?
"Can't you just get a handset anywhere and then get a contract with any provider?"
This gets to the nub of the problem. From T-Mobile, a full price droid is $560. But from Motorola, a full-price droid is also $560. Now, in a few months. the full-price T-Mobile droid will still be up there, but the Moto one will be drop to $400 or whatever.
It's true that you mostly have to know what you want and go trawling amazon for it or the manufacturers' sites, if you want an unlocked phone. But it also seems possible that the carriers not only inflate their own prices for no-contract handsets, but also get the manufacturers to follow suit while the phones are hot.
I've bought my last four that I use on T-Mobile, sans contract. Mobilebee used to have pretty good deals on unlocked handsets, but I don't know where to get handsets these days. My current handset is first-generation iPhone bought off Craigslist.
Congress has been making some noise about going after providers for this kind of behavior, but so far the only senator putting any serious weight behind it is Amy Klobuchar.
In the USA, of the major carriers (Verizon, ATT, Sprint, T-Mobile), only ATT and T-Mobile have GSM (sim) phones. And they do the "free" handset with a contract thing. Even then, T-Mobile uses an odd frequency for their 3G, so only EDGE works if you switch between them (well, and voice). There really is no awareness that things could be different among the public.
Allegedly, Verizon will be going to the next gen of GSM, so things might loosen up.
@remmelt: You certainly can get a handset from a third party(subject to the usual GSM/CDMA and frequency issues); but there often isn't much point.
Virtually all contracts include a phone subsidy(and are priced so that they make that subsidy back, and more, over the contract term). You don't get a cheaper contract if you turn the subsidy down.
Here in Canada, there is only one GSM provider, Rogers, and they make full use of their monopoly to gouge the customer. Here, subsidized phones carry a 3 year contract, and the subsidy is only around $100 off. If you decline the contract and bring your own phone, they screw you other ways instead. Without a contract, basic features such as caller ID, voicemail, call forwarding, call waiting, etc etc, all cost $7 each. The cheapest plan without a contract is $25 plus the "network fee", making it close to $40 with no features whatsoever.. If you want basic features like voicemail and callid and 200 text messages, your bill goes up to more than $60/mo for the most basic plan possible, 200 daytime minutes, no nights and weekends, no in-network calling discounts, etc. If you drink the koolaid and sell your soul for 3 years, the basic plan gives you all those basic features we got for free in the 1980's, and it only costs you $25/mo. Too bad we don't have any other choice, it's a monopoly. If you don't like it, don't use a cell phone.
And the phones you get... are crippled. Both locked and frequently, functionality is removed.
Even at the same price, it would be a worse deal.
How is this surprising? Just on the phone BOM itself (forget the GSM/UMTS licencing or the OS, or the cost of building the network in the first place).
ODM: $50
OEM: $65 (30% profit)
Distributor: $98 (50% profit)
Operator: $150 (50% profit)
"..(subject to bizarre GSM/CDMA and frequency issues).."
Fixed that for ya :)
Wow cell phone companies lying through their teeth...what a surprise..
Too bad the US government is completely useless in taking care of the citizens of the US, otherwise they may do something about this..
Yeah...there's a Spanish company called Geek's Phone who's selling a completely unlocked Android phone, with root access, right now, for 285€ (about $300). I was kinda surprised not to see it here or on Gadget, in fact.
This is a bad example. T-Mobile owned stores sell the Moto Renew for $59.99. If you can buy it from Moto direct for $50, i think $10 isn't a huge deal. That $160 price is what Amazon is charging, not T-Mobile.
It is beside the point, but the Renew (MotoW233) is a horrible - truly heinously bad phone, but lets use it as the example.
That same phone from Amazon on a Pre-Pay is $7.99 (as of today 27NOV09) - there is no difference between this, the $50 version or the $160 version (I know this for a face since I used a regular T-Mo sim in the "prepay" version I bought 2 months ago for $29 (and returned) You can buy the pre-pay, insert your contract sim and it just works with T-Mo (AT&T actually has different towers for its Go-Phone customers)
There is absolutely no logic to phone pricing and its relation to your monthly contract price - no matter what you do, you will be screwed.
The only phone around here is a PAYG 7-11 model (sim-based, rogers network but gimped, actually ztar -- an Indian company that runs the 'throwaway cellphone' business in Canada) but if I actually used it, a well-constructed monthly plan from anyone would be cheaper.
We got the phone on a promotion -- buy $100 of network time (20¢/min flat) get the phone free. I'm absolutely certain that the only reason this business exists is to fend off monopoly claims against Rogers.
Sadly, this is possibly the best deal available to Canadians.
Isn't it odd how people socialise what's best handled by capitalism and capitalise what's best handled by socialism? (Hint, in order: cell phones, health care)
I have a Renew that I bought in June. I walked into the store, said, "I want a phone that cost under $100... without a contract." The salesperson disgustedly pointed me to the back and ignored me. In the back I looked over the phones and eventually picked the Renew because it could accept a micro SD and let me play MP3s (I really wanted that for the ringtones, not for playing actual music). It was listed at $60. I went up to the cashier, who took out one of the prepaid phones, rung it up as a prepaid, then opened it up and put my SIM card in. My actual cost? $30. And unlike the anonymous commenter above, I've been pretty happy with my little green phone.
I dream of a provider offering a reduced fee plan when I use my own equipment.
I'd much rather buy a high priced device up front ($400 for a blackberry, iphone, droid, etc) and then pay a more sane rate of service, rather than the hole kit and kaboodle costing thousands of dollars.
I guess that's my cake and eating it too, though, with a tall glass of milk to boot.
This seems incorrect. If you read the details about Amazon's "instant discount," you see that you are required to use the carrier for a minimum of 181 consecutive says, or else Amazon will charge you $250.
There is a (bit, anyway) of light at the end of the tunnel for folks in the US. T-Mobile's new "Even More Plus" plan (I swear, I'm not making that name up) does not include a handset subsidy, has no contract, and is cheaper than a regular plan. The "Even More" plan, is the same thing, but with a handset subsidy and a contract, for more money per month. If you buy your handsets elsewhere, EM+ isn't a bad way to go.
@ boxlightbox. That's what T-Mobile is doing now. They have two types of plans. Even More costs more but you get subsidized handsets. Their Even More Plus plans are less expensive but you pay full price for the phone or use your own phone.
Unlocked? I don't see anything on the Moto/Amazon product pages for this phone to indicate that it's unlocked for use on any carrier's GSM network. Both products specifically say it's a T-Mobile phone, which means, unless the page states otherwise, that it's still SIM-locked.
Fortunately T-Mobile has a very liberal unlock policy, if your account is in good standing for 90 days, you just call & ask for an unlock code so you can travel to a foreign country and stil use your phone. They usually respond within a couple business days with instructions, and an unlock code follows shortly thereafter.
I work for a cell company and I'm sure that it is fairly the same amongst providers but we do pay a very large amount for handsets. For Example, the Blackberry Curve which full price may be over $500 dollars full retail for you but is usually offered with a contract between free after rebates and $50 dollars, costs us over $300. We take a $300 dollar hit on the phone.
Yes, the price of the phone is subsidized to some extent, expecting to make the money back over the contract price. Now, with our specific company . . .
If you bring in a phone that works on our system that you procured through your own legitimate methods. We will hook it up free of charge AND it will NOT put any kind of contract on your account at all. You will be charged for access through the rest of the monthly billing cycle, but won't be locked into anything (unless you already have a contract and just got this phone off Ebay cause you dropped yours in the toilet or threw it at your boyfriend).
I'm not very familiar with all the policies and workings of other companies, but I'm familiar enough with ours to say that the only examples of "screwing" that I can think of is Verizon restricting the bluetooth capabilities of their phones and the entire concept of locking a GSM phone is ludicrous to me. Albeit, some rules and regulations are very very confusing without being inside enough to see the big picture and the reasonings.