AT&T Mobile CEO sees phone subsidies coming to an end

AT&T Mobile CEO sees phone subsidies coming to an end
AT&T Mobile CEO Ralph de la Vega sees consumers ending their long love affair with the subsidized two-year contract. The executive says the gradual disappearance of subsidized phones will take place as more consumers demand to pay for the latest and greatest handsets by making monthly installment payments. De la Vega says consumers will select a two-year subsidized payment option less often, leading the choice to eventually fade away.

AT&T is moving its customers away from subsidies. This week, it stopped offering two-year contracts at third party retailers like Best Buy and the Apple Store. Overall, two-thirds of AT&T's smartphone sales last quarter were done on AT&T Next. This plan allows equipment buyers to pay the full retail price of a new phone using monthly installment charges. For example, the 32GB Samsung Galaxy S6 will cost you $199.99 with a signed two-year pact. Over the 30 month AT&T Next 24 plan, the phone is priced at $0 down and $22.84 a month. The 24 month Next 18 plan requires monthly payments of $28.55. The AT&T Next 12 plan lets you pay $34.25 a month for 20 months.

It was T-Mobile that first started eliminating subsidized phone sales, but it is Sprint that is catering to the spec junkies who have the need to upgrade every year in order to have the latest hardware. By offering its customers a lease contracts, Sprint subscribers get to save a little money over an outright purchase. They also get to use the latest device and have the opportunity to trade in the leased model for the next hot phone. The downside to leasing is the lack of ownership, and the pressure to keep the leased unit looking new.

source: re/code via AppleInsider

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26 Comments

1. QWERTYslider unregistered

Fine. Then drop the monthly prices to $30 for unlimited everything like the Europeans, American wireless providers are greedy c#cksuckers

6. sgodsell

Posts: 7369; Member since: Mar 16, 2013

The other thing that is changing is the price of some really good devices are selling off contract for some exceptional price's. For example the Asus ZenFone 2 that comes 2/4 GB of ram and either 16/64 GB of storage for either $199 or $299. There is many other examples of inexpensive, but really good smart phones like the Moto G, Alcatel idol 3, and many more. I think this is the new trend.

17. michaelny2001

Posts: 328; Member since: Aug 01, 2012

yup! if they drop the carrier subsidy, then the manufacturers will have to drop their crazy 300-400% profit margin. Asus, one plus, even some HTC, Motorola, Nexus, etc all woul dbe cheaper, and then why buy AT&T? Just buy unlocked and check to see the correct LTE bands. If not, Cricket or H2O works. it will be like in europe in less than decade. just watch. 10 years ago we didn't have pre paid everything. I remember i used to pay 40 bucks plus tax for 500 minutes and 250 texts, not it's all unlimited. So we r getting there.

25. coldspring22

Posts: 349; Member since: Feb 28, 2015

No way apple will drop it's 400% markup on iphone. At least not until iphone marketshare drops to 1% woirld wide.

9. Fallen1

Posts: 288; Member since: Nov 14, 2014

Love my country to death but I agree 100%

11. Leo_MC

Posts: 7432; Member since: Dec 02, 2011

Europeans pay as little as 5-10 euro for unlimited voice and text ;).

2. waddup121 unregistered

dawwww!

3. engineer-1701d unregistered

right we have to pay full price for the phone and 90-120 a month for slow lte of 5mb-25mb speed, some one needs to speak up in congress or else we are f ed

4. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

Can be summaries as a bigger pay check for him and the rest of you can go to hell.

5. DirtyDan23

Posts: 280; Member since: Aug 12, 2014

Nifto

7. Cheezwiz

Posts: 500; Member since: Dec 29, 2014

No subsidies, fine. I expect my two lines to be $50 per month (for both) then. This is going to be bulls**t when they eliminate subsidies and still charge $95 per line for 5GB. What a joke.

8. justdrew

Posts: 4; Member since: Jul 10, 2012

they charged it anyway you just didnt know

10. JoeDirt

Posts: 49; Member since: Oct 19, 2013

I don't see what the problem is since it seems like just about everyone wants a phone faster than every 2 years anyways.

12. downbeat4

Posts: 94; Member since: Dec 03, 2010

The plans are lower now on all the carriers when you do this. $15-$25 per line less. They left that part out of the article.

13. AlikMalix unregistered

As long as I get to keep my unlimited data (and according to recent court ruling - unthrottled), I will not switch. I sell my iPhones for more than the subsidized price of a new one every 2 years, get a new model, keep the rest of the cash. (the "S" models for iPhones are always better upgrades than the Body Changing models, anyway)...

14. rwolf1984

Posts: 536; Member since: Jun 06, 2009

Customers are choosing 2 years less because you forced them. AT&T better not go the way of Verizon and make customers with unlimited pay full retail up front for new devices. They will lose customers. Sprint is doing it right. They have loyalty offers for its tenured customers on "legacy" plans. Yes this is leasing and it is not as scary as this article implied. "The pressure to keep the phone looking new"...yes you have to turn the device in, but it doesn't have to look brand-new. There can be some where and tear just no cracked screens, missing buttons, liquid damage...it has to function properly. Just like all the other carriers Sprint offers device protection the majority of customers participate in this program. This way you can get maintenance performed on the device. If you have a catastrophic issue with the device (smashed, lost or stolen, liquid) file a claim and you'll get a new one next business day. There really is "no pressure" from leasing on Sprint. It's a new concept and it appears to be working for them. Essentially we use these things for 2 years or less and pitch or throw them in a drawer anyways...it's like beer you don't own to you rent it...

15. johnbftl

Posts: 283; Member since: Jun 09, 2012

Everyone complains that it is the carriers that are greedy by ending subsidies. American consumers have a sense of entitlement and no sense of business in the wireless industry. Subsidies were fine when the cost of manufacturing was low and retail value of a handset was around $200. Now that phones cost more than that to manufacture and retail for upwards or $1000, it is not practical to subsidize $800. With operating costs, it would take the entire length of the contract to break even. No one takes into account all the money companies invest in overhead. Things like network build out and maintenance, paying employees, paying rent and utilities for a store. It's a business. They still need to make money too. It's not a charity.

20. QWERTYslider unregistered

YOU aren't taking into account that US carriers RAPE us with high monthly fees and data charges !!!!

26. coldspring22

Posts: 349; Member since: Feb 28, 2015

Nobody is forcing you to sign that contract. Freedompop is available if you want ultra low cost/free cell phone plan.

21. plonko

Posts: 10; Member since: Dec 18, 2013

You sir obviously don't understand the difference between retail and wholesale pricing. With AT&T, Verizon, Sprint, and T-Mobile having a combined market cap of ~$425B, I think we're pretty far away from having to worry about them being charities.

16. Micah007

Posts: 266; Member since: Oct 09, 2014

Did people honestly think you could buy a 600 or 700 dollar phone for 199.99 and you would be able to leave without paying the full cost? Smh, subsidized contract or not you eventually would end up paying full retail whether you realize is or not. This option is much better since your no longer being lied to.

19. QWERTYslider unregistered

You realize these D-bags STILL want to charge us the same monthly prices they were previously, but now they want to REMOVE the subsidy, right? Do the math. They want to raised the costs almost $500 over a 24month period. If these D-bags want us to pay for our our devices like the Euros, they need to offer Euro plans that are $30 for EVERYTHING UNLIMITED.

23. Astreo

Posts: 105; Member since: May 05, 2011

They dont charge the same monthly price, the price per line goes down between $15 and $25...you need to go look at a brochure.

18. QWERTYslider unregistered

PS Hey Ralph- Nice mustache, D-bag.

22. corporateJP

Posts: 2458; Member since: Nov 28, 2009

If it wasn't for Aio/Cricket and the fact they let you keep unlimited data on legacy plans, this guy would be on a "Punch in the Yambag" list. Nowhere near as bad as the narcissistic asshats at Verizon, however.

24. Astreo

Posts: 105; Member since: May 05, 2011

I'm glad that the two year contracts are going away. Now with their new rate plans it makes no sense to pay so much upfront when i can just lease a phone and get a new one sooner.

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