Probably the most interesting thing from Apple today, in my opinion. The ability to buy short term plans from different providers effortlessly can turn my tablet into a much more versatile device, and increase competition and reduce long-term carrier lock-in.
It's pretty sweet and if it can set a standard for phones then we'll see carriers become true utilities between which customers can switch easily if they get poor service. In short, pretty awesome.
Today's carrier system kind of feels like this dinosaur, like a landline... archaic and unnecessary. With so many people travelling, changing places, changing technology etc, it makes a lot of sense to move from subscriptions to short-time payments, and eventually, pay-per second of use on the fly, directly, without an account or monthly statement, with a push payment instead of a pull payment. (digital currencies being a key element here). Anyway, getting a bit too off-topic here, but cool first move by Apple for sure!
There's nothing new about "soft" SIM cards. The problem has been that carriers like them locked to their own services. (This is true in Europe and I assume in the US also...)
> 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.
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.
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".
You have to realize that it really wasn't until recently that you could do BYOD on the networks. They wouldn't give you a discount at all for owning the device outright, even at the end of the 2 year contract. There was no benefit to having paid $750 for a phone, except if you really really wanted that particular phone. The best math then was to upgrade to a new phone as soon as your contract ended. Otherwise, you were paying the built-in $10/mo or whatever for old tech. Far better to shell out $0-$200 for a new phone on contract and lock-in for another 2 years.
even when i was on the old unlimited-only-in-name from att which was the same price with a subsided device or not, having my own device still allowed me to:
- avoid crazy fees out of nowhere for canceling (wife had one refurbished $99 note ii. when canceling had to pay almost $200 on top of the values in the contract)
- be able to use own device overseas.
- not have sleazy device protection insurance BS added every month and you having to call in to cancel
One thing I learned is that there are things in life you shouldn't be cheap about, and one of them is most definitely a smartphone. You're buying a device you'll be using every day, likely pulling it up for few seconds every little while. You definitely don't want to have a smartphone that looks like crap, hangs up all the time and in the end won't let you do half of the things it was supposed to do. This would be introducing an incredibly big source of frustrations into your daily routine. I wouldn't be surprised if additional psychiatrist bill would be bigger than money saved on the phone.
I was stuck for three years with a crapphone (LG P150) that was too weak to lift its own operating system (Android). After those three years of torture (and using it only for calls and text messages, as turning on Internet would max out the processing power and memory and would require taking out the battery) I can say such phones should not be allowed on the market. Especially not pushed by telecoms on contracts. It's especially sad to look at people who get burned by this when buying their first smartphones. It's basically a story of shattered dreams. It's just evil.
So folks, either buy a dumbphone (if all you need is text and calls), or shell out for some decent tech. Buy that Nexus or S4. It's worth the money.
My SO switched to the same thing about 4 or 5 months ago. She was paying $40/mo with AT&T and had a crappy alcatel lucent phone. She has absolutely loved the Moto G. It is very, very similar to the Galaxy Nexus with a few updates. Definitely a good deal!
I completely agree with you. My point is that, in 2014, $750 is way more than twice as much as it costs to get a phone that exhibits exactly zero of the problems you describe. In fact, that has been true since at least 2012, when I bought the Nexus 4 that I'm still using.
So I agree, shell out for some decent tech, it's totally worth the money, but be excited that it only costs a couple hundred bucks to do so!
I agree. I'm used to european prices and also haven't consider that Nexus phones are actually quite cheap. I bought my current phone (S4) over a year ago for around $650.
I'm going to stick to buying high-end phones now and yes, I'm excited to learn it's not as expensive as I thought anymore :).
This reminds me of a comment from cockeyed.com's article about the price of an XBox One from the rent-to-own shop Aaron's [1]. The concept is the same, large payment up front is much cheaper than renting, if you can do it.
> $2,082 for a game console? Have you lost your mind?
> This is a ridiculous retail proposition. What fool would sign up for this?
> Not me, but I couldn't help noticing that Aaron's Xbox price ($79/month for 24 months) is the exact price and duration of my AT&T wireless contract which I signed to take delivery of my fancy new Galaxy Note smartphone.
I was quite surprised at how many people were surprised I bought my N5 outright last year, but I now pay nearly a third for a SIM only plan than others are paying for their smartphone plans.
Have converted a few people to that mindset - but (let's ignore the point about if you don't have much cash, locking yourself into a long term phone contract isn't smart, people will do it anyway), it is easier for people who live month to month to have it bundled like that, it's a bit like buying a sofa from DFS on credit...
Help me understand the math. With contract I pay $200. Without I pay $750. Difference = $550. Divided by 24 months = $23. Do I pay more than that to ATT each month? Assumption is that I get a new phone every 2 yrs which I have been for the past many cycles.
With a prepaid provider, I pay $50/month for unlimited internet, calling, and texting. There are no extra taxes or "recovery charges".
$750 + ($50 * 24) = $1950
Last I checked, AT&T was about $100/month. It also charges a $36 "upgrade fee".
$36 + $200 + ($100 * 24) = $2636
That also assumes you upgrade immediately after paying your 24th month of service. Otherwise, tack on $50 overpayment for every month you wait to upgrade.
May be I am missing something (I am not in the US). But, do you have to pay rent for the device if you go for the subsidised option? If so, then its not a subsidy. If it is a subsidy, then you are clearly gaining the subsidised amount. The only thing that you are losing is the ability to switch carriers for the contract period. Also, are you not allowed to choose a plan of your choice if you go for a subsidised phone?
The "subsidies" are not truly subsidies, they are built into the contract prices. At least in the EU every operator offers SIM-only contracts (though they may or may not advertise them), because not doing so would be a clear and blatant violation of EU anti-tying regulations, and they are always cheaper.
To the extent you are getting a real subsidy, it will be if the carrier decides to forgo margins on the device.
This isn't always true, though it's typically only not true when operators are throwing ridiculous offers at people who are trying to leave them. Similarly, I got phone a few years back at a ridiculous student-only deal. Both cases ended up with me paying about £200 more over the whole contract than I would've with SIM-only contracts, and both got me phones that retail for more than double that.
For any bundle they are offering they should have a non-zero cost in acquiring the phone, in which case they'd have a very hard time to justify not letting you sign up to an unbundled agreement where at the very least the cost of the phone is removed. They'd almost certainly be breaking the law if they do (of course that doesn't necessary mean they aren't doing it though)
Same here. I'm on AT&T, but bought an unlocked Verizon iPhone 6. I may not end up switching carriers in the next two years, but it's nice to have the extra flexibility for the same price I'd end up paying if I went with subsidized or Next plans.
Yeah, they sell off-contract Verizon phones at the fruit store. They're unlocked GSM global phones, pretty sweet. I got one because they were all my store had and immediately popped in my T-Mo SIM.
I paid ~$350 for a used S4 that I got activated on PagePlus. Why would I pay $80 a month to a big named carrier who keeps charging me rent on the phone after its paid off? (My plan is $39 for unlimited voice/text+1GB data, I used to do 500mb+1.2k min+3k texts for $29/mo).
Page Plus is truly amazing, especially now that they support 4G (but 3.5 Mbps throttle) as of a couple weeks ago. I just set someone up with a gently used S3 for ~$140, which if you compare specs to the S4, isn't much of a step down.
The carriers should be required to tell the customer the total price, including the contract. Perhaps then the consumers would know what they are signing up to. And the contract length should be limited, given how volatile and fast moving the market is.
Verizon told me the full price of my 6 and how that was broken down based on two different plans I could choose.
In the end since I had completed and past the end of my contract on the 4s the 6 was free. Pay 200 to get it and get 200 back for returning the 4s.
There are some good deals out there but most people don't look for them or worse ignore them. There are people won't do the 4s or such trade in because "its a hassle". Yeah, they mail you mailer and you send it back in postage paid. Oh, fill out a form on the site to start the process.
There are people who don't care what the true price is just as there are people who don't want to know; they aren't the same people
Actually, you aren't aware of the full price of your contract either. The second you get the opportunity to upgrade you should take it and seek to maximize the value of the discount you get.
Phone upgrades are like a call option you get every two years but since you had a 4S you let some time slide in between excercing. If you didn't like the 5s the better move would have been to upgrade anyway and immediately sell the phone, possibly saving the money to buy one later or spend it on something else.
The longer you wait to upgrade, once you have the ability, the less your upgrade is worth to you as the carrier has already made the discount back (and then some) through your payments.
The optimal strategy is to hit it as soon as you get it.
This is why I don't like this model. I don't need or want to spend money on a new phone every two years, but if I don't exercise the option, I'm leaving money on the table.
I think the optimal strategy is to avoid "buying" the option to begin with, get a cheap unsubsidized plan, get an inexpensive phone, and keep it for three to five years.
The full details of the contract are available right there on the contract. Not sure what more you think it would be reasonable to expect.
The length of the contract is usually limited to two years. Do you think we should have laws forbidding contracts of this duration? Why? Both parties are free to reject contracts they think are too long (or too short).
With the Nexus phones (previous versions at least) you could get them at a reasonable price direct from Google. Most of my friends bought direct from Google. I understand Apple let's you buy a phone direct as well, though they're prices aren't/weren't as reasonable.
Hopefully this helps to set the precedent that you can have your cake and eat it too (Have a reasonable phone at a reasonable price).
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.
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.
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).
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?
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.
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.
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.
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.
I'm actually with the subscription model, it gives you peace of mind. The thing is it's done bad in the US.
Here in Israel there was a big carrier "revolution" and now you can get a subscription for about $25 a month that gives you 6gb of surfing (then it slows you down), unlimited calls & text and access to this plan in several countries such as the UK and France, with more coming. For other countries it just costs something like 10 cents a minute for an outgoing call.
This way I only pay a fixed amount of money a month and spare the flux.
I definitely agree with this. It represents an interesting power shift; before the core technology was your SIM, and your phone shifted around your carrier. Apple kind of wants to change this by making it so that the iPhone is at the center, with the carrier being subservient to the consumers' whims. I would think this is a step too far for most carriers, but then again, Apple got carriers to agree to it...
In a truly competitive system there would be no need to ever conciously think about the carrier you were using. Your data would just be routed securely using the best means available and people would compete to be the best connection. Instead we have an absurd situation where carriers want to prevent customers using their product!
In a truly non-competitive system, we might be more conscious and more connected. Our internet connections might be routed using free high-speed publicly available internet and people would complain. Instead we have an absurd situation where a cartel of so-called "carriers" charge paying customers a toll for using the internet!
The end result of such a system would probably be to charge websites for last mile bandwidth instead of users. In a system with thousands of small ISPs that could actually work well to fund bandwidth expansion. Of course at that point everything would move to P2P and the system would break again.
I used that word because I assumed that someone would complain that my suggestion is insecure. Of course the internet is entirely built around sending data publically across networks that you cannot trust. If you are building a new system to route data intelligently from the first hop it would make sense to include an encryption standard to make it less bad than the status quo. Having different classes of trusted networks just encourages a false sense of safety.
AT&T, unless they've taken it away again yet, offers an iPad plan that's $25 for 1G or 3 months whichever comes first. Which is kind of sort of a short term plan.
It's pretty sweet and if it can set a standard for phones then we'll see carriers become true utilities between which customers can switch easily if they get poor service. In short, pretty awesome.
Today's carrier system kind of feels like this dinosaur, like a landline... archaic and unnecessary. With so many people travelling, changing places, changing technology etc, it makes a lot of sense to move from subscriptions to short-time payments, and eventually, pay-per second of use on the fly, directly, without an account or monthly statement, with a push payment instead of a pull payment. (digital currencies being a key element here). Anyway, getting a bit too off-topic here, but cool first move by Apple for sure!