Six Colors
Six Colors

by Jason Snell & Dan Moren

This Week's Sponsor

Unite 5 - Turn Web Apps into Supercharged macOS apps

The beginning of the end for smartphone subsidies?

AT&T Wireless chief Ralph de la Vega, talking to Re/code, says smartphone subsidies are an endangered species:

“I think it is one of those options that is going to go away slowly,” AT&T CEO of mobile and business solutions Ralph de la Vega told Re/code on Tuesday. The shift will happen, de la Vega said, “not because we insist on it but because customers will choose it less often.”

Can’t happen soon enough, in my opinion. Yes, most people don’t want to pay $600-$700 for a brand new smartphone when they could be paying $200-$300–remember the original iPhone?–but the true costs have always been hidden. Your subsidy is built into your phone plan, but even after you’ve finished the usual two-year contract, at which point your phone should be paid off, your bill doesn’t go down. Madness.

T-Mobile’s already made this shift, factoring an installment cost of the phone into its plan price. When you pay off the phone, your plan gets cheaper. So if you decide to stick with your current phone for a while, you save money. Likewise, if you bring your own phone, you don’t pay the higher rate. If you want to switch to another provider, just pay off the cost of the phone, and you’re free to go–no pesky contracts mucking things up.

I’ve been eyeing the T-Mobile plans for some time, though the major stumbling block for me is the network’s coverage. I also bought an iPhone 6 last fall, so I’m locked in for another year and change at this point. But next time my contract’s up, you better believe I’m going to be doing some comparison shopping. Hey, maybe Apple will even decide to dip its toes into the MVNO market by then.

—Linked by Dan Moren

Search Six Colors