Why Subsidized Phones Are a Rip-Off

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shardnet

Member
Mar 31, 2012
45
3
Like I said it's different in the USA. Our plans pretty much make us pay for the full price + extra. All phones have a 1 year warranty. Even then using tmobile insurance it will cost you an extra $120 every two years. They also charge you a fee for delivering a replacement now. I think it's $5 om insurance and 20 dollars without.

Sent from my SGH-T989 using xda premium

Ah so that's different to here. Where the plan's price stays completely the same regardless of you getting the phone (either completely free, or subsidised) or not.
 

Aerocaptain

Senior Member
Sep 23, 2010
168
26
Cleveland
I personally feel the opposite of the OP. How exactly is a subsidized phone a ripoff? The PLAN is going to be the same whether you bring your own phone or get one from the carrier. If you know you aren't going to be sticking around for 2 years then buying your phone outright might be the way to go. Otherwise I'd say save some money.

Very true. In the US, the top 3 carriers (Verizon, At&t, and Sprint) charge the same rates whether you have a subsidized device or not. This effectively takes any advantage to purchasing the device without subsidy out of the equation. The only other option is to set up a device with an inferior carrier that offers mediocre quality with severely regionalized service reception (T-Mobile, Revel, Boost, Clear, and about a hundred more). For the most part, the only reason people go to those carriers is either because the city they live in is covered "enough" with that carrier and they don't leave the city much so why not save a few bucks, or they cannot get credit approval with the big 3. (Anyone using those lower carriers, don't get your panties in a knot! I'm generalizing) Unfortunately, those low end carriers are the only ones that offer better rates for unsubsidized phones. Of course to service detriment.

Carrier prepays are a joke...unless you want a pure talk/text phone.

Calling cards are a pain in the ass. Once again pure talk phone.

If you don't see that its a rip off, then you are as much the problem.

I hate when people snap at other people without supporting their point. Bunch of followers. Stop going with the crowd and educate yourself.

Q: Are Carrier Subsidies a Rip Off?
A: No, you'd be stupid not to take one with the big 3.

Q: What is the Rip Off?
A: The policy among the big 3 to charge more money across the board on monthly plan rates to compensate for the subsidies.

Q: Why is that policy a Rip Off?
A: Because it does not give the freedom to purchase a device outright (without taking subsidies) in order to remain off contract with a reduced monthly service plan.

Q: What do we have to blame for the $30 Verizon upgrade charge?
A: The iphone..... Bastards! :mad:

(Actually 80% serious on the last one. I'd explain why but I think this post is too long as is.)

Sent from CDMA V6 SC GNexus w/Liquid & Franco.kernel
 
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K

Killbynature

Guest
Sprint has horrible coverage. So does at&t. Unless your on the area. That point is nulled and void. Verizon is the only exception regardless of coverage. Your point is also flawed as I'd you travel a lot your better off swapping out simcards and paying for an international prepaid plan while you are out of the country. If your not in the coverage area tmobile does have wifi calling compatible phones. They also give free signal boosters if your eligible.

Let's see a prepaid carrier straight Talk is $45 a month and can use tmobile and at&t towers. Buying your phone off contract would still be cheaper than paying for subsidies and contract.

Most prepaid plans don't even use calling cards anymore. Walk in pay bill at kiosk or online. Even boost and cricket have them.


If your out of a service area on at&t well too bad no wifi calling and no signal boosters to help you. Sprint is the same way. Verizon only carrier to have a large amount of coverage.

What the problem is people don't understand that having customers buy phones full price would lower rates on contract plans.


Sent from my SGH-T989 using xda premium
 
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phillibl

Retired Forum Moderator
Apr 15, 2012
384
116
Xiaomi Poco F3
What many people forget is there are other service providers you can use that are much cheaper. I am on Page Plus Cellular now and my bill was about about cut in half. Also they use verizon's towers so service is great.
 

benson12

Senior Member
Nov 3, 2009
117
1
Minneapolis
I'm with Aerocaptain on this. If you are with the big 3, then you may as well take the subsidy. They don't offer any discount to bring your own phone. If you want the best networks, you have to pay here. T-Mobile offers great discounts to bring your own phone, so if their network works for you, that's your best deal.

I have not looked into MVNOs much other than to find none really work for me (coverage and plan wise). They may be an answer if their coverage is good enough for you.

Essentially, if you are on the big 3, you should use your subsidy, you are paying for it anyway.
 

adelmundo

Senior Member
Oct 10, 2010
579
70
San Ramon, CA
I'm with Aerocaptain on this. If you are with the big 3, then you may as well take the subsidy. They don't offer any discount to bring your own phone. If you want the best networks, you have to pay here. T-Mobile offers great discounts to bring your own phone, so if their network works for you, that's your best deal.

I have not looked into MVNOs much other than to find none really work for me (coverage and plan wise). They may be an answer if their coverage is good enough for you.

Essentially, if you are on the big 3, you should use your subsidy, you are paying for it anyway.

Straight Talk, on their Bring Your Own Device Plan, use both AT&T and T-Mobile for their networks. You can buy any GSM phone that uses either T-Mo band or AT&T bands and just purchase the correct SIM from them (costs $15 for the SIM) and then put it on their Everything Unlmited Plan for $45/month. You get the same coverage area as AT&T postpaid and you will get up to HSPA+ "Faux"G speed, or if you have the T-Mo SIM, you get the same coverage area as T-Mo with up to HSPA+ 42 Mbps. On average I get rougly 2-3 Mbps and as high as 8-9 Mbps in some areas using the Straight Talk AT&T SIM on my International Galaxy Note.

T-Mobile has another plan which they sell at Walmart (both online and in-store) if you use primarily data and text and don't use a lot of voice minutes for $30/month, which includes 100 minutes voice, unlimited text, and unlimited data at up to HSPA+ 42Mbps (throttled after 5 GB per month). You can buy a T-Mobile branded phone (doesn't have to be unlocked) and use this or buy an unlocked AT&T compatible phone that has the chipset to flash a T-Mobile compatible modem (such as the Samsung Galaxy S2 or the AT&T version of the Samsung Galaxy Note).
 
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KingKuba13

Senior Member
Mar 28, 2011
324
12
Big 3 here have a monopoly so what are you going to do buy the phone outright and then go and try and get a better monthly deal with wind/mobilicity/etc???

Have fun with that.
 

thebobp

Senior Member
Feb 16, 2012
1,189
203
Very true. In the US, the top 3 carriers (Verizon, At&t, and Sprint) charge the same rates whether you have a subsidized device or not. This effectively takes any advantage to purchasing the device without subsidy out of the equation. The only other option is to set up a device with an inferior carrier that offers mediocre quality with severely regionalized service reception (T-Mobile, Revel, Boost, Clear, and about a hundred more).

I can't confirm or deny this, so let's just say that, if you're picky enough, you'll probably end up paying the most anyway. This does not, mean, however, that everyone else has to as well.

Carrier prepays are a joke...unless you want a pure talk/text phone.

lol wot.

There's an entire thread that says otherwise.
 

Aerocaptain

Senior Member
Sep 23, 2010
168
26
Cleveland
I can't confirm or deny this, so let's just say that, if you're picky enough, you'll probably end up paying the most anyway. This does not, mean, however, that everyone else has to as well.



lol wot.

There's an entire thread that says otherwise.

A whole thread? No way! If its in a whole entire thread it must be true.

I want excellent call quality, great coverage areas, helpful CS, and fast data. And that makes me picky? So your saying that if I want better service, I have to pay a little more? Hmmmm, Not exactly a revelation.

As far as my prepay statement, I was referring to the big 3 not allowing smartphones on their prepays.

Sure you can go with an off carrier that rents towers from the big 3, but do you want to suffer through spotty coverage areas, outsourced CS, and heavily throttled & reduced data speeds? Prepay discussion is better left in the prepay thread for the minority of people it is good for.

Sent from CDMA V6 SC GNexus w/Liquid & Franco.kernel
 
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Deggy

Senior Member
May 25, 2010
777
134
Massachusetts
Whether I pay $200 or $500 for a phone, I'm still paying the same monthly amount anyways. Unless I go to straight talk or T-Mobile. /thread.

Sent from my MB860 using XDA
 

thebobp

Senior Member
Feb 16, 2012
1,189
203
A whole thread? No way! If its in a whole entire thread it must be true.

Actually, yes. It demonstrates that too many people have found prepaid useful to just take your opinion at face value.

I want excellent call quality, great coverage areas, helpful CS, and fast data. And that makes me picky?

1) Actually, yes. Unless you travel everywhere, call customer service every week, why do you need all that?

2) You know that prepaid doesn't have these things, how, exactly?

3) If your prepaid doesn't work out.... switch plans. The advantage of prepaid (in addition to cost) is that you aren't locked-in.
As far as my prepay statement, I was referring to the big 3 not allowing smartphones on their prepays....except one of the blackberry's I believe.

Maybe you should actually read that thread (unless the Galaxy Nexus doesn't count as a smartphone).

sent from my Terran Command Center.
 
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Aerocaptain

Senior Member
Sep 23, 2010
168
26
Cleveland
Hahaha, I know these things because I worked for Verizon. I've talked to both customers of these subcarriers as well as the subcarriers themselves. I have found that service as a whole is subpar when you contrast services rendered by the 3 main carriers. I'm amazed that you have never heard of people getting throttled and sometimes kicked of their unlimited plan. Or the piss poor CS, or the reduced coverage area provided by these subcarriers.

It appears that you are saying that the services rendered with prepay subcarriers matches the services on Verizon, At&t or Sprint. For that you are 100% wrong.

Which of the big 3 has a Galaxy Nexus on prepay?

I'm not saying that prepay is useless. Its definitely a cheaper alternative to contract. However, there are many concessions people would have to make for the services to fit the average individual.


Sent from CDMA V6 SC GNexus w/Liquid & Franco.kernel
 

vetvito

Senior Member
Dec 31, 2007
3,154
181
I havent took a concession. My phone still works the same, same call quality, text, good net speeds. Only difference is I'm not paying much.

No contracts, no hidden fees, not stuck with the same phone.

I have good credit. I was taught to only sign paperwork for a home, and stuff that pays me.

Sent from my Nexus S using Tapatalk 2
 

PoXFreak

Senior Member
Jan 2, 2011
1,132
846
Apex NC
This thread only proves that so many different people with so many different plans, contract or prepaid, all have varying thoughts and experiences with their cellular carriers.
I, for one, have been pleased overall with the QOS I have recieved from AT&T, I just may be one of the exceptions though. I live in a busy bustling area with LOTS of towers serving LOTS of different carriers, mostly owned and/or operated by the Big 3.
I have been with AT&T for around 5 years with only ONE problem that was quickly corrected. I was happy enough with them to go ahead and use their UVerse service here in the states which, to my knowledge, has never failed.
Don't get me wrong, I am not plugging anyone here, just voicing an opening opinion.
On the subject of subsidy, I used an old HTC Kaiser running Android 2.2.2 for almost 2 1/2 years before taking the dive and getting a new phone. No increase in fees or charges, (yes the extra $36 activation fee sucks), AND I get a new phone for the 2 years on contract.
Sure, upgrades in the near future are almost impossible, but why upgrade when I did my homework and got a phone with some longevity and usefulness? Enough to cover the next 2 years... hard to tell at this point. I do know that I will be happy with my selection for those 2 years.
Just my $.02
 

Aerocaptain

Senior Member
Sep 23, 2010
168
26
Cleveland
Like I said earlier, prepay works for some. Not the majority. No matter how you look at it, concessions do exist moving from a big 3 carrier to a prepay carrier that rents towers. If those concessions work for you, more power to you. The truth of the matter is, prepay does not save thousands with the same quality of service. Let's look at cost analysis real quick.

If 2 people wanted the galaxy nexus, one on Verizon, one on Straight talk when the device first came out.

Verizon consumer (this is what I paid): purchased the device for $150 w/contract on letstalk and I pay $90 per month. Total investment till next upgrade where the cycle repeats (20months):$1950

Straight talk consumer pays $700 for the device and pays $45 per month for a comparable rate plan. Total investment: $1600.

$350 difference over the period. ($17.50 extra per month with verizon). And I'm getting better coverage, better CS, and LTE speeds. In my opinion its worth it. If we compared straight talk with sprint, the monthly difference would be close to nil.

Sent from CDMA V6 SC GNexus w/Liquid & Franco.kernel
 
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benson12

Senior Member
Nov 3, 2009
117
1
Minneapolis
It sounds like Straight Talk and Red Pocket could be okay MVNOs (on AT&T network anyway), but I hear they use the prepay network coverage, which is supposedly smaller than the postpaid. I don't know that for sure, I just did some reading last night.

The downside to me is that I have 2 smartphones on my plan, and 1 dumbphone. An MVNO will beat the price, but not by much, and I wouldn't be gaining anything except no contract. If I were to switch, I would want to be saving money and getting at least the same service. On Red Pocket, at $60 for each smartphone, and $40 for the dumbphone, I wouldn't be saving any money at all. Now, Straight Talk would save me money, $45 for each phone, I'd be saving some.

I'd likely port my numbers to Google Voice if I were to switch, that way I wouldn't have any troubles with them, and can keep the number as long as Google Voice is around.

The thing is, I'm locked into my contract for another 1.5 years anyway. I've got a while to do the research and figure it out. Maybe both of those MVNOs will be gone, and another several will be there in their place.
 

thebobp

Senior Member
Feb 16, 2012
1,189
203
Hahaha, I know these things because I worked for Verizon.

You've worked for the carrier that has some of the worst prepaid and most notorious customer service/customer lock-in strategies, and you're convinced you have a thorough view on the subject?

All I can say is, no wonder your posts contain so many inaccuracies (a blackberry being the only smartphone allowed on prepaid LOL) and biases (sup, I need coverage absolutely everywhere like Verizon happens to have, not just the places I actually go to). You likely only know what Verizon wanted you to spread.
 

Aerocaptain

Senior Member
Sep 23, 2010
168
26
Cleveland
We've been talking about contract plans vs prepay on a single user plan. What if you had a family of 3? For simplicity, we'll keep them on a talk text phone. At straight talk, that family would pay $135 plus the phone cost. On Verizon, that same family would pay $150 on an unlimited plan with free handsets. With costs of the devices included, that family would pay about the same over the term. If they picked any other service plan with Verizon, they would be paying much less over that same term.

I think when all is said and done, the decision contract/prepay is largely situation based. I do believe the big 3 collude to make their prices high enough to bleed out consumers wallets, but not too high to make prepay subcarriers the better alternative to the majority of consumers.

Sent from CDMA V6 SC GNexus w/Liquid & Franco.kernel
 

thebobp

Senior Member
Feb 16, 2012
1,189
203
If 2 people wanted the galaxy nexus, one on Verizon, one on Straight talk when the device first came out.

Verizon consumer (this is what I paid): purchased the device for $150 w/contract on letstalk and I pay $90 per month. Total investment till next upgrade where the cycle repeats (20months):$1950

Straight talk consumer pays $700 for the device and pays $45 per month for a comparable rate plan. Total investment: $1600.

$350 difference over the period.

And what about now?

An unlocked Galaxy Nexus is $470 on Amazon, which gives $1370 as prepaid investment. A locked one is $80, rendering the post-paid investment $1880.

$510 saved. Plus you don't pay the price of lock-in: you can now switch services, no hassle, should absolutely anything comes up (including, yes, a better offer).


Edit:
We've been talking about contract plans vs prepay on a single user plan. What if you had a family of 3?

Fair enough, family plans often allow for matching savings, and you only have to pay the price of lock-in.

In the end, of course:
I think when all is said and done, the decision contract/prepay is largely situation based.

This is absolutely right (and has been my point all along). One needs to evaluate prepaid/contract options in order to see which is best for them. I only took issue with your earlier description of prepaid as "a joke". Prepaid really does works well (depending, of course, on your preferences), and having it universally dismissed like that is little better than misinformation.
 
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Aerocaptain

Senior Member
Sep 23, 2010
168
26
Cleveland
You've worked for the carrier that has some of the worst prepaid and most notorious customer service/customer lock-in strategies, and you're convinced you have a thorough view on the subject?

All I can say is, no wonder your posts contain so many inaccuracies (a blackberry being the only smartphone allowed on prepaid LOL) and biases (sup, I need coverage absolutely everywhere like Verizon happens to have, not just the places I actually go to). You likely only know what Verizon wanted you to spread.

Dude, i'd hate to get in a verbal fist fight with you but everything I've said is based off of fact. There is only 1 model of blackberry that is permitted on Verizon's prepay. Do some research on it and next time come back with facts not senseless and factless ramblings that a 5 year old would do.

As I said previously on my first post, if a subcarriers coverage area is adequate for your part of town, and you keep to that part of town, perhaps that's the best plan for you. But you are not the majority.

I understand that many prepay users are passionate about their decision and believe they are "sticking it to the man.". The truth of the matter is, service and price are usually directly proportional in the cell phone industry. If that was not the case, the big 3 carriers would be out of business.

Sent from CDMA V6 SC GNexus w/Liquid & Franco.kernel
 

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    The big American telecos have always been pretty high up on my list of evil corporations, so I wasn't exactly surprised to hear that Verizon – perhaps the worst offender of them all – is making the consumer bear the brunt of another frivolous fee. From now on Verizon subscribers will have to pay a $30 fee every time they upgrade their phones. While we've all gotten used to carriers inventing bogus fees literally out of thin air, it is important to take a step back and understand exactly how Verizon, AT&T and the rest are shamelessly ripping us off with every monthly statement.

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    If you actually sit down and do the math, you end up paying the carrier back way more than just the price of the phone. But that's not the story the carriers are selling to the media. In fact, based on the decrease in profits carriers are complaining about how much money they are losing on subsidized phones. So in an attempt to allegedly compensate for providing us with phones at subsidized prices, US carriers have systematically introduced a so-called “upgrade fee” on top of all the existing charges lurking underneath the surface of your cell phone bill.

    What may look like a relatively small fee will actually bring Verizon an extra $1 billion a year in terms of profit. And now that they've jumped on the “upgrade fee” bandwagon consumers are left with no choice but to shake their fists at the telcos and shell out an extra $30.

    And get this, according to Verizon, this new fee is meant to “help continue to provide customers with the level of service and support they have come to expect”. If by that they mean that we've all become used to the fact that Verizon is one money-thirsty leech of a company with terrible customer service – then, yes, we agree.

    As Americans we've become addicted to two-year contracts and subsidized phones, but my recommendation to you would be to use your Internet browsing skills and buy your Android phones at full price. Thankfully, there are plenty of good deals to be had on eBay and online discount stores. Don't let the Big Three bleed you to death with fees, fines and small print. Just keep one thing in mind: with these telecos it's always the consumer that gets the short end of the stick.
    1
    How is it a rip off if I was going to buy that smart phone anyway and use that carrier? If I pick all the options I want carrier with phone and they are willing to subsidize the phone how is that ripping me off? I'd be using that phone and that carrier anyway so why not take the subsidy?
    1
    You guys still have it better with 2 year plans, and we are stuck in "3rd world " like stage with 3 year contracts.... :mad:
    1
    ACtually it's not the subsidised phone that's a ripoff but the plan itself.

    Keep in mind that the price of the plan is the same regardless of you getting a new phone with or not. There's no cheaper plan options for people opting out of the phone. Or any kind of saving.

    The phone itself is basically an added benefit to you the user. Compare about the atrocious data and smd plans instead.
    1
    Having looked at prices on US provider's websites and complaints posted on here, you guys seriously need to get the industry regulated to protect consumers from being ripped off.

    That's basically the worst idea ever.

    It's the fact that the industry -- and, most importantly, spectra -- are regulated in the first place that lets the big players exert this kind of monopoly control.