|
| quote: | Originally posted by DigiNut
John, while I agree with you in theory about contracts in general (remember, pure capitalist here), the contracts for wireless providers here are a joke. They do not benefit the customers at all, even after the phone discount.
What's really happening when you get that $800 phone for $200 is that they aren't giving it to you, they're leasing it to you. It's brilliant, because the useful life of a cell phone now is the same as a computer, about 3 years, so after the 3 years they just let you keep it because it's been depreciated all the way down to zero. You pay a standard 25% down payment on the 3-year contract, and if you want a shorter contract then they increase the down payment instead of the interest.
Of course, the lease, and the interest, is completely hidden in their fees. What's outrageous is that they don't offer discounts to regular monthly subscribers who buy their phone outright and therefore aren't costing the provider any capital. Economically it would make perfect sense, but the service they provide is usually so abysmal that they consider it more important to achieve lock-in, otherwise every customer would switch the second a competitor offered a better deal.
It's clever economics disguised with even cleverer marketing. If they disclosed the actual sale price of the phone (which is seriously inflated from the book value, not discounted), potential customers would be horrified and think a lot harder about their purchase. Instead, the companies collude to inflate rates across the board and offer "free" or "cheap" phones, and customers think they're getting a great deal.
In reality, customers who sign contracts to get cheaper phones are merely getting the short end of the stick, whereas customers who don't sign contracts are paying an even higher premium for the freedom of being able to walk away or get a better plan. It's truly a winner-take-all game and the subscribers always lose, and it will continue to remain that way until the market is actually allowed to become competitive.
And although I'm not a fan of Apple, I do at least have to give them some credit for flexing their corporate muscle and forcing the local providers to offer better data plans. If it hadn't been for them, we'd still be paying $25 for 5 megs. |
So true, and well written!
|
