A for effort
The unsubsidized cellphone model will find few takers
September 27 2008 - 5:59 am ET | Dan Meyer | RCR Wireless News
You’ve got to hand it to carriers for at least trying to come clean with consumers, though in some cases those efforts are a day late and a dollar short.
Take Verizon Wireless, for instance, which has made waves in the industry by taking the lead on a number of consumer-friendly initiatives like prorating early-termination fees. Last week, the wireless provider announced it would begin selling phones to consumers at an unsubsidized price when attached to a no-contract, month-to-month rate plan.
On the surface, giving consumers options appears to be a small, but positive move for consumers and for Verizon Wireless: The carrier looks good for offering people the choice of whether to sign a contract or not and the consumer gets to make the ultimate decision on whether to sign a contract.
This also seems to take some of the heat off of the carrier in light of recent litigation surrounding ETFs and a general sour look upon the industry’s current policies that favor two-year contracts.
The move also gives consumers an idea of what devices would cost if the carrier did not subsidize the price of the handset, which it then recoups during the term of the contract.
However, consumers have been brought up not expecting to have to pay for their devices, and with the current economic crisis slowly encompassing the country, showcasing higher prices for a phone probably will have little impact on consumers. Numerous analyst reports have shown that consumers typically pay less than $50 for their mobile phones, and in most cases consumers walk out of retail stores with a free handset, while at the same time complaining about the terms of attached contracts.
Many industry analysts have forecast the demise of the handset subsidy model and there have been a handful of cases where handset manufacturers have attempted to offer devices directly to consumers. In most cases these efforts have shown little traction due to the pricing discrepancy with subsidized models. Apple and AT&T Mobility quickly realized that they would sell a boatload more iPhones if they chipped in with a greater subsidy on the device.
So, while Verizon Wireless’ move should be applauded for its intent, unless it can also embed some sort of hypnotic Flash pop-up on its Web site or train its sales staff to use the Jedi mind trick, the unsubsidized model will find few takers.
October 4, 2008 05:16 pm
well of course us cellular does that, thats why they are they number....7....8...9 or something carrier. i work for verizon and its about growth!
September 27, 2008 05:04 pm
The market for unsubsidized phones is actually quite robust, so I disagree with Dan on his main point. Indeed, Verizon is coming late to the game, but unsubsidized and unlocked phones have been sold by independent retailers and network affiliates in the GSM world for a long time. Many people don't want to be locked into a contract, and are willing to pay now for the flexibility instead.
September 27, 2008 05:04 pm
I can't remember when att started this bit i was not surprised at all since verizon tends to copy att and vise versa when one company offers something the other does not.
September 27, 2008 06:03 am
I work for a agent of U.S cellular and its great that verizon wireless is doing this for the customer and everyone is making such a big stink about it. I just wanted to point out that U.S cellular has been doing this for as far back as I can remember.
September 27, 2008 06:03 am
I also work for US Cellular. Not only do we let you buy a phone with no contract you can also bring in an old US Cellular phone and activate that with no contract, literlly if you know someone with a phone from US Cellular that they are no longer using you can bring in that phone and have no contract. It is good costomer service and that is what US Cellular is all about.