DISQUS

Daniel · 2 years ago

I used to live in Europe, and sold wireless there. In the UK, when your contract was over, and you'd paid off your subsidy - you could call the carrier and get a new, lower rate (at least for o2).

In the US, people get so outraged about paying $250 + for a phone they'll do anything to lock themselves in for the next 5 years just to get a free Razr. It's ridiculous.

John · 2 years ago

I just paid to get out of my neverending contract from Nextel. Everything you did like add text messaging renewed your contract. It is terrible. My rate plan never changed. I check with all the carriers to make sure that I would not be suckered into something like this again, all over the price of a stupid phone. I paid a lot more than the original phone.

J · 2 years ago

yea, i understand the point that you're trying to get at...

but my question is why do people expect that their cell phone providers should not turn a profit, on both the hardware and the service...

when you go buy a television, you don't pay the price that the television cost to the dealer, you pay that price plus margin so that the company can stay in business...

this is the same thing... cingular/verizon/t-mobile/sprint are all business and it is their right to turn a profit on their products (hardware and service)...

Thought · 2 years ago

Thanks for everyone's great comments.

#1: nice to know at least o2 does the right thing with their customers. You are correct in that what carriers play to is the instinct among consumers to go for the lowest price up front...which usually does not end up in the best deal for consumers.

#3: I have nothing against companies making profits...you are absolutely correct in that profits are what enable companies to stay in business, not to mention pay salaries and benefits for employees, etc.
However, part of the healthy dynamic in any market economy is for consumers to be informed so as to act as a check and balance on corporations.
With your television analogy, the point is that when I buy a TV I don't have to subscribe to a particular cable provider.
But more importantly, as noted in my article, what I really object to is that the lack of transparency. If I want to buy my phone on the installment plan, I have a right to know the terms of that loan, just as with any financing agreement. That is what is lacking today, and no wonder: the system allows for carriers to build in all sorts of markups without the consumer knowing about it.

Tim Wu · 2 years ago

From Tim Wu:

I think this is the right discussion to be having. The cell phone selling practices are similar in some ways to other practices, like the way furniture is are sold in poor neighborhoods.

There's a nice example here: http://allfinancialmatters.com/2007/03/26/renti...

You can get a couch for "no down payment," and "low monthly payments," but after 3 years of payment you may have had paid $2800 for a $100 couch.

While no one is saying companies can't try and make money, similarly, consumers don't have to sit by and take whatever is thrown at them.

In the cell world, since service is bundled with equipment, you don't really have an option not to take the loan / low-monthly payment route.

Tim Wu · 2 years ago

That should be, a $1000 couch

Thought · 2 years ago

Tim,

Thanks so very much for taking the time to comment. I am truly humbled, and have great admiration for your work.