Can someone clarify how not subsidizing the phone is a good thing?

[JohnJSal]

I'm a little confused about the benefit of paying full-price for a phone rather than having it subsidized. Of course, the obvious benefit would be that you don't have to sign a contract, but usually I hear something like "you don't have to keep paying for the phone in your monthly fee," but I don't quite understand this line of thinking.

For example, my Sprint plan is $70/month (plus the $10 fee), so $80/month. The unlimited T-Mobile plan is $70/month, basically the same. But if I sign a two-year contract with Sprint, I get the phone for $99 or $199 usually. With T-Mobile's new system, I'd have to pay the full price, which could be as much as $499 or so.

At what point does it make sense NOT to have the phone subsidized, assuming you aren't the type of person who jumps carriers every other month (which I'm not)? I don't see how I'm still "paying" for the cost of the phone even after my contract is over. The monthly bill between the two is basically the same, but the cost of the phone is a big difference.

Can someone explain why the non-subsidized phone is a good way to do things?

Thanks!

 

[ardchoille]

From what I understand, you pay for T-Mobile phones over time.. $20.00/month, so you're not paying the full price for the phone all at once. Same thing as a subsidized phone but without the contract.

 

[JohnJSal]

From what I understand, you pay for T-Mobile phones over time.. $20.00/month, so you're not paying the full price for the phone all at once. Same thing as a subsidized phone but without the contract.

But this is exactly what I don't understand. My bill has only ever been the price of the data plan ($70/month). There is no additional charge that could be considered the price of the phone. In other words, my Sprint plan would be $70/month (plus the other fee) and that's it. My T-Mobile plan would be $70/month plus another $20-25 for the phone, until it's paid off.

How is the un-subsidized method better than simply paying for the data plan and nothing else?

Edit: Just to be clear, what I don't understand in your post is when you say "Same thing as a subsidized phone but without the contract." I don't see how it is the same thing. To me, it seems like you're paying more, because you're either paying $99 or $199 upfront for the subsidized plan, or you're paying $399 or $499 over time for the un-subsidized plan. The prices of the monthly fees are the same otherwise.

 

[ardchoille]

Perhaps the cost of the phone isn't being itemized? I'm thinking that, after the phone is paid off, your bill may be reduced since you're no longer paying for the phone. I can't say for sure, I think the best thing to do would be to talk directly with T-Mobile.

 

[jhawkkw]

Because with Verizon, AT&T, and Sprint, once you've finished your two year contract, your bill doesn't drop after you've paid off the phone. So it's like buying a house or car and after you finish paying it off, you still pay the bank to continue using it. By getting rid of subsidies, it now becomes a formal loan that you can pay off and once it's done you no longer pay; even if you finish paying it off early.

 

[ParishL31]

But this is exactly what I don't understand. My bill has only ever been the price of the data plan ($70/month). There is no additional charge that could be considered the price of the phone. In other words, my Sprint plan would be $70/month (plus the other fee) and that's it. My T-Mobile plan would be $70/month plus another $20-25 for the phone, until it's paid off.

How is the un-subsidized method better than simply paying for the data plan and nothing else?

The "theory" behind subsidizing and "built in phone costs" is that it doesn't show up as a line item. But rather a portion of that $70 is due to the subsidized phone, even though it's not broken out as a line item. The argument continues that you sometimes "pay more in the long run" because if you stay on that $70/month line you technically continue "phone payments" even after your two year period is over.

Honestly, I see it the way you do. As there is no way this is good for the customer. The only one that saves money is T-Mobile and forces loyal customers who stay with them long term to pay more.

The whole "theory" of higher rate plans with subsidized phones doesn't make sense to me either. We signed a family plan long ago and have stuck on it and continued to extend it since the rate is pretty good. My family pays $160 for four lines if you don't include the insurance we opt for on all four phones. The "same" plan now advertised on their site is $180. It makes no sense for me to switch to one of these new "lower" rates, and makes even less sense that I would have paid $250 for a new phone and continued my service while now I have to pay $750 for the same phone and still continue the same service.

Makes no sense to me. Maybe for people who are more short term oriented and continuously switch plans within T-Mobile it works out, but for long term oriented customers that have a good rate...it seems we get screwed on this deal.

 

[JohnJSal]

Because with Verizon, AT&T, and Sprint, once you've finished your two year contract, your bill doesn't drop after you've paid off the phone. So it's like buying a house or car and after you finish paying it off, you still pay the bank to continue using it. By getting rid of subsidies, it now becomes a form loan that you can pay off and once it's done you no longer pay; even if you finish paying it off early.

Alright, perhaps I'm just not making myself clear or I'm being very dense about this. But what I STILL don't understand is that, even after you pay off the full price of the phone on T-Mobile, AFAIK your bill does NOT drop from the $70/month. That is simply the price of the unlimited plan.

In my case, with Sprint, when my two-year contract ends, it's true that my monthly fee doesn't drop either, but it's still the SAME price as the T-Mobile plan. Both plans are $70/month and neither one drops after the phone is paid off or the contract ends.

However, with Sprint you only pay about $100-200 for the phone, whereas with T-Mobile you pay $400-500.

Does what I'm saying make sense? I do NOT understand this idea that, after my two-year contract ends, I am "still paying" for my phone. HOW am I still paying? My bill will essentially be the same as a T-Mobile customer. Where is the charge that I'm "still" paying?

 

[iTzKPanda]

T-Mobile says those contracts are "bulls**t." No, really that's what the CEO said. The company now no longer requires customers to sign a contract for service. That's right, no annual contract to sign -- you pay month-to-month for your cellular bill and can back out at anytime. T-Mobile is calling it the Simple Choice Plan.

Verizon and AT&T offer shared data plans where you share buckets of data across different phones in your family; they may work out to be more affordable. For this, let's compare the individual monthly charges at AT&T, Sprint, T-Mobile and Verizon for the Samsung Galaxy S3.

Verizon: $110 a month for unlimited talk, text and 4GB of data
AT&T: $120 a month for unlimited talk and text and 3GB of data
Sprint: $110 a month for unlimited talk, text and data
T-Mobile: $90 a month for unlimited voice, text and data
You can see that T-Mobile offers the better deal, especially for those individual contracts. But there's another charge to consider on that monthly bill, and that's the price for the phone.

T-Mobile will offer phones at an even lower price up front, but you will pay off that phone over time with interest-free monthly installments.

Let's take that Galaxy S3 again. The Galaxy S3 will cost $69.99 on the day you buy it, but you will then pay $20 every month for the next 24 months, which comes out to $480. See, over the two-year period you pay for the price of the phone. T-Mobile will offer the same type of deal on other smartphones, including the BlackBerry Z10 and the HTC One. There is also the option to just pay for the phone all at once up front.

T-Mobile says that customers can upgrade their devices at anytime though which is the plus side. For those who can't wait the standard 2 years, you can upgrade to a new phone (for example, a year later when the next HTC or Samsung flagship comes out) without an early termination fee. You will still, however, have to pay the $20/month to pay off the S3.

Credit to ABCnews

 

[JohnJSal]

The "theory" behind subsidizing and "built in phone costs" is that it doesn't show up as a line item. But rather a portion of that $70 is due to the subsidized phone, even though it's not broken out as a line item. The argument continues that you sometimes "pay more in the long run" because if you stay on that $70/month line you technically continue "phone payments" even after your two year period is over.

Hmm, this seems to address my question somewhat, but I still don't see how the advantage falls to T-Mobile customers, unless their monthly fee drops from $70 (to say $60 or $50) after you pay the full price of the phone. After you pay $500 for the phone, your bill is still the same as a Sprint customer's, who only paid $200 for their phone.

 

[runtmms]

It all depends on what plan you're grandfathered in on. The problem with subsidized phones is you usually end up paying more than full retail for the phone because of how expensive those plans can be.

My brother got a "free" gs3 on Sprint. He pays $80/month for a limited minute plan with data. He switched right before I switched to Solavei - and I still think he's a little mad at me for not stopping him. Solavei would provide more data than he uses (faster than Sprint) and unlimited minutes. So his subsidized phone is costing him an extra $30/month for 24 months - with worse service. That's a $720 phone - and if he wants to leave early there's a $350 early termination fee.

The nice thing about the T-Mobile setup is they are financing the phone - so you stop making payments once the phone is paid for. That's not the case with any contract plan. Unfortunately, I think their phones are too expensive. Can't beat the price of the Nexus 4 straight from Google.

 

[JohnJSal]

The nice thing about the T-Mobile setup is they are financing the phone - so you stop making payments once the phone is paid for. That's not the case with any contract plan.

This is the concept I don't understand. How am I still "making payments" on my phone, even though my contract is over? The only thing I can think of, as was suggested above, is that my plan shouldn't actually be $70, but the price is inflated to include the price of the phone.

However, the problem with that explanation is that T-Mobile's unlimited plan is the same price ($70), so I don't see how this could be an explanation.

 

[ParishL31]

This is the concept I don't understand. How am I still "making payments" on my phone, even though my contract is over? The only thing I can think of, as was suggested above, is that my plan shouldn't actually be $70, but the price is inflated to include the price of the phone.

However, the problem with that explanation is that T-Mobile's unlimited plan is the same price ($70), so I don't see how this could be an explanation.

That's the same exact boat I'm in. My current plan is cheaper than their "new" plans, even though mine is still inflated for subsidized phones. I think the whole savings idea doesn't take into account of people who got locked into good rates and grandfathered into a bunch of free stuff.

I'm not happy about the situation either, especially since I have my eye on the S4 which is going to cost upwards of $750 for the larger memory models with their new upgrading system.

 

[jhawkkw]

Alright, perhaps I'm just not making myself clear or I'm being very dense about this. But what I STILL don't understand is that, even after you pay off the full price of the phone on T-Mobile, AFAIK your bill does NOT drop from the $70/month. That is simply the price of the unlimited plan.

In my case, with Sprint, when my two-year contract ends, it's true that my monthly fee doesn't drop either, but it's still the SAME price as the T-Mobile plan. Both plans are $70/month and neither one drops after the phone is paid off or the contract ends.

However, with Sprint you only pay about $100-200 for the phone, whereas with T-Mobile you pay $400-500.

Does what I'm saying make sense? I do NOT understand this idea that, after my two-year contract ends, I am "still paying" for my phone. HOW am I still paying? My bill will essentially be the same as a T-Mobile customer. Where is the charge that I'm "still" paying?

On the other 3 carriers, the subsidies are included in the overall bill, but hidden. T-Mobile is now saying if you take out loan to lower the up front cost, they're going to show you an extra 10-20 dollars per month charge that goes towards paying off the phone. Once it's payed off, it will drop and go back down to 70. The other 3 carriers include this fee in their monthly rates, hide it from you, and then don't remove it once the device is payed off.

 

[new optimus]

Alright, perhaps I'm just not making myself clear or I'm being very dense about this. But what I STILL don't understand is that, even after you pay off the full price of the phone on T-Mobile, AFAIK your bill does NOT drop from the $70/month. That is simply the price of the unlimited plan.

In my case, with Sprint, when my two-year contract ends, it's true that my monthly fee doesn't drop either, but it's still the SAME price as the T-Mobile plan. Both plans are $70/month and neither one drops after the phone is paid off or the contract ends.

However, with Sprint you only pay about $100-200 for the phone, whereas with T-Mobile you pay $400-500.

Does what I'm saying make sense? I do NOT understand this idea that, after my two-year contract ends, I am "still paying" for my phone. HOW am I still paying? My bill will essentially be the same as a T-Mobile customer. Where is the charge that I'm "still" paying?

As with the poster above you I understand what your saying, but I have to ask you this, with sprint, since that is who you have if you were a new customer could you get that $70 plan?
if you can then I agree this seems to be a bad deal, but if like the previous poster who seems to have been with t mobile for a while and has a now discontinued plan he has a plan that is cheaper then what is now offered.
my wife is also getting a rate cheaper then what is now offered on her metropcs plan, unthrottled unlimited lte data for $40 now everthing is throttled after certain amount of data.
I also find that with cable companies too, I got a great deal on a comcast internet and tv deal payed $50 per month for years, then they called me about this great rate I could have for almost twice as fast speeds, I asked them if I didnt like it could I return to what I had, they assured me I could and like a idiot I believed them. turns out soon as they switched me I was screwed and couldnt go back. So I got stuck paying a higher price which got higher the longer I was on it, they had a "discounted" rate for 6 months then it jumped up double what I had before.

 

[JohnJSal]

On the other 3 carriers, the subsidies are included in the overall bill, but hidden. T-Mobile is now saying if you take out loan to lower the up front cost, they're going to show you an extra 10-20 dollars per month charge that goes towards paying off the phone. Once it's payed off, it will drop and go back down to 70. The other 3 carriers include this fee in their monthly rates, hide it from you, and then don't remove it once the device is payed off.

This would make sense if the price of Sprint's plan and the price of T-Mobile's plan weren't the same. It just makes it seem like T-Mobile is overcharging you as well, in addition to having to pay the full price of the phone.

 

[jhawkkw]

Carriers generally subsidize a device about 400 dollars, with iphones being 450. If you buy the phone for 200 upfront, and then pay $20 per month like what you do with all subsidies, then over a 2 year contract you pay 480 dollars on top of the 200 towards the cost of the device. In essence, you pay 80 extra dollars going this route instead of buying it full upfront. In T-Mobiles situation, you wouldn't be paying this extra 80 dollars, the charge would drop after the 20th month because you've payed off the subsidy. The total amount paid to the carrier continues to be extra if you don't upgrade immediately once you're able to. This is why companies let you upgrade at 20 months, because you have paid off the subsidy and they're looking to lock in you for an additional 2 years.

Here's a New York Times article that explores the issue and what T-Mobile is doing.
http://www.nytimes.com/2013/04/04/t...f-cellphone-contracts-and-penalties.html?_r=0

 

[iTzKPanda]

You pay the full price of the phone in all 4 carriers. Like jhawk said, T-Mobile shows you outright that you're paying for the phone whereas the other carriers "hide" it in your monthly bill.
Sprint's plan and T-Mobile's plan are not the same price. T-Mobile's unlimited everything is $70/month and Sprint's unlimited everything is $110/month.

T-Mobile's plan then turns into $75-90/month depending on which phone you purchase.

For the S3, you'd pay $200 for the phone outright when you start a contract Sprint.
On T-Mobile, you have $70 for the phone outright when you start and $20 extra each month.

However, when your 24 months is up with T-Mobile and Sprint, your monthly bill decreases back to $70 and Sprint's continues to be $110.

Edit for math (over the course of 24 months with the Galaxy S3):
Tmobile: $70 + $90/month for 24 months = $2230
Sprint: $200 + $110 for 24 months = $2840

 

[JohnJSal]

Sprint's plan and T-Mobile's plan are not the same price. T-Mobile's unlimited everything is $70/month and Sprint's unlimited everything is $110/month.

Ah, this was my mistake all along! I always forget that my Sprint plan only has 450 minutes and is not the truly unlimited plan, which is $100. I suppose that changes everything!

 

[ParishL31]

So essentially I'm just a rare case where my old "subsidized included" rate happens to be lower than the new lower rates and I get shafted since I no longer get to extend my already lower rate and get a subsidized phone for it? Correct?

Sorry, kind of weird wording but hopefully it makes sense.

 

[JohnJSal]

So essentially I'm just a rare case where my old "subsidized included" rate happens to be lower than the new lower rates and I get shafted since I no longer get to extend my already lower rate and get a subsidized phone for it? Correct?

Sorry, kind of weird wording but hopefully it makes sense.

Yeah, that's about what I thought happened to me too. If you have a truly unlimited everything plan, then yeah, it's probably not worth switching.

 

[JohnJSal]

Oh boy, just realized my Sprint contract doesn't end until August 2014. I'm screwed.

 

[Crashdamage]

So essentially I'm just a rare case where my old "subsidized included" rate happens to be lower than the new lower rates and I get shafted since I no longer get to extend my already lower rate and get a subsidized phone for it? Correct?

No. You are grandfathered into your current deal and can keep it as long as you want.

Linux user #266351. Android since v1.0

 

[new optimus]

No. You are grandfathered into your current deal and can keep it as long as you want.

Linux user #266351. Android since v1.0

But he does not get subsidized phones,
he still has to pay the $20 per month extra if he gets a no interest loan, right?

 

[ParishL31]

No. You are grandfathered into your current deal and can keep it as long as you want.

Linux user #266351. Android since v1.0

Oh, sorry I worded it wrong. I know I can keep my grandfathered rate as long as I want, I just meant I can no longer get subsidized phones for extending my grandfathered rate every two years and use it to my advantage.

 

[Crashdamage]

Oh, sorry I worded it wrong. I know I can keep my grandfathered rate as long as I want, I just meant I can no longer get subsidized phones for extending my grandfathered rate every two years and use it to my advantage.

You should be able to still get a 'subsidized' phone. Just keep in mind that so-called 'subsidized' phones really aren't. You still pay in full for the phone as part of the monthly bill. But unlike the new plans, with your old plan your monthly bill does not decrease after the cost of the phone is covered.

Linux user #266351. Android since v1.0