Contracts. Why?

In alt.cellular.verizon CozmicDebris <isheforreal> wrote:
>
> Correct me if I'm wrong, but doesn't T-Mo prepaid only work on their
> network, while postpaid does roam? That would seem to make the comparison
> apples-to-oranges.

you are absolutely correct. And there are mobile-mobile minutes, nights and
weekends, etc.

--
Thomas T. Veldhouse

America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.

In article <5ukj3oF1hksu8U2@mid.individual.net>,
"Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:

> > That's hard for me to see, considering T-Mobile wants $30 for 300 minutes
> > post-pay (use 'em or lose 'em in a month), vs. $100 for 1,000 minutes
> > pre-pay (use 'em any time in a year).
> >
>
> You get roaming for free on the post-pay plan ... there is no roaming on
> pre-pay plans. Thus, you get less coverage for the $1. You probably don't
> get unlimitted nights and weekends either ... or free mobile to mobile, etc.

The no roaming and less coverage is exactly why the T-Mo pay as you go
plan sucks.

In article <5ukivtF1hksu8U1@mid.individual.net>,
"Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:

> To the guy who bought the Samsung at Walmart ... did you ever price that phone
> to what is available on Ebay as new for the same model? I bet the price was
> similar or even higher at Walmart.

As an indicator, right now the very first "new, never used" unit on Ebay
in the "buy it now" category is $80 shipped to my door.

And as the auction says, "box is not included to save on shipping
weight". So in other words, it's not "new in box". And he has 4 of
them available.

I paid $50 at a brick and mortar store, locally, where if there was a
problem with the unit I could take it back. And it was new in box.

Previously owned with a few "nicks and scratches" seems to be $65
shipped.

$50, new in box, Walmart.

I'm guessing someone bought a few at Walmart and is trying to take
advantage of stupid people who go to Ebay and never bother to see what
the price and availability is locally.

In article <5ukhosF1gqpq4U5@mid.individual.net>,
"Thomas T. Veldhouse" <veldy71@yahoo.com> wrote:

> Prepaid phones are NOT subsidized. You bought a prepay phone, otherwise known
> as commitment free. If you had bought it on a subsidized contract, the phone
> would probably have been free. You just helped them unload excess inventory.
> Feel good that you got what you consider a fair price. You won't be finding a
> Motorola Q anytime soon at Walmart for a similar price without commitment ...
> and you know why.

Have you ever gone to Walmart to see?

There are PLENTY of good phones, even Qs, for prepaid.

At 09 Jan 2008 18:23:25 +0000 Thomas T. Veldhouse wrote:


>

> Prepaid phones are NOT subsidized.

Sure they are. We're probably splitting hairs, but the carriers subsidize
prepaid handsets to spur signups in a sort of "giveaway the razor to sell
the blades" fashion. Tracfone offers handsets for $15 and Virgin for $20;
the included batteries and chargers cost more than that!

> You bought a prepay phone,
> otherwise known as commitment free.

"Committment" and "subsidy" aren't necessarily related...

In alt.cellular.sprintpcs Paul Miner <pminer@elrancho.invalid> wrote:
>
> Ok, so mid-2005. Then why do you still call them Sprint PCS?
>

Because I feel like it ... it is the name of this group isn't it?

--
Thomas T. Veldhouse

America is the country where you buy a lifetime
supply of aspirin for one dollar, and use it up in two weeks.

At 09 Jan 2008 18:16:52 +0000 Thomas T. Veldhouse wrote:

> > True- but they're making money either way; whether you pay the full
> > unsubsidized price, or re-up for two years. Again, the point is, if the
> > "Uberfone 5000", or whatever model you really want can be obtained $150-
200
> > cheaper with a contract, why not? If circumstances change and you need
to
> > break the contract, you pay the $150-200 EFT and no harm done- it was
the
> > amount of the discount anyway.
> >
>
> This is precisely what I was trying to say, except that their EFT is
usually
> MORE than the subsidy, so the carrier comes out ahead ...

I guess that depends on your POV. I find the subsidy and EFT are in each
other's ballpark, at least.

> and they don't lower
> the price of your monthly plan when the subsidy is paid up ... which
means you
> should threaten churn to keep your money, as otherwise it is pure profit
for
> them ... a greedy model.


You also are no longer under contract, either. I liken it to a magazine
subscription- a subscription is cheaper per issue than the "no committment"
newsstand price. Instead of a service discount for your two-year
"subscription" you get a phone subsidy.

> I would rather have the option to buy a phone that is not locked to any
> carrier and buy that phone at full price. Then I should be able to
activate
> it with any carrier and not pay the plan price that subsidized buyers pay.

I agree fully. On the other hand, it's probably better for the free market
to eventually come to that conclusion that through forced regulation.

Plus, you never know what you as an individual can negotiate. When T-Mo
was out of stock on a particular handset I wanted in April 2006, (my
current WinMo phone,) I convinced them to apply a $200 "subsidy" directly
to my account in exchange for a one-year committment so I could buy the
handset I wanted from an independent dealer who had it in stock. It took a
bit of convincing, but I managed to get them to do it. (I did have to fax
them a receipt to "prove" I bought the handset before they applied the $200
credit.)

While I agree with your previous post that CDMA offers certain
technological advantages over GSM, GSM offers certain practical advantages-
namely it's not used by Verizon or Sprint, so GSM users aren't bound by
those carrier's oppressive handset policies! ;-)

At 09 Jan 2008 18:44:13 +0000 Thomas T. Veldhouse wrote:

> And what I have been saying is they don't really discount those prepaid
phones
> at all ... or very rarely.

I strongly disagree. Often the prepaid models are the same current models
the carriers offer to contract customers (although typically low-end,
understandably- there's little point offering mobile TV enabled phones to
customers who can't buy the TV service on prepaid plans!)

> Most are phones that were high volume sellers and
> became excess inventory, so they sell those as prepaid [or offer them as
> "free" to subsidized customers]. Clearing excess inventory that they
would
> otherwise write off because they need room for newer more profitable
models
> makes a lot of sense ... and thus, the prepaid companies tend to be
> subsideries or completely different companies altogether that got to buy
these
> phones on clearance.

Look at Virgin's or Tracfone's offerings- these are handsets that were
never sold by the underlying carrier, and have custom UIs to support the
MVNO. There's no way Tracfone is buying those $15 retail Motos for less
than the $10 they sell them to Target or Walmart for. According to the
trade papers, the lowest end phones currently manufactured wholesale for
$30-40US, and these are featureless monochromatic-display models you and I
will never see at WalMart- they're built for carriers in emerging nations.

> I bet buying one of those $30 prepaid phones provided
> a net revenue of $15 for the carrier offering the pre-paid phone, even if
it
> is never activated ...

Unlikely- an MSRP $30-40 prepaid phone probably is sold to the mass market
retailer for 60-70% of that (Walmart wants to make a buck as well!) T
ere's no accounting depreciation trickery that can make it profitable to
sell a new handset to WalMart for $20 without the expectation of future
airtime purchases.

> because the phone is not worth $30 to them, but, in teh
> case of my example, only $15.


Not a chance.

> BTW ... it is such inventory price depreciation that they write off, not
the
> subsidies ... just referencing another part of the thread.


I'm not so sure. Customer acquisition cost, including a subsidy, is a
legitimate cost of doing business, not a capital invenstment, and could be
written off- not as a depreciation, but as a loss- it's not a lease- it's a
sale. (At least that's how I did it when I was a cellular dealer- I sold
the "free" phone at a $200 loss, which was offset by the $300 commission
from my carrier, resulting in a $100 profit.)


> They didn't lose money on that Sanyo phone the sold this guy because the
phone
> isn't worth to them as much as he paid for it in the first place [hence
they
> made a profit]. That is why the cheap comittment free pre-paid phones are
> older models [or some current models where inventory is well in excess of
what
> it should be], the phone is now worth less to them, so they sell them for
> less.

You're overthinking this- prepaid phones (at least those sold outside a
carrier's own corporate stores) are packaged in different retail packaging,
with different manuals ad inserts, often with different (fewer) included
accessories- they aren't excess inventory reboxed in blister packs to sell
at Walmart- these particular phones were always intended to be sold as
prepaid models.

> The goal is to not have to write off any losses at all and that is what
> these phones do for the carriers; they take a loss due to depreciation
not due
> to some pre-paid guy buying the phone and using it on another carrier ...
the
> goal was to get rid of the phone, not whether it was activated or not.


Not true, particularly in the case of a carrier like Verizon with
"exclusive" models. Look at Verizon's low-end- twenty virtually indentical
sub-$50 retail (subsidized) flip phones from a variety of manufacturers
with virtually identical (lack of) features. These phones' mothers
couldn't tell them apart. Now look t Verizon's retail prepaid low-end
(sub $50) one blister-packed model in "Verizon InPulse" packaging- a
Samsung (or is it Starcom, I forget?) recently replaced a Nokia 26-
something that held the niche for a year. If your theory was correct, we'd
see a steady rotation of discontinued or overstock product as the low-end
prepaid model du jour, but we don't- the prepaid lineup is stable, and
bears little relation to the current postpaid lineup.


> To the guy who bought the Samsung at Walmart ... did you ever price that
phone
> to what is available on Ebay as new for the same model? I bet the price
was
> similar or even higher at Walmart.

Actually I found the opposite- when I wanted to buy a low-end Verizon phone
to use on PagePlus prepaid) eBay's prices were similar or higher than
Walmart's. Luckily I stumbled upon a good deal on an old Samsung WinMo
smartphone on eBay, since PagePlus (and Verizon, I suspect) are offering
free 1X data on prepaid (most likely by accident) which allows me
Contacts/Calendar sync with my Exchange server and IMAP e-mail access,
which the low-end prepaid phones wouldn't.

To summarize, prepaid handsets ARE subsidized, but to a lesser extent than
postpaid obviously. Rather than using a contract to "enforce" recouping
the subsidy, Verizon relies on "incompatibility" with other carriers (Sprint,
Virgin, etc. won't activate Verizon handsets, AT&T and T-Mo can't), and GSM
carriers use SIM locks to enforce use of prepaid handsets on the "right"
network. Undoubtedly, some handsets end up on the "wrong" network,
resulting in the "loss" of the subsidy, but this represents a small number.

What will be interesting is how the prepaid landscape changes in this new
supposed era of "open" networks (which I'll believe when I actually see it!)
I suspect prepaid models will become far more crippled than their
postpaid counterparts (i.e. data capabilities disabled) to discourage use
on other networks. For example, some T-Mo prepaid phones have the ability
to edit the GPRS access point disabled, so even if SIM-unlocked, would work
for voice only if used on AT&T or overseas, greatly limiting their appeal
if used off-network.

At 09 Jan 2008 13:55:43 -0500 Elmo P. Shagnasty wrote:

> > You get roaming for free on the post-pay plan ... there is no roaming on
> > pre-pay plans. Thus, you get less coverage for the $1. You probably
don't
> > get unlimitted nights and weekends either ... or free mobile to mobile,
etc.
>
> The no roaming and less coverage is exactly why the T-Mo pay as you go
> plan sucks.

There IS roaming on T-Mo's prepaid plans. A couple of slightly more
expensive (to T-Mo) carriers are not available to prepaid users (mostly in
the midwest) but T-Mo prepaid and contract users have virtually identical
coverage. (This hasn't always been the case however- prepaid roaming was
added two or three years ago.)

"Thomas T. Veldhouse" <veldy71@yahoo.com> wrote in
news:5ukh4pF1gqpq4U2@mid.individual.net:

> In alt.cellular.verizon CozmicDebris <isheforreal> wrote:
>>
>> Except that it gives them a healthy loss to write off every quarter
>> for equipment subsudies.And I'll gurantee that neither the IRS or SEC
>> woudl allow them to either make up or artificially inflate that
>> number.
>>
>
> They better not be writing it off as a loss ... it clearly is NOT. It
> is an investment [I don't get to write off my investments ... in fact,
> I have to pay taxes on the earnings when I get them]. They "invest"
> $150 in your phone so that the phone is cheaper for you, and in
> return, they over charge you by a certain amount for one or two years
> to make up that money ... and if you quit early, they charge you more
> than the $150 the initially invested in you, so they still get a
> profit.
>

It is clearly a loss. The monthly charge paid to the company is for
services rendered to use the phone, not equipment subsidized. This is
clearly stated in every service agreement.

In any event, every carrier reports the loss as a seperate line item on
their quarterly financials, and has done so for years. The government
(specifically the IRS and SEC) do not share your opinion. Grocery stores
and other big box stores get to right off the loss on their loss leaders
(products sold below cost to generate traffic)- this is no different.