On Mon, 04 Dec 2006 22:48:55 -0700, Todd Allcock
<[email protected]> wrote in <[email protected]>:

>At 04 Dec 2006 20:14:45 -0600 Scott wrote:
>> > They pay a hell of a lot less than the $175 termination fee
>> > for a handset.

>> That is the biggest myth in the industry. Take a look at the SEC filings
>> for any cellular provider- look for the "equipment subsidy" line item and
>> divide it by the number of new subscribers for the quarter to get a very
>> lowball number.

>True, because most people don't actually grasp what an "equipment
>subsidy" is.
>In reality it's not the difference between what the handset costs the
>carrier wholesale and what you pay for it, but more like the difference
>between the retail cost (wholesale cost plus dealer profit) and what you
>pay for it. When I was a Cingular dealer a bazillion years ago, they
>would pay me $250-300 for a new activation, and I'd give a customer a
>"free" phone that cost me maybe $125-175 dollars. I wasn't working for
>free- I needed to make a profit.
>The $300 was the "equipment subsidy" paid by Cingular, and it was greater
>than the "cost" of the phone, just as the price of any retail item you
>purchase is greater than the cost of the item, otherwise the vendor
>wouldn't be in business.

The actual difference with Cingular, promotions aside, as communicated
to the FCC and CAPUC, is $50 per year of contract term as compared to
the no subsidy price from Cingular. Other prices are irrelevant.

John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>

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