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  1. #1
    let_it_ride
    Guest
    Just throwing this out, but do any of you out there think it would be better
    to get a lower monthly rate than an occasional break on a phone ???

    Seems like we are free phone driven, we can't see the forest for the trees.
    But we do pay for those "free" phones in higher monthly charges, and
    probably more than if we just bought our devices like we do with any other
    utility. I don't expect my electric company to give me a free fridge, damn,
    I can't afford them now, how could I afford them after that ?? My
    understanding is that in Europe they don't discount the phones, but the
    service rates are much less than here.

    Anyway, what do you all think ????






    See More: Phone Discounts vs Lower Monthly Rates




  2. #2
    Stanley Reynolds
    Guest

    Re: Phone Discounts vs Lower Monthly Rates

    I think that the company would rather spend the money on marketing to get
    more customers and rates would be the same if phones were not discounted.
    But it would be nice to let the customer pick first 2 months free and no
    activation fee or a cheap phone.





  3. #3
    Bob Smith
    Guest

    Re: Phone Discounts vs Lower Monthly Rates


    "let_it_ride" <[email protected]> wrote in message
    news:[email protected]
    > Just throwing this out, but do any of you out there think it would be

    better
    > to get a lower monthly rate than an occasional break on a phone ???
    >
    > Seems like we are free phone driven, we can't see the forest for the

    trees.
    > But we do pay for those "free" phones in higher monthly charges, and
    > probably more than if we just bought our devices like we do with any

    other
    > utility.


    Higher monthly charges? How so? Unless you have to bump up to $35/mo. plan
    for taking the $150 minute plan, nothing changes on one plan.

    > I don't expect my electric company to give me a free fridge, damn,
    > I can't afford them now, how could I afford them after that ?? My
    > understanding is that in Europe they don't discount the phones, but the
    > service rates are much less than here.
    >
    > Anyway, what do you all think ????


    I don't know whether those plans in Europe are that much cheaper. Especially
    when converting the local currency to US dollars.

    Bob





  4. #4
    Isaiah Beard
    Guest

    Re: Phone Discounts vs Lower Monthly Rates

    let_it_ride wrote:
    > Just throwing this out, but do any of you out there think it would be better
    > to get a lower monthly rate than an occasional break on a phone ???


    Well, the break is a lot more than just occasional. Believe it or not,
    NO one buys their Sprint phone at full price. It just happens that
    Sprint and other carriers are willing to offer MORE of a subsidy than
    normal to new customers or eligible 18-monthers than current,
    non-elligible customers.

    If we did away with all subsidies, then the "full" price of handsets
    could easily shoot up $75 to $100 what they already are.

    A case in point is Nextel. They are probably the only wireless company
    that doesn't subsidize the "full" price of handsets. And a phone with a
    feature set similar to a $150 phone on Sprint will go for $275 on
    Nextel. they can do this however, because they don't cater nearly as
    much to individuals. They go after groups, businesses, people who must
    have direct connect capability and are willing to pay through the nose
    for it, even if the network underneath is sub-standard.

    > Seems like we are free phone driven, we can't see the forest for the trees.


    Unfortunately, this is a situation that cell carriers have dug
    themselves into and can't really get out of. imagine the uproar if
    people suddenly had to pay more,just because, when before they could get
    a new phone and service for free?

    There's also a psychological effect. People are more willing to get
    sucked in with a "freebie" and pay little amounts that add up to huge
    amounts over time, rather than have large startup costs up front and
    lower continuing costs down the road. The Rent-To-Own industry is a
    prime example.




    --
    E-mail fudged to thwart spammers.
    Transpose the c's and a's in my e-mail address to reply.



  5. #5

    Re: Phone Discounts vs Lower Monthly Rates

    On Sat, 14 May 2005 10:59:00 -0400, Isaiah Beard
    <[email protected]> wrote:
    >>let_it_ride wrote:
    >> Seems like we are free phone driven, we can't see the forest for the trees.


    Phones aren't free. You pay for the phone in all cases, the monthly
    and minute rate would be much lower if they weren't using the free
    phone to get you signed up for a new contract. That is all the "free"
    phone is: A mechanism to keep you under contract.

    By keeping a stranglehold on the phone supply the only way for you to
    get one is from *the carrier*. And the only way they will give you
    one is if you sign a contract to pay them monthly for 2 years (except
    Tmobile, 1-year). So they give you a phone that probably costs them
    less than $50 and in exchange they have you under contract to pay them
    $960, $1500 or even more over 2 years. Not a bad deal from the
    carriers standpoint but it is hardly in the users best interest.

    >Unfortunately, this is a situation that cell carriers have dug
    >themselves into and can't really get out of. imagine the uproar if
    >people suddenly had to pay more,just because, when before they could get
    >a new phone and service for free?

    That would never happen. If Motorola, Samsung, LG and Nokia were
    duking it out in the market you would see great innovation and much
    lower prices. I bet a very nice phone would cost $99 at retail with
    the store markup. How much do you think it costs to make a 3.5 oz
    phone in a factory in Mexico? $15? $25? Maybe. Not more than that
    I assure you. Remember, the volume is HUGE. Maybe phone manufacturers
    would sell you a phone with a years service included. Heh.
    >
    >There's also a psychological effect. People are more willing to get
    >sucked in with a "freebie" and pay little amounts that add up to huge
    >amounts over time, rather than have large startup costs up front and
    >lower continuing costs down the road. The Rent-To-Own industry is a
    >prime example.

    The marketing. It's all the marketing. Bundling has resulted in a
    large inflation of phone prices then they discount them if you sign
    up. If that were illegal the market would take over, and everything
    would be better. Lots better.



  6. #6
    SS
    Guest

    Re: Phone Discounts vs Lower Monthly Rates


    "[email protected]" <[email protected]> wrote in message
    news:[email protected]

    > If Motorola, Samsung, LG and Nokia were
    > duking it out in the market you would see great innovation and much
    > lower prices. I bet a very nice phone would cost $99 at retail with
    > the store markup. How much do you think it costs to make a 3.5 oz
    > phone in a factory in Mexico? $15? $25? Maybe. Not more than that
    > I assure you. Remember, the volume is HUGE. Maybe phone manufacturers
    > would sell you a phone with a years service included. Heh.


    You can assure us? Then tell me- where are the $100 computers made in
    Mexico? After all, if a cell phone would only cost $25 to make, a basic
    computer couldn't cost more than $75 to make. As far as your $25 claim
    goes, here's something to think about- the CDMA processor alone costs much
    more than that, even when bought in huge volumes.

    > >
    > >There's also a psychological effect. People are more willing to get
    > >sucked in with a "freebie" and pay little amounts that add up to huge
    > >amounts over time, rather than have large startup costs up front and
    > >lower continuing costs down the road. The Rent-To-Own industry is a
    > >prime example.

    > The marketing. It's all the marketing. Bundling has resulted in a
    > large inflation of phone prices then they discount them if you sign
    > up. If that were illegal the market would take over, and everything
    > would be better. Lots better.


    Really? Care to explain the large losses recorded by every domestic
    provider for consumer equipment subsidies each quarter? They're reported
    out in the open and would have been exposed as scams a long time ago by a
    whole bunch of people (independent auditors,press, competitors, FTC, etc.)
    if they were not accurate. And these losses can only be taken if the
    selling price is less than the cost of the product, not for simply selling
    for a cheaper price (but above cost).

    EVERY TIME someone has "assured" that the cost of these phones is much
    cheaper than the industry claims, there has been a complete lack of facts to
    support the statement- it has always been nothing more than an opinion.
    After the hundreds (if not thousands) of claims just like yours, we still
    have yet to see a single bit of proof to back the claim. Do you actually
    have facts to support your claim, or do you simply represent today's best
    guess?





  7. #7

    Re: Phone Discounts vs Lower Monthly Rates

    On Mon, 16 May 2005 21:49:57 -0600, "SS" <[email protected]>
    wrote:

    >
    >EVERY TIME someone has "assured" that the cost of these phones is much
    >cheaper than the industry claims, there has been a complete lack of facts to
    >support the statement- it has always been nothing more than an opinion.
    >After the hundreds (if not thousands) of claims just like yours, we still
    >have yet to see a single bit of proof to back the claim. Do you actually
    >have facts to support your claim, or do you simply represent today's best
    >guess


    Prepaid phones are not sold at a loss. Maybe no carrier profit but
    there is surely retailer margin or they wouldn't be there.

    Prepaid color phones at Target, $79. CDMA chip installed. Virgin
    Mobile.

    You can't get anything at Sprint for that, not without signing an
    agreement to give them at least $863 for service over two years,
    probably lots more.

    If you think Sprint is actually giving you a *free* phone you are
    naive. They might give you one, or sell you one and make you send for
    a rebate (so they can get some "slippage"). But only for signing a
    contract. Phones are not free, and they are not losing money on them.
    That would be bad business.





  8. #8

    Re: Phone Discounts vs Lower Monthly Rates

    On Tue, 17 May 2005 03:08:46 GMT, Paul Miner <[email protected]>
    wrote:

    >On Sat, 14 May 2005 23:16:35 GMT, "[email protected]"
    ><[email protected]> wrote:
    >
    >>By keeping a stranglehold on the phone supply the only way for you to
    >>get one is from *the carrier*. And the only way they will give you
    >>one is if you sign a contract to pay them monthly for 2 years (except
    >>Tmobile, 1-year). So they give you a phone that probably costs them
    >>less than $50 <...>

    >
    >I'd sure love to see some facts backing up the claim of these
    >so-called low cost handsets. I have a feeling the actual cost to the
    >carrier is far more than $50 on average (across all current models),
    >and WAY more than $50 for the high end models, probably as much as 10x
    >that amount.


    I'm sure it is. I am sure they have some models that cost them $50 or
    $75 to buy. But if they put a $400 price on it and give you a $150
    rebate for signing a 2 year contract they are *not* losing money.
    That $400 phone certainly cost them less than the $250 YOU are paying
    THEM. Heh.

    All I am saying is they are keeping the prices of equipment
    artificially high to keep their customers under contract, and unlike
    how it was 2 years ago at Sprint current customers now have fairly
    poor options compared to new customers-as far as equipment is
    concerned.

    With all the phones being carrier branded and sold only through the
    carrier it results in artificially high prices and they are using that
    fact to their advantage. By making you sign a contract to pay them
    money for 2 years.

    If the manufacturers were competing with each other on the equipment
    you would see a natural decline in prices due to competition.




  9. #9
    Bob Smith
    Guest

    Re: Phone Discounts vs Lower Monthly Rates


    "[email protected]" <[email protected]> wrote in message
    news:[email protected]
    > On Mon, 16 May 2005 21:49:57 -0600, "SS" <[email protected]>
    > wrote:
    >
    > >
    > >EVERY TIME someone has "assured" that the cost of these phones is much
    > >cheaper than the industry claims, there has been a complete lack of facts

    to
    > >support the statement- it has always been nothing more than an opinion.
    > >After the hundreds (if not thousands) of claims just like yours, we still
    > >have yet to see a single bit of proof to back the claim. Do you actually
    > >have facts to support your claim, or do you simply represent today's best
    > >guess

    >
    > Prepaid phones are not sold at a loss. Maybe no carrier profit but
    > there is surely retailer margin or they wouldn't be there.
    >
    > Prepaid color phones at Target, $79. CDMA chip installed. Virgin
    > Mobile.


    So, what's your point? Do you know for sure that these phones aren't
    subsidized by Virgin Mobile, to Target ... or off Virgin's website as well?

    Just where is your proof as to the actual cost of the phone? I don't see it
    here ...
    >
    > You can't get anything at Sprint for that, not without signing an
    > agreement to give them at least $863 for service over two years,
    > probably lots more.
    >
    > If you think Sprint is actually giving you a *free* phone you are
    > naive. They might give you one, or sell you one and make you send for
    > a rebate (so they can get some "slippage"). But only for signing a
    > contract. Phones are not free, and they are not losing money on them.
    > That would be bad business.


    Uh, yes, they are losing money on them initially. They hope to recap the
    actual difference within 10 months of service.

    Bob





  10. #10
    SS
    Guest

    Re: Phone Discounts vs Lower Monthly Rates


    "[email protected]" <[email protected]> wrote in message
    news:[email protected]

    >
    > Prepaid phones are not sold at a loss. Maybe no carrier profit but
    > there is surely retailer margin or they wouldn't be there.


    Again, where's the proof? The more likely scenario is that the carrier pays
    the retailer x dollars for each phone sold, just as they do for the calling
    cards.

    >
    > Prepaid color phones at Target, $79. CDMA chip installed. Virgin
    > Mobile.


    And Sprint currently has 11 on their website priced cheaper than that with
    many more features. Nothing has been proved.

    >
    > You can't get anything at Sprint for that, not without signing an
    > agreement to give them at least $863 for service over two years,
    > probably lots more.
    >
    > If you think Sprint is actually giving you a *free* phone you are
    > naive. They might give you one, or sell you one and make you send for
    > a rebate (so they can get some "slippage"). But only for signing a
    > contract. Phones are not free, and they are not losing money on them.



    Then let me ***** it out to you. On their 1st quarter financial report, as
    filed with the FCC and FTC, Sprint reports equipment COSTS of $652M and
    equipment REVENUES (not profits) of $328M. This is far from secret
    information, as it is available from both the FTC and Sprint itself. Don't
    believe it?

    http://www.sprint.com/sprint/ir/fn/qe/1q05.pdf

    Go to the last page- they are line items #3 & #5. In this age of uncovering
    the great Corporate Monsters of the world and the perpetual notion that
    cellular companies are evil, I sincerely doubt that the media, consumer
    groups, disgruntled ex-employees or the various state AG's would allow this
    to fly if it weren't indeed accurate. The link I provided gives proof of
    what I say. I'll be more than happy to research anything you have that
    proves otherwise.

    > That would be bad business.
    >


    Actually, it would appear to be good business, because the $324M loss pales
    in comparison to the $3.867B in revenue that they reported for the same time
    period. They spent a little to make a lot. But they still lost money on
    the phones.





  11. #11

    Re: Phone Discounts vs Lower Monthly Rates

    On Tue, 17 May 2005 17:50:37 -0600, "SS" <[email protected]>
    wrote:

    >Then let me ***** it out to you. On their 1st quarter financial report, as
    >filed with the FCC and FTC, Sprint reports equipment COSTS of $652M and
    >equipment REVENUES (not profits) of $328M. This is far from secret
    >information, as it is available from both the FTC and Sprint itself. Don't
    >believe it?
    >
    >http://www.sprint.com/sprint/ir/fn/qe/1q05.pdf
    >
    >Go to the last page- they are line items #3 & #5. In this age of uncovering
    >the great Corporate Monsters of the world and the perpetual notion that
    >cellular companies are evil, I sincerely doubt that the media, consumer
    >groups, disgruntled ex-employees or the various state AG's would allow this
    >to fly if it weren't indeed accurate. The link I provided gives proof of
    >what I say. I'll be more than happy to research anything you have that
    >proves otherwise.


    Huh? Cellular phones in stores to sell are not equipment.

    Equipment is computers for the office, desks, chairs, cellsites, stuff
    like that.

    Not items bought for resale, stock.

    That item would be in the line with a title like "cost of goods sold".
    But it's not broken out. It's on page 2. All lumped together. $1.8
    Billion.

    But that includes cost of services and products, so includes store
    rent, office rent, cellsite rent, cost of running the network, telecom
    costs, T1 lines, maintenance, etc.. You can't analyze profit or loss
    on items sold in stores with that information.

    Call their investor relations up and ask if you really want to know.


    Find



  12. #12
    Tinman
    Guest

    Re: Phone Discounts vs Lower Monthly Rates

    [email protected] wrote:
    > On Tue, 17 May 2005 17:50:37 -0600, "SS" <[email protected]>
    > wrote:
    >
    >> Then let me ***** it out to you. On their 1st quarter financial
    >> report, as filed with the FCC and FTC, Sprint reports equipment
    >> COSTS of $652M and equipment REVENUES (not profits) of $328M. This
    >> is far from secret information, as it is available from both the FTC
    >> and Sprint itself. Don't believe it?
    >>
    >> http://www.sprint.com/sprint/ir/fn/qe/1q05.pdf
    >>
    >> Go to the last page- they are line items #3 & #5. In this age of
    >> uncovering the great Corporate Monsters of the world and the
    >> perpetual notion that cellular companies are evil, I sincerely doubt
    >> that the media, consumer groups, disgruntled ex-employees or the
    >> various state AG's would allow this to fly if it weren't indeed
    >> accurate. The link I provided gives proof of what I say. I'll be
    >> more than happy to research anything you have that proves otherwise.

    >
    > Huh? Cellular phones in stores to sell are not equipment.
    >
    > Equipment is computers for the office, desks, chairs, cellsites, stuff
    > like that.
    >
    > Not items bought for resale, stock.
    >
    > That item would be in the line with a title like "cost of goods sold".
    > But it's not broken out. It's on page 2. All lumped together. $1.8
    > Billion.
    >
    > But that includes cost of services and products, so includes store
    > rent, office rent, cellsite rent, cost of running the network, telecom
    > costs, T1 lines, maintenance, etc.. You can't analyze profit or loss
    > on items sold in stores with that information.
    >
    > Call their investor relations up and ask if you really want to know.
    >


    While I do agree with you that I'd rather see handsets sold in a true
    competitive market, I don't agree with the numbers you have provided
    regarding the price paid by SPCS for handsets. There is little doubt
    they are more expensive than you think. Here's a quote from Sprint's
    2003 Annual Report (10-K):

    ====================
    Revenues from sales of handsets and accessories, including new customers
    and upgrades, were approximately 9.0% of net operating revenues in 2003,
    10.0% in 2002 and 11.8% in 2001. These declines were mainly due to
    higher rebates and lower gross additions. As part of the PCS Group's
    marketing plans, handsets, net of rebates,
    are usually sold at prices below cost.
    ====================
    http://www4.sprint.com/03ar/download...3arForm10K.pdf
    (On page 39.)

    So there you have it; the smoking gun.

    My concern is if those handsets are over-priced due to lack of open
    competition (to end users). In the absence of such a market I can't
    definitively say they are.


    --
    Mike





  13. #13

    Re: Phone Discounts vs Lower Monthly Rates

    On Wed, 18 May 2005 12:03:13 -0700, "Tinman"
    <[email protected]> wrote:
    >
    >While I do agree with you that I'd rather see handsets sold in a true
    >competitive market, I don't agree with the numbers you have provided
    >regarding the price paid by SPCS for handsets. There is little doubt
    >they are more expensive than you think. Here's a quote from Sprint's
    >2003 Annual Report (10-K):
    >
    >====================
    >Revenues from sales of handsets and accessories, including new customers
    >and upgrades, were approximately 9.0% of net operating revenues in 2003,
    >10.0% in 2002 and 11.8% in 2001. These declines were mainly due to
    >higher rebates and lower gross additions. As part of the PCS Group's
    >marketing plans, handsets, net of rebates,
    >are usually sold at prices below cost.
    >====================
    >http://www4.sprint.com/03ar/download...3arForm10K.pdf
    >(On page 39.)
    >
    >So there you have it; the smoking gun.


    Yeah, well the question is how much less. $2? They didn't say. In
    some cases I imagine that is the amount less. Completely offset by
    the contract revenue which is why they do it.

    For current customers I am pretty sure that is not the case. They
    probably make some amount on current customers who need equipment. I
    am sure it's not a whole lot, but it is not a loss, or not much loss.
    The more expensive the phone the more they make on it since the rebate
    is the same.

    They would surely recognize sales and marketing expenses, support
    expenses, cost of the activation process so as to make those be a net
    loss, tax deductible for them, it would be ridiculous not to.

    >My concern is if those handsets are over-priced due to lack of open
    >competition (to end users). In the absence of such a market I can't
    >definitively say they are.


    Yeah, well I am sure they are much higher than they would be were
    there competition.



  14. #14
    Bob Smith
    Guest

    Re: Phone Discounts vs Lower Monthly Rates


    "Tinman" <[email protected]> wrote in message
    news:[email protected]
    <snipped>

    > ====================
    > Revenues from sales of handsets and accessories, including new customers
    > and upgrades, were approximately 9.0% of net operating revenues in 2003,
    > 10.0% in 2002 and 11.8% in 2001. These declines were mainly due to
    > higher rebates and lower gross additions. As part of the PCS Group's
    > marketing plans, handsets, net of rebates,
    > are usually sold at prices below cost.
    > ====================
    > http://www4.sprint.com/03ar/download...3arForm10K.pdf
    > (On page 39.)
    >
    > So there you have it; the smoking gun.
    >
    > My concern is if those handsets are over-priced due to lack of open
    > competition (to end users). In the absence of such a market I can't
    > definitively say they are.


    There is that Mike. Certain phone manufacturers only deal with one wireless
    provider, like Sanyo ... when it comes to CDMA providers, so it's hard to
    compare costs between providers. In saying that, I'm sure that Sanyo prices
    out their phones to SPCS at the lowest mark up as possible, so that their
    phones will sell @ SPCS stores, affiliates and retail stores.

    Bob





  15. #15
    SS
    Guest

    Re: Phone Discounts vs Lower Monthly Rates


    "[email protected]" <[email protected]> wrote in message
    news:[email protected]
    > On Tue, 17 May 2005 17:50:37 -0600, "SS" <[email protected]>
    > wrote:
    >
    > >Then let me ***** it out to you. On their 1st quarter financial report,

    as
    > >filed with the FCC and FTC, Sprint reports equipment COSTS of $652M and
    > >equipment REVENUES (not profits) of $328M. This is far from secret
    > >information, as it is available from both the FTC and Sprint itself.

    Don't
    > >believe it?
    > >
    > >http://www.sprint.com/sprint/ir/fn/qe/1q05.pdf
    > >
    > >Go to the last page- they are line items #3 & #5. In this age of

    uncovering
    > >the great Corporate Monsters of the world and the perpetual notion that
    > >cellular companies are evil, I sincerely doubt that the media, consumer
    > >groups, disgruntled ex-employees or the various state AG's would allow

    this
    > >to fly if it weren't indeed accurate. The link I provided gives proof of
    > >what I say. I'll be more than happy to research anything you have that
    > >proves otherwise.

    >
    > Huh? Cellular phones in stores to sell are not equipment.


    Maybe not in your vernacular, but in the business world, they are most
    certainly consumer equipment necessary to access and use the network.

    >
    > Equipment is computers for the office, desks, chairs, cellsites, stuff
    > like that.


    And none of those generate revenue, so again, the equipment mentioned is
    indeed phones. The items that you mention are in the Capital Expenditure
    line, where they belong. You missed the entire reason for the page you were
    looking at. It is not a detailed financial statement, but a statistical
    page of key metrics inportant to the industry that are not used in the
    standard accounting. THe cost of computers is not one of those metrics.


    >
    > Not items bought for resale, stock.


    Again, read above- those are Capital Expenditures.

    >
    > That item would be in the line with a title like "cost of goods sold".
    > But it's not broken out. It's on page 2. All lumped together. $1.8
    > Billion.


    See above.

    >
    > But that includes cost of services and products, so includes store
    > rent, office rent, cellsite rent, cost of running the network, telecom
    > costs, T1 lines, maintenance, etc.. You can't analyze profit or loss
    > on items sold in stores with that information.
    >
    > Call their investor relations up and ask if you really want to know.


    Or instead of calling them, I can use the knowledge of reading these
    financials that I have as an investor in the industry.

    I'm still waiting for facts contrary to the numbers and have yet to see any.





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