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  1. #61
    Todd Allcock
    Guest

    Re: Contracts. Why?

    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! ;-)




    See More: Contracts. Why?




  2. #62
    CozmicDebris
    Guest

    Re: Contracts. Why?

    "Thomas T. Veldhouse" <[email protected]> wrote in
    news:[email protected]:

    > 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.




  3. #63
    sylvan butler
    Guest

    Re: Contracts. Why?

    On Tue, 08 Jan 2008 20:50:32 -0700, Todd Allcock <[email protected]> wrote:
    > Having said that, unlike most carriers who seem to offer prepaid as a "last
    > resort" for credit-challenged consumers, and at a price designed not to
    > cannibalize their bread-n-butter postpaid biz, T-Mo aggressively pursues
    > the pre-paid market, seeming to assume that anyone their prepaid offering
    > lures from pstpaid is likely a high enough volume user that it'll be worth
    > it. That seems to work for them, considering that their prepaid ARPU is
    > (relatively) high, and their total ARPU is also relatively high considering
    > their high percentage of prepaid customers compared to other carriers.


    The cost to T-Mo for a prepaid customer is probably a lot lower than
    their cost per post-paid customer. There is a customer support
    organization for both, but all the freebies, billing, billing support,
    payment processing, collections, etc. are only for post-paid.

    The only ongoing costs for a "glove box" phone on prepaid are the
    minutes that are actually used, and a tiny bit of the amortized
    infrastructure necessary to deliver service (from the cell tower to
    providing a means to refill the minutes). Probably the most expensive
    (costly) t-mo prepaid customer is the one that buys a phone, uses the
    allotted minutes just before they expire, then replaces the phone.

    sdb
    --
    What's seen on your screen? http://PcScreenWatch.com
    sdbuse1 on mailhost bigfoot.com



  4. #64
    Jerome Zelinske
    Guest

    Re: Contracts. Why?

    Does uscellular have service in your area? They are CDMA, but
    cellular not PCS.



  5. #65
    Thomas T. Veldhouse
    Guest

    Re: Contracts. Why?

    Jerome Zelinske <[email protected]> wrote:
    > Does uscellular have service in your area? They are CDMA, but
    > cellular not PCS.


    I my immediate area there is only Sprint and Verizon (and perhaps QWest .. who
    joined/partnered with Sprint and share PCS spectrum and systems). Alltel
    bought up a bunch of regional carriers and is getting to be a bigger presence
    in rural MN. I think US Cellular might have some towers up North, but I am
    not sure. But, in the Twin Cities, there is just Sprint and Verizon on CDMA
    (note my previous exception of QWest).

    --
    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.




  6. #66
    Thomas T. Veldhouse
    Guest

    Re: Contracts. Why?

    In alt.cellular.sprintpcs CozmicDebris <isheforreal> wrote:
    >
    > 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.
    >


    You know very well that a subsidy is not a loss on the balance sheet; it is an
    expense. To make a profit, they have to earn more revenue than they put out
    in expenses [which include the subsidy, labor, infrastructure and other fixed
    costs]. A loss is only if they fail to net a profit. Another write off [or
    loss] is depreciation, and that clearly is a category that a subsidy does NOT
    fall into [although it is a category their inventory of phones can fall into].


    > 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.
    >


    Yes, it is for depreciation of depreciable assets. Company vehicles,
    depritiating inventory, even infrastructure all allow for that kind of loss.
    A subsidy, however, is NOT a loss, it is an expense.

    --
    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.




  7. #67
    Thomas T. Veldhouse
    Guest

    Re: Contracts. Why?

    In alt.cellular.sprintpcs Todd Allcock <[email protected]> wrote:
    >
    > I guess that depends on your POV. I find the subsidy and EFT are in each
    > other's ballpark, at least.
    >


    It really depends. Some of the phones they give away for "free" when you sign
    up, are often old inventory that they want to clear for newer models and are
    perhaps worth $30 to them on the balance sheet. So, you get a free phone that
    is worth perhaps $30 to the carrier, but to quit you owe them $175, well, that
    is quite a deal for the carrier no matter how you look at it. Basically, if
    you buy new high end models in demand, then you are probably closer to that
    equitable case where ETF is close to the subsidy.

    > 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.


    It is really a source of revenue to the carrier ... they really hope users
    keep the same phone for years or upgrade hardware, plans and re-contract.

    It is this reason why the retention department is usually able to accomodate
    you, because they know that it is free revenue anyway.

    --
    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.




  8. #68
    Todd Allcock
    Guest

    Re: Contracts. Why?

    At 10 Jan 2008 19:29:14 +0000 Thomas T. Veldhouse wrote:

    > I my immediate area there is only Sprint and Verizon (and perhaps

    QWest .. who
    > joined/partnered with Sprint and share PCS spectrum and systems).


    To clarify that comment a little, these days Qwest is simply a Sprint MVNO.
    Qwest sold their wireless spectrum and assets long ago, and uses Sprint's
    network and infra tructure, but but their own Qwest-branded handsets,
    billing systems and customer service. Sort of like a postpaid Virgin Mobile.


    Ironically, the "old AT&T" (the LD company that SBC bought) had just signed
    an agreement with Sprint to offer wireless service in the same MVNO fashion
    as Qwest, to back in the wireless biz two years after spinning off the old
    AT&T Wireless (which has just been purchased by Cingular at that point.)
    That deal was invalidated by their (AT&T's) acquisition by SBC.





  9. #69
    Thomas T. Veldhouse
    Guest

    Re: Contracts. Why?

    Sorry for the top post here, but it is easier to address all your comments in
    one place.

    First, yes, it is possible there are a few subsidized pre-paid model phones
    [carrier locked], but it is also clear that the business model is such that it
    is not the case for the vast majority of cases. In fact, if it was, a
    competitor could simply buy all the retail assets of a smaller competitor and
    not activate service and quickly put them out of business. A company can not
    operate under such a business model.

    What you failed to do was address depreciated inventory along the entire
    supply chain. I illustrated this for the carrier only, but not the
    manufacturer or any other part of the supply chain. Any part of the supply
    chain will, at some point, find it has significant quantities of depreciated
    inventory, and it is this that turns into the "free" or very low cost phones
    used to capture new customers (i.e. buy this phone and get three free) for
    pre and post paid customers. The difference is that the subsidy is part of
    the business model for post paid, because they have a contract with ETF
    penalties to support it. With pre-paid, they largely rely upon the inventory
    depreciation [somewhere along the supply chain] to offer low cost phones.

    In summary, any subsidies on pre-paid contractless phones are almost certainly
    not the standard business model [especially for GSM based phones and carriers
    where unlocking a phone is common place], it exposes a carrier to a lot
    of risk that a phone will be purchased and not used on their plan (Grandma has
    her E911 backup in her car).

    In alt.cellular.sprintpcs Todd Allcock <[email protected]> wrote:
    > 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.
    >
    >


    --
    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.




  10. #70
    CozmicDebris
    Guest

    Re: Contracts. Why?

    "Thomas T. Veldhouse" <[email protected]> wrote in
    news:[email protected]:

    > In alt.cellular.sprintpcs CozmicDebris <isheforreal> wrote:
    >>
    >> 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.
    >>

    >
    > You know very well that a subsidy is not a loss on the balance sheet;
    > it is an expense. To make a profit, they have to earn more revenue
    > than they put out in expenses [which include the subsidy, labor,
    > infrastructure and other fixed costs]. A loss is only if they fail to
    > net a profit. Another write off [or loss] is depreciation, and that
    > clearly is a category that a subsidy does NOT fall into [although it
    > is a category their inventory of phones can fall into].


    All fine and dandy- none of it applies here. And I don't need the
    accounting lesson, so you can save it for someone that does.

    >
    >
    >> 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.
    >>

    >
    > Yes, it is for depreciation of depreciable assets. Company vehicles,
    > depritiating inventory, even infrastructure all allow for that kind of
    > loss. A subsidy, however, is NOT a loss, it is an expense.
    >


    No- that is another seperate line item. You should look at a few 10-Q's
    and then come back when you know what I'm speaking of.

    And trying to convince me of your point of view is useless- I don't make up
    the accounting rules for the industry. I simply stated a very publiv piece
    of knowledge.



  11. #71
    Thomas T. Veldhouse
    Guest

    Re: Contracts. Why?

    In alt.cellular.sprintpcs CozmicDebris <isheforreal> wrote:
    >
    > No- that is another seperate line item. You should look at a few 10-Q's
    > and then come back when you know what I'm speaking of.
    >
    > And trying to convince me of your point of view is useless- I don't make up
    > the accounting rules for the industry. I simply stated a very publiv piece
    > of knowledge.


    Really? Very public? How about a link?

    --
    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.




  12. #72
    CozmicDebris
    Guest

    Re: Contracts. Why?

    "Thomas T. Veldhouse" <[email protected]> wrote in
    news:[email protected]:

    > In alt.cellular.sprintpcs CozmicDebris <isheforreal> wrote:
    >>
    >> No- that is another seperate line item. You should look at a few
    >> 10-Q's and then come back when you know what I'm speaking of.
    >>
    >> And trying to convince me of your point of view is useless- I don't
    >> make up the accounting rules for the industry. I simply stated a
    >> very publiv piece of knowledge.

    >
    > Really? Very public? How about a link?
    >


    www.sprint.com

    www.verizon.com

    www.att.com

    Go to any of their investor pages and pull up any one of their quarterly
    reprts that are filed with the SEC. Each and every one will have a line
    item for equipment subsidies.

    It doesn't get any more public than that. And you can argue the semantics
    of the terminology used all you want- that's not going to change the
    reality of the situation.



  13. #73
    Todd Allcock
    Guest

    Re: Contracts. Why?

    At 10 Jan 2008 21:44:50 +0000 Thomas T. Veldhouse wrote:

    > First, yes, it is possible there are a few subsidized pre-paid model

    phones
    > [carrier locked], but it is also clear that the business model is such

    that it
    > is not the case for the vast majority of cases.



    Go to the website of any major carrier, and compare the prices of their
    prepaid phones to the same models unsubsidized without contract. The
    prepaid version is less- usually far less.

    According to posts on Howard Foums (I'm not a Verizon customer so I have no
    first-hand knowledge) Verizon recently instituted a policy (at corporate
    stores) when you can buy any Verizon phone at the one-year contract price
    (not the lower two-year) if you activate it prepaid on the spot. If that's
    not a direct subsidy, what is?

    > In fact, if it was, a
    > competitor could simply buy all the retail assets of a smaller competitor

    and
    > not activate service and quickly put them out of business.


    How? Send a memo and tell every company employee to buy every competitor's
    prepaids and bin them? We're talking about major carriers like T-Mo,
    Verizon and AT&T. How could one of those guys retailiate on the others in
    that fashion?

    Due to prepaid subsidies, most, if not all, carriers institute purchase
    limits. T-Mo's website only allows two prepaid purchases per person at a
    time, and only so many (5 or 10- I forget- I'm only at 3 so far in the last
    12 months) to any person/address per year. AT&T also has a yearly limit
    (as FatWallet.com customers constantly complain!) WalMart limits prepaid
    phone purchases per visit.

    If selling these handsets at $15-40 was so lucrative, why would companies
    care if I bought 50 and stored them in my garage? Could it be that they'd
    actually incur a loss?

    > A company can not
    > operate under such a business model.


    Sure they can, if the abuse is small enough as to not upset the total
    profits. How many people are going to buy prepaid handsets and not use them,
    or use them on other carriers? How many as a percentage of customers who
    activate service "properly?"

    Prepaid is an insanely profitable business. As soon as one carrier
    discounts handsets to spur adoption rates, the others have tofollow suit to
    conpete. It was Tracfone- a company with expensive airtime, that started
    the downward spiral. They cripple their phones with custom firmware which
    is difficult to "unTracfone" and prevents it's use on other networks. In
    fact, Tracfone's biggest problem with retail sales is "accessory theft."
    People can buy a complete $15 Motorola phone cheaper than they can buy a
    battery or spare charger for the same model! You could buy the phone, take
    the battery, and throw the rest away and Be $5 ahead (a replacement battery
    for the $15 phone at WalMart is $19.99!)

    > What you failed to do was address depreciated inventory along the entire
    > supply chain. I illustrated this for the carrier only, but not the
    > manufacturer or any other part of the supply chain. Any part of the

    supply
    > chain will, at some point, find it has significant quantities of

    depreciated
    > inventory, and it is this that turns into the "free" or very low cost

    phones
    > used to capture new customers (i.e. buy this phone and get three free) for
    > pre and post paid customers. The difference is that the subsidy is part

    of
    > the business model for post paid, because they have a contract with ETF
    > penalties to support it. With pre-paid, they largely rely upon the

    inventory
    > depreciation [somewhere along the supply chain] to offer low cost phones.


    That's true of certain promotional models, perhaps, but it's not the norm-
    it doesn't explain how carriers introduce the same NEW model to pre- and
    post-paid at the same time- i.e. T-Mo's Nokia 2610, Sidekicks or Samsung
    Stripe. The difference is that the prepid models tend to hng around
    longer, but that's attributable to the separate packaging- they may guess
    how many they need for say, a year, and guess badly. (Carriers don't
    repack a retail prepaid phone for postpaid sales or vice-versa, if one
    model sells out before the other.)


    > In summary, any subsidies on pre-paid contractless phones are almost

    certainly
    > not the standard business model [especially for GSM based phones and

    carriers
    > where unlocking a phone is common place]


    Manufacturers have taken great pains to make unlocking more difficult these
    days- it's often not as simple as getting a code off a web-based calculator
    and typing it in. Many phones now require dedicated unlocking hardware or
    unlocking by shops that charge a fee often equal or higher than what you
    paid for the phone.
    I've given plenty of examples that preaid subsidies ARE the standard
    business model- look at Virgin's line- a group of unique phones built
    specifically for them alone and retail from $14.99 and up. Sorry, but
    there is no way in H-E-double-hockey-sticks that any manufacturer on the
    planet has figured out how to manufacture a CDMA phone and bundle a battery
    and charger to hit a $14.99 RETAIL price point. They can't currently hit
    $15 wholesale!


    > it exposes a carrier to a lot
    > of risk that a phone will be purchased and not used on their plan

    (Grandma has
    > her E911 backup in her car).


    Again, how many? 1 in 20? 1 in 10? The vast bulk of prepaid phones are
    used on the intended carrier, which makes up for the losses. The
    alternative is to make entry-level prepaid $99.99, which would severely
    reduce the market for the lucrative sales of minutes. Again, it's a case
    of "giving away the razor" (or, in this case, the RAZR) "to sell the
    blades."


    You're operating under a flawed principle (IMHO) that carriers and
    manufacturers, in thirty years of cellular sales, haven't figured out how
    to balance production, inventory, and sales, and glibly accept there will
    be thousands of excess phones left over that they'll be thrilled to sell
    for 10-cents on the dollar due to 'depreciation.' No one likes
    depreciating inventory and certainly doesn't plan an important facet of
    their business (like retail prepaid) around it.

    Frankly, subsidized prepaid is actually one of the reasons I'm no longer a
    cellular dealer. I was an SBMS (eventually Cingular) dealer, and built a
    good portion of my business around prepaid- particularly to the elderly,
    who often wanted the security of cellular but used very few minutes.
    One Christmas season (2001 maybe?) Cingular corporate stores offered a new
    Nokia 5120 phone on prepaid, including activation and starter airtime for
    the (then) amazing price of $99, and was promoting it heavily. Trouble
    was, they wouldn't sell these prepackaged kits to their independent
    dealers, in fear that we'd just cannibalize the phones for postpaid sales
    (wholesale price at that time for the 5120 was about $125) and $10 airtime
    card (wholesale value $8.50.)

    At that time I was bundling decent refurbished analog phones ($50-65
    wholesale) and $10 airtime and selling them for $99- that couldn't compete
    with my own carrier's corporate offering. That was the straw that broke
    the proverbial camel's back (but, in fairness, that camel was already
    carrying a bunch of straws!) and I terminated my agent agreement.

    Subsidized prepaid is a standard practice and has been for a long time.
    Obviously the subsidies are far less than with conract phones, but they're
    subsidized nonetheless.






  14. #74
    Jerome Zelinske
    Guest

    Re: Contracts. Why?

    Is verizon PCS or cellular in your area? What are the two
    cellular carriers? Sprint PCS is one of your PCS carriers. Are there
    more PCS carriers?
    Here the two cellular are att and uscellular. The PCS are Sprint
    PCS, t-mobile, and verizon.



  15. #75
    Thomas T. Veldhouse
    Guest

    Re: Contracts. Why?

    Jerome Zelinske <[email protected]> wrote:
    > Is verizon PCS or cellular in your area? What are the two
    > cellular carriers? Sprint PCS is one of your PCS carriers. Are there
    > more PCS carriers?


    Verizon is cellular. Sprint is PCS. AT&T is cellular and PCS and T-Mobile is
    PCS.

    > Here the two cellular are att and uscellular. The PCS are Sprint
    > PCS, t-mobile, and verizon.


    Is Verizon native there? The only Verizon PCS that I am aware of is in
    Florida.

    --
    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.




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