Contracts. Why?

You know, you are right. I forgot that my son took his phone swimming and
he was in the middle of a contract. Buying a phone from the cell company
would have been insanely expensive. He went to Craigs list and bought a
phone he liked for a reasonable price and he is happy. The phone on
Craigslist was essentially brand new.

So I stand corrected on this issue.

Vito


"Carl" <[email protected]> wrote in message
news:[email protected]...
> Uncle_vito wrote:
>> When you sell the phone? Who wants a used cell phone with older
>> technology when they can get a new phone subsidized by Verizon. BTW,
>> if you are not going to change providers anyway, who cares about a
>> contract?
> Vito- you would be surprised at the number of people looking for a used
> cell phone. There are probably several reasons for it, but one example is
> someone who is under contract who has lost or damaged their phone (that
> contract does lock them in folks).
>
> I have four people in my family, each of whom gets a new phone every
> couple of years. I have zero old cell phones hanging around the house.
> They ALL have been sold on eBay, and I'm not talking about for
> insignificant prices either. I wouldn't bother for a few bucks.
>
> Of course "marketing" is part of the key to success in reselling your cell
> phone, as it is in any other business deal. I keep the boxes, manuals,
> and chargers to all my phones and I keep them in very good condition.
> They sell.
>
> Now I'll grant you that, as the technology advances ever more rapidly, and
> prices drop, it may become harder to do this. I'll be testing this in a
> short while. Wish me luck.
>
>

---

› See More: Contracts. Why?

At 08 Jan 2008 17:53:26 -0600 clifto wrote:
> Joel Koltner wrote:
> > The pay-as-you-go phones tend to make significantly more money on a
"per
> > minute of usage" basis than "regular" (contract) phones, so the
marketing idea
> > there is that it doesn't take nearly as long for the manufacturer to re-
coop
> > the "discount" they gave you on the phone, so even if you lose or throw
away
> > or otherwise stop using the phone (and go get another one for $50)
there's a
> > decent chance they'll have already made some money off of you overall.
>
> 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).


But you cherry-picked the most expensive (per minute) rate plan for your
comparison, not to mention the $30/300 minute plan includes free weekends.
T-Mo offers 1000 minutes for $40- a more attractive plan for heavy users- a
700 min./month postpaid user, for example, pays $40/month instead of $70 on
prepaid.

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.

Todd Allcock <[email protected]> wrote in
news:[email protected]:

> At 08 Jan 2008 17:53:26 -0600 clifto wrote:
>> Joel Koltner wrote:
>> > The pay-as-you-go phones tend to make significantly more money on a
> "per
>> > minute of usage" basis than "regular" (contract) phones, so the
> marketing idea
>> > there is that it doesn't take nearly as long for the manufacturer
>> > to re-
> coop
>> > the "discount" they gave you on the phone, so even if you lose or
>> > throw
> away
>> > or otherwise stop using the phone (and go get another one for $50)
> there's a
>> > decent chance they'll have already made some money off of you
>> > overall.
>>
>> 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).
>
>
> But you cherry-picked the most expensive (per minute) rate plan for
> your comparison, not to mention the $30/300 minute plan includes free
> weekends. T-Mo offers 1000 minutes for $40- a more attractive plan for
> heavy users- a 700 min./month postpaid user, for example, pays
> $40/month instead of $70 on prepaid.
>
> 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.
>
>
>
>

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.

On 2008-01-09, 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.

The last time I was comparing pre-paid plans that was indeed
the case.

--
Grant Edwards grante Yow! By MEER biz doo
at SCHOIN...
visi.com

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

>In alt.cellular.t-mobile Grant Edwards <[email protected]> wrote:
>> On 2008-01-07, LHA <[email protected]> wrote:
>>
>>> If the cellular companies provided the service and support
>>> that their customers desire and deserve, they would NOT need
>>> to lock us in with long, expensive contracts.
>>
>> As long as they're giving you a $200-$300 phone for free,
>> they're going to require that you guarantee future purchases in
>> order to cover the cost of that phone.
>>
>
>But they don't. They give you a $150 phone for free.

That's like saying "I charged it, so it was free." They have signed
to a contract that guarantees them a future revenue stream, and that
future revenue stream has a present value.

>They give you a $300
>phone for $150 ...

Assuming that it really cost them $300, which I doubt. Probably some
phones are sold for close to the carriers's retail price, but almost
certainly not all of them. If they weren't making money on the
process, they'd stop doing it.

At 08 Jan 2008 22:14:20 -0600 CozmicDebris 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.


Good point. That used to be true, but T-Mo opened up their prepaid
coverage to include roaming, including some at 850MHz. It doesn't roam
everywhere a T-Mo postpaid phone does, but the prepaid and postpaid maps
are closer than they used to be.

On 2008-01-09, Grant Edwards <[email protected]> wrote:
> On 2008-01-09, 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.
>
> The last time I was comparing pre-paid plans that was indeed
> the case.

This might have been the case at some time in the past but it isn't now.
T-Mobile prepaid has a bunch of roaming coverage; just check the prepaid
coverage map at T-Mobile's web site. I've heard that T-Mobile prepaid
has somewhat less roaming coverage than postpaid, but it is hard to find a
difference between the two maps.

Dennis Ferguson

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.

Whose other networks do they roam on?

--
If John McCain gets the 2008 Republican Presidential nomination,
my vote for President will be a write-in for Jiang Zemin.

Todd Allcock wrote:
> At 08 Jan 2008 17:53:26 -0600 clifto 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).
>
> But you cherry-picked the most expensive (per minute) rate plan for your
> comparison, not to mention the $30/300 minute plan includes free weekends.
> T-Mo offers 1000 minutes for $40- a more attractive plan for heavy users- a
> 700 min./month postpaid user, for example, pays $40/month instead of $70 on
> prepaid.

The problem with that is that the user can't depend on the 700 minutes.
After he hits the limit, the plan has a price more like $280 per month
($0.40 per minute). So he's going to waste some finite number of minutes
every month to avoid hitting the limit. I suppose it's a matter of skill
or luck as to how few minutes get wasted.

--
If John McCain gets the 2008 Republican Presidential nomination,
my vote for President will be a write-in for Jiang Zemin.

At 09 Jan 2008 05:52:47 -0600 clifto wrote:

> > T-Mo offers 1000 minutes for $40- a more attractive plan for heavy
users- a
> > 700 min./month postpaid user, for example, pays $40/month instead of
$70 on
> > prepaid.
>
> The problem with that is that the user can't depend on the 700 minutes.
> After he hits the limit, the plan has a price more like $280 per month
> ($0.40 per minute).

Right- that's why I used 700 as my example- the plan actually includes
1000, but it's unrealistic to assume anyone would use all of their minutes
each month. My hypothetical customer leaves 300 minutes "on the table"
every month.

> So he's going to waste some finite number of minutes
> every month to avoid hitting the limit. I suppose it's a matter of skill
> or luck as to how few minutes get wasted.


Maybe- the point was that as long as his average minute cost is _less_ than
$0.10, it's a better deal (for him) than prepaid. That happens when he
hits 400 minutes on the $40 for 1000 minute plan.

At 08 Jan 2008 21:32:21 -0800 Jack Hamilton wrote:

> >But they don't. They give you a $150 phone for free.
>
> That's like saying "I charged it, so it was free." They have signed
> to a contract that guarantees them a future revenue stream, and that
> future revenue stream has a present value.


True, but the use of the phone requires service anyway. As long as the EFT
is equal or less than the subsidy, why not? You aren't really stuck with "
$1000" worth of service (2 years at $40/month), you're stuck with paying
the EFT to cancel- roughly the price of the discount.

> >They give you a $300
> >phone for $150 ...
>
> Assuming that it really cost them $300, which I doubt.

It doesn't matter what it costs to manufacture or procure- nothing else you
buy is sold for "cost" either. What matters is the difference between what
it will cost you to buy it with or without the contract. (And not
necessarily from the carrier- i.e. if you can get the same phone on eBay,
or a local dealer without contract cheaper.)

> Probably some
> phones are sold for close to the carriers's retail price, but almost
> certainly not all of them. If they weren't making money on the
> process, they'd stop doing it.

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.

Otherwise, two years later with the same carrier, that full price phone
without contract was $200 more, and you still spent two years with the
carrier- just without a contractual obligation.

In alt.cellular.verizon Paul Miner <[email protected]> wrote:
>
> I was under the impression that the cost to acquire a new customer
> included more than just the cost of the equipment subsidy.
>

Same goes for walmart ... you don't sign a contract with them when you walk in
the door saying that you will pay them $X every month or pay $XXX to quit
paying.

The ETF is connected to the reduction in phone price. Any other money spent,
whether it be advertising or paying for good reviews, is not money they have a
right to recoup via a contract.

As far as the cost of activation goes ... they already charge you activate an
account, so no contract needed for that.

> Just curious, does anyone know when they stopped calling themselves
> Sprint PCS? Was it around the time of the Nextel merger, or before
> that? It seems odd to refer to them as Sprint PCS this many years
> later.
>

Sprint split off Sprint PCS years ago so there was a tracking stock and the
main stock. Then, Sprint merged with Nextel and Sprint PCS was rolled back
into the fold leaving Sprint Nextel. As far as when, well, it should be
obvious from the name, eh? :-)

--
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 alt.cellular.verizon Elmo P. Shagnasty <[email protected]> wrote:
>
> If you want the ability to switch out phones as a fashion statement, and
> have several phones to choose from depending on what mood you're in,
> then realistically in the US your choice is GSM and the SIM
> card--excepting the iPhone, of course.
>

Actually, you can switch out your phones on Verizon all that you want too [but
currently, you are limitted to Verizon supported phones]. That doesn't
affect your ability to get a discount on a new phone in one or two years and
it doesn't affect your contract term.

With Sprint PCS, and perhaps only with Sprint PCS, if you change phones, your
discount on a new phone is reset to two years out. They trigger the discount
on two years from your last ESN switch. That is absolutely ridiculous and is
a sign of just how poor the programmers who set that system up were (or still
are!). In fact, it is this reason alone [and the customer service that
followed the flaw] that led me to leave Sprint PCS after about five years.

> What you give up, frankly, is network availability and call quality.
>

Verizon has a GREAT network and their plans have excellent coverage [including
roaming] for post pay customers. I won't go into the reasons why I think CDMA
is a better technology for voice than GSM (but let's say multipath is
particular beneficial in downtown areas) but I think there are many with
relatively fewer benefits going to GSM. I often hear my coworkers who use
T-Mobile and AT&T complain that the person on the other end can't hear them
.... or the other way around. I don't think that has ever happened to me on a
CDMA phone. Since I hate Sprint PCS now [for good reasons enumerated hear
more than a year ago], Verizon is my only real option here unless I decide to
tolerate AT&T and live with what AT&T offers, which is GSM and higher prices
:-(

--
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 05:52:31 -0600 clifto 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.
>
> Whose other networks do they roam on?

Small regional carriers, mostly- Unicell in parts of New England, Iowa
Wireless, Viero in Colorado and Nebraska, Western Wireless (now owned by
Alltel, IIRC, who left up some GSM capacity for the roaming revenue.)

In VERY limited areas, T-Mo customers can roam on AT&T- I'm not sure if
it's a leftover part of the old West Coast/NY T-Mo/Cingular sharing
agreement or legacy agreements AT&T got stuck with when they acquired other
carriers.

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.

That is why I say it shouldn't be legal. Plan prices should be lower if a
person is not on contract and they should be able to activate a non-subsidized
phone, whether new or used, without a contract and without paying the rates
created for "subsidy recovery". The best deal in the world for these
companies is somebody coming in with a used phone, activating it on a new plan
and charging them the same monthly rate that they charge others who are paying
off their subsidy AND creating a profit for the carrier. In short, these
people are probably the most profitable ... yet, they don't allow it in a lot
of cases ... or want to charge you MORE per month to start a phone on a new
plan without a contract [I think Sprint used to charge $10 / month for this].

Someday, it will be all wireless data, and you can pick your VoIP provider and
phone ... then we will be complaining about data contracts instead of these
blasted subsidy rip-offs.

--
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.