Could not stay aboard the Droid ship... But not because of the phone

[ViViDboarder]

It seems to me that the OP and several others have no understanding of what it means to sign a contract...

These companies don't even have to offer an ETF. They could just decline your requests to terminate and stick you with the entire 2 years even though you don't want it. You signed it.

The ETF is only higher to cancel out the costs of the phones.

If VZW is forking up 350 to subsidize your Droid under the assumption that you're going to have a 2 year plan, they are going to want to make sure they at least break even on that!

It's a business not a charity people. If you decide to make the commitment, great.

 

[Applejuiced]

The question is though how much do really these companies fork out for the subsidy?
Theres nowhere near $350 that VZ is forking out IMO.
If the 32GB iPhone 3GS for example sells for $299 with a two year term and the 32GB iPod Touch RETAILS (read there is a PROFIT when its sold) for $299, how much subsidy do you think ATT is really paying out? Do you think there is $175 (or more??) worth of hardware upgrades in the iPhone 3GS over the ipod Touch?
What I suspect the raise in ETF is simply to keep their 'loyal' subjects in line so they can nickle and dime you to death for the next 2 years.
With their highpriced plans and features they make up the subsidy within a few months.

The ETF is only higher to cancel out the costs of the phones.

If VZW is forking up 350 to subsidize your Droid under the assumption that you're going to have a 2 year plan, they are going to want to make sure they at least break even on that!

It's a business not a charity people. If you decide to make the commitment, great.

 

[ViViDboarder]

The question is though how much do really these companies fork out for the subsidy?
Theres nowhere near $350 that VZ is forking out IMO.
If the 32GB iPhone 3GS for example sells for $299 with a two year term and the 32GB iPod Touch RETAILS (read there is a PROFIT when its sold) for $299, how much subsidy do you think ATT is really paying out? Do you think there is $175 (or more??) worth of hardware upgrades in the iPhone 3GS over the ipod Touch?
What I suspect the raise in ETF is simply to keep their 'loyal' subjects in line so they can nickle and dime you to death for the next 2 years.
With their highpriced plans and features they make up the subsidy within a few months.

While I'm sure they want people to stay with them for the next two years... They do offer and ETF... If that was the main concern they'd just force you to uphold the binding agreement you signed.

On top of that, the Droid retails with no contract at $560. This means that VZW is forking over $360 for your phone hoping that you will be loyal. Now lets touch on markup. Assume that VZW is making some money off of the phone sales. Maybe 15%. I don't know how it works but I'm sure Motorola is marking it up when they sell it to VZW so I'm not sure VZW even makes anything off of the phone. In fact, I doubt it considering iPhones and any other phones are the same price when bought from Manufacturers (Apple Stores) or Cariers (AT&T). But for the sake of the arguement... Lets say VZW pays $487 for the phone to Motorola and tries to profit (make it look like they are giving you a bigger rebate, no actual proffit because it's sold for $200 with the contract). Then VZW is STILL paying $287 for you to use the phone.

If you back out of your contract after a month or two they are losing money. Notice that the ETF drops faster than it does with AT&T. I'm pretty sure the VZW ETF drops $10/mo while the lower AT&T ETF drops $5/mo.

The increase in cost is to cover the expenses of the devices. If they were looking to lock people in longer, they'd make the good rebates on 4 year contracts or not offer an ETF and make you pay your way out of the entire cost of the contract.

 

[Applejuiced]

Yes but we dont really know what big companys like AT&T or Verizon that sell tons of phones for a phone manufacturer really pay for the subsidy.
I doubt its anywhere near the retail thats all.

While I'm sure they want people to stay with them for the next two years... They do offer and ETF... If that was the main concern they'd just force you to uphold the binding agreement you signed.

On top of that, the Droid retails with no contract at $560. This means that VZW is forking over $360 for your phone hoping that you will be loyal. Now lets touch on markup. Assume that VZW is making some money off of the phone sales. Maybe 15%. I don't know how it works but I'm sure Motorola is marking it up when they sell it to VZW so I'm not sure VZW even makes anything off of the phone. In fact, I doubt it considering iPhones and any other phones are the same price when bought from Manufacturers (Apple Stores) or Cariers (AT&T). But for the sake of the arguement... Lets say VZW pays $487 for the phone to Motorola and tries to profit (make it look like they are giving you a bigger rebate, no actual proffit because it's sold for $200 with the contract). Then VZW is STILL paying $287 for you to use the phone.

If you back out of your contract after a month or two they are losing money. Notice that the ETF drops faster than it does with AT&T. I'm pretty sure the VZW ETF drops $10/mo while the lower AT&T ETF drops $5/mo.

The increase in cost is to cover the expenses of the devices. If they were looking to lock people in longer, they'd make the good rebates on 4 year contracts or not offer an ETF and make you pay your way out of the entire cost of the contract.

 

[nateo200]

That's an understandable goal, but the free ride is over.

People have been working the system... swapping carriers before they paid off a heavily subsidized phone... and now those actions have raised ETFs for everyone.

----

I can't begrudge the carriers' ETFs to pay back subsidies.

However, I do side with those who want to know why our monthly plans aren't cheaper if we bring in a non-subsidized phone.

If I buy a used phone, I shouldn't have to pay a subsidized plan price.

Now, I realize that it's probably all financially worked out as some kind of everyone-pays-a-share deal, just like data plans currently are (instead of paying per actual usage), but still...

Not going to lie I'm pretty jealous of the Canadians on Bell paying what $45 USD equivlent? Agreed I would pay all 600 bones ofnthe 3GS if I paid $50 a month....

 

[ukcolinr]

I think $350 is still a pretty reasonable price!

I'm in the UK. I bought my iPhone 3GS in June, let's say next June/July when the next iPhone will probably be released I want to upgrade. I'll have 2 choices. Buy it on Pay as you Go, based on the current prices a 16GB handset is £450 (approx $760) or I can buy out my contract which means paying all the remaining monthly fee's til when my contract would have expired which is £35/mo so £420 (approx $710), I'd then still have to take out another new contract. I appreciate $175 was much nicer, but $350 is still a lot less than we have to pay here, and I think it works much the same in most european countries! I think I'll be having to stick with my 3GS til my contract expires on 18th June 2011 *sigh*