T-Mobile's CMO Cole Brodman would like to see subsidized pricing on new phones go away because he thinks that consumers don't see the true value of the hardware under the current system.
The reality is that financially, subsidies hit carriers like T-Mobile and Sprint extremely hard, especially on popular devices like the iPhone. Sprint pays a huge upfront cost in the billions of dollars to Apple to get the iPhone in the hopes of recovering that in monthly user fees during the contract period.
While getting rid of the subsidies makes sense for carriers, it only benefits consumers if it means we get to eliminate contracts and get reduced monthly prices. After all, the carriers aren't eating that cost out of the goodness of their hearts, we pay the full price of that phone over time. If carriers aren't having to recover the cost of the hardware, there is zero justification for the contract unless they give us an ever larger discount to reflect the reduced customer acquisition costs.
What do you suppose the chances are of that happening? I'm not holding my breath.
T-Mobile CMO: subsidized pricing hurts wireless competition, undermines hardware value
Could an end to unsubsidized smartphones be on its way for US carriers? If T-Mobile's Chief Marketing Officer Cole Brodman had his way, that
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