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AT&T CEO Randall Stephenson Calls For an End to Big Phone Subsidies

December 10, 2013 - Written By Cory McNutt

Guess who just made my “list” today…AT&T CEO Randall Stephenson, that wants to do away with the big phone subsidies because wireless carriers can no longer afford to fund our constant desire to upgrade our smartphones every 18 months. According to CNet, speaking at an investor conference in New York City on Tuesday Stephenson said:

“When you’re growing the business initially, you have to do aggressive device subsidies to get people on the network. But as you approach 90 percent penetration, you move into maintenance mode. That means more device upgrades. And the model has to change. You can’t afford to subsidize devices like that.”

This “silly talk” has to stop, although it has been in the wind for a couple of years – Almost two years ago T-Mobile’s Chief Marketing Officer Cole Brodman was asked one thing he would change if he had the power to do so, and he said:

“It [device subsidies] actually distorts what devices actually cost and it causes OEMs, carriers — everybody to compete on different playing fields. I think it is really difficult, especially from a consumer perspective, because it causes consumers to devalue completely the hardware they are using…. It is amazing hardware, but it has become kind of throw away. So, it is unfortunate, you’ve got dual-core, multiprocessor devices with amazing HD screens that get thrown away at 18 months.”

T-Mobile moved forward this year with its “Uncarrier” ad campaign, and then added the JUMP! program to allow those that want a new device, the choice to upgrade every six months, but the user is picking up more of the cost of the device. The consumer is basically taking on a no interest finance plan to purchase their device – a very smart move. Verizon’s Edge, AT&T’s Next, and Sprint’s One Up programs are all geared to have the consumer pay the entire cost of the phone.

CEO Randall Stephenson
AT&T CEO Randall Stephenson

Zero, that is exactly what Stephenson would like to see it cost AT&T when a customer buys a new phone.  He said:

“If you are a customer and you don’t need to upgrade your device, you can get unlimited talk and text and access to the data network for $45 all-in. You can use your own device or finance it. I think this will be very powerful. It’s where we see the market going.”

I love that these executives seem to be telling us that we do not need to upgrade every 18-24 months because our devices still work – don’t they realize how fast electronics and devices improve each year? If a newer model comes out with more features and better hardware, the carriers would have us keep our older equipment because it can still make a phone call? If they want us to pay for our phones and are willing to give us 24, interest-free months to pay for it, then really lower my monthly plan payment since you no longer have to subsidize my $700 device – and don’t give me a $10 break, some real savings.

Let us know in the comments or on Google+ how you feel about subsidies and if you are willing to pay full-price for your device…and if you must, would this deter you from upgrading as often.