It used to be that carriers would offer huge subsidies on smartphones as long as the customer is willing to sign a two-year contract with them. This has resulted in expensive phones like the iPhone being reduced to a couple of hundred. While this move no doubt draws in new customers, it also eats into the carrier’s margins.
This is why carriers such as T-Mobile have done away with subsidies, introducing installment plans in its place. It also seems that AT&T’s CEO Ralph de la Vega agrees with the sentiment as he too believes that phone subsidies are on their way out as customers are starting to change the way they buy things.
Speaking to Re/code, de la Vega was quoted as saying that, “I think it is one of those options that is going to go away slowly.” In fact AT&T themselves are starting to phase out subsidies by introducing the Next program which was launched last year and basically offered customers installment plans on their phones.
Recently the carrier also removed two-year contract pricing from third-party stores such as Best Buy and the Apple Store. So could phone installment plans be the new subsidies moving forward? It might be a little too early to tell, according to de la Vega, who suggested that perhaps we might need to give it a little more time.
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