updated 04:26 pm EST, Tue December 10, 2013
Remarks about subsidy future, upcoming market targets made in NYC
Addressing a friendly crowd of investors in New York City, AT&T CEO Randall Stephenson noted that with cellphone adoption at 75 percent and climbing, networks would likely soon stop offering large subsidies for devices. The move comes on the heels of AT&T's new pricing plan, that offers customers discounts of up to $15 per month if users retain an older device, rather than upgrade it after two years of use.
Stephenson said of the subsidies' past benefits tthat "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."
"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 [per month]. You can use your own device or finance it. I think this will be very powerful. It's where we see the market going" claimed the executive.
Device financing plans are currently available at AT&T, T-Mobile, and Verizon. Reports from earlier this year suggest that Samsung devices average 84 percent subsidy, with Apple devices being subsidized at 74 percent.
Speaking of the future, Stephenson said that "the last two years have been a full-court press to shore up our spectrum position up to and through the next auction. We are shoring up our capacity reserve in anticipation of the next growth wave, which is video -- and mobile video requires a lot of spectrum." Presumably, the carriers would have to offer lower prices on large data allotments, or reinstate the mostly-dead unlimited data plans, for this wave to occur.