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AT&T CEO: Subsidies for smartphones must end for continued growth

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.



By Electronista Staff
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  1. LenE

    Fresh-Faced Recruit

    Joined: 05-19-04

    Until now, they wouldn't reduce the cost of service after a contract expired. It didn't matter that the device was well-paid for, they wouldn't budge.

    They do everything that they can to get us to abandon our old unlimited plans, while greatly raising the costs of data. Share, they say, it only costs about 30% more than you are paying now, and you lose unlimited data. Do you want to tether? Move off of unlimited and pay an additional fee.

    Do you want a newer device more often? Jump on our new program with a higher subsidy reimbursement cost (get rid of your unlimited data).

    Why the change of tune? So fed up with these clowns (all of them, not just AT&T).

  1. JackWebb

    Fresh-Faced Recruit

    Joined: 08-31-07

    Demand for this remains so great with parents buying the devices and plans for their kids, etc. that this helps keep the price high. People are paying for luxury ahead of need. So for me, even though I have actual legitimate business needs I end up picking T-mobile $50/mo and so-so coverage with an iPhone 4 or Nexus 4 I bought second-hand.

    Getting away from subsidies would better expose the real costs of the devices and hopefully would put more price pressure on the costs of the phones.

  1. The Vicar

    Junior Member

    Joined: 07-01-09

    Nationalize the cell phone networks, and kick out the bloated, expensive middlemen like AT&T, who are gypping everyone.

  1. auto_immune

    Dedicated MacNNer

    Joined: 05-29-08

    I knew the normal deal was to get a cheaper subsidized phone by signing a two year
    contract agreement, but now they admit they were changing an extra $15 for service
    as well.

    Scumbags.

  1. Grendelmon

    Dedicated MacNNer

    Joined: 12-26-07

    I got my wife an unsubsidized 4S and she's on Virgin Mobile. 300 minutes, unlimited data/text. No contract. Unlocked phone. $35/month.

  1. driven

    Addicted to MacNN

    Joined: 05-08-01

    @LenE ... why the change of tune? T-Mobile changed the game. Competition at it's finest!!

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