Shameless Carriers

Jean-Louis Gassée, on the latest round of carrier executives bemoaning the prices they have to pay to Apple for iPhones:

I don’t know if Stephenson is speaking out of cultural deafness or cynicism, but he’s obscuring the point: There is no subsidy. Carriers extend a loan that users pay back as part of the monthly service payment. Like any loan shark, the carrier likes its subscriber to stay indefinitely in debt, to always come back for more, for a new phone and its ever-revolving payments stream.

When carrier executives complain about iPhone subsidies, what they are really complaining about are customers who see the iPhone as being worth a premium. If you (the carrier) don’t carry the iPhone, you will bleed customers until you do. In this scenario it should be no surprise that Apple is able to negotiate favorable terms. What the carriers pine for are the old days when nearly all customers would just come in and buy whatever phone the carrier’s own salespeople recommended.

Monday, 16 December 2013