Someone please explain "subsidized" phones to me

Discussion in 'Android General Discussions' started by Jmoore1701, Aug 22, 2013.

  1. Jmoore1701

    Jmoore1701 Member

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    I don't really get the whole concept of a "subsidized" phone. For instance, let's say that I and my twin brother Victor go to the Verizon store. I buy the Galaxy S4 for $200 with a 2 year contract because I know I'm going to be with Verizon, for better or worse, for a long time. Victor, however, decides he doesn't want to be locked into a contract, and pays the full retail price of $650. We both sign up for the exact same plan and service and features...
    So now we're both paying the same amount each month. How is my phone "subsidized"? If--IF--we both stay with Verizon for 2 years, Victor is screwed out of $450.
    Sure, Victor can switch phones any time he wants with no penalties. But he paid $450 for that priviledge!
    And what if we both decide to go to AT&T at the same time? I would have to pay, at most, a $350 early termination fee...that still puts me $100 ahead of Victor, right? What calculation am I missing here?

    So here are my real questions in all this:
    1) Shouldn't they either charge me more per month, or charge Victor less?
    2) Is locking me into a 2 year contract really worth $450 to Verizon?
    3) Isn't Victor really paying a $450 penalty for NOT having a contract?
    4) Why do we drive on a parkway, but park in a driveway?

    (Sorry, I got carried away on that last one)
     
  2. TatDroid

    TatDroid Active Member

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    1) Verizon SHOULD charge Victor less for his monthly contract, but they don't. You are both paying the subsidy. Some companies (T Mobile is one, I believe) do charge less if you BYOD (bring your own device)
    2) They're not paying $450. They are charging it back to you monthly (the subsidy)
    3) Yes. The ONLY time this makes sense is if you are already on a Verizon unlimited data plan. If you want to remain on unlimited data you must BYOD. If you buy a subsidised phone from Verizon you will lose your unlimited data.
     
  3. Jmoore1701

    Jmoore1701 Member

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    Thanks, TatDroid, that makes sense now. Victor's the one being screwed for the first two years, since we're both paying a subsidy, AND he's also paying a $450 penalty. But AFTER the two years, I'm being screwed too because my subsidy doesn't go away, I'm still paying the same amount per month.

    Um... you didn't answer Number 4 LOL
     
  4. TatDroid

    TatDroid Active Member

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    4) You're free to drive down your driveway to go park on the parkway, but then the parkway would become a driveway.
     
  5. NOVICE

    NOVICE Active Member

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    Check with Verizon next week. New plan which will allow upgrades to a new phone every 12 months (or 6 months with a penalty).

    New twist on the subsiding game because of new plans coming from Sprint and smaller carriers.
     
  6. Jmoore1701

    Jmoore1701 Member

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    I don't know, Novice... I can't read the description of Verizon's Edge plan in any way that does NOT make it sound like a huge ripoff. You have to turn in a phone you've been paying a subsidy AND an Edge payment on. They're charging you an enormous premium for wanting to upgrade often. I could understand that if if upgrading was a complex, cumbersome, expensive process for Verizon, but it ain't.
    I think I'm going to stay with my "strategy" of buying subsidized phones and keeping them as long as I can, only upgrading after my two years is up and ONLY if there is a truly compelling new device out at the time.
     
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