The big carriers have long subsidised phones to lure customers in. But that could all be coming to an end, at least in the US, if AT&T’s chief is to be believed.
Speaking at a conference on Tuesday, AT&T’s CEO Randall Stephenson explained that mobile service providers can no longer afford to fund the smartphone upgrade cycle, reports CNET. With 75 per cent of customers now using a smartphone — a figure that’s still climbing — their finances just can’t stretch. He explained:
“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 per cent penetration, you move into maintenance mode. That means more device upgrades. And the model has to change. You can’t afford to subsidise devices like that.”
Instead, you can expect to see more and more plans that encourage users to keep their older phones, which incentivise sticking with what people already have. It means convincing many users that they don’t need a phone every 18-24 months, or at least convincing them that the cost must fall on them. As Stephenson explained:
“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 $US45 all-in. You can use your own device or finance it. I think this will be very powerful. It’s where we see the market going.”
In other words, AT&T are confirming what you may have feared for some time: you might have to start stumping it big time for each phone you get. [CNET]