After operating under the subsidy model for years, AT&T CEO Randall Stephenson says carriers simply can’t afford it anymore. Is it time to completely revamp the smartphone buying process as we know it?
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AT&T wants to do away with device subsidies


Recent months have seen the introduction of new programs by carriers that encourage subscribers to finance their phones or simply bring their own to the network. According to AT&T CEO Randall Stephenson, it’s about time.

Speaking on Tuesday, Stephenson said device subsidies were great when carriers were first trying to win over customers, but now as the mobile market has matured AT&T wants to focus on selling its services. Subsidies aren’t friendly on the bottom line, and Stephenson says AT&T can’t afford to do it much longer.

The way he sees it, device upgrades are no longer the responsibility of the carrier. Either pay up for a new phone (through financing or purchasing outright) or simply keep your older device. The idea backs recently introduced plans that offer a discount when used in conjunction with an unsubsidized handset.

While many won’t like the idea of having to pay over $200 for a new iPhone, the idea is ultimately a win-win for carrier and consumers. The carrier now longer carries the burden of subsidization while consumers get cheaper mobile plans and the option to upgrade their device more frequently than the standard two-year contract. For a commodity that has so long operated under that model, bucking the trend won’t be welcomed by all consumers. We see it as a necessary evil, but in the long run it should work out better for all.

[via CNET]

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