Quote:
Originally Posted by FanIn80
On average, iPhone users spend between $80-$100 per month on their phone bill. Over the length of a 36 month contract, that's $2880-$3600. $800 of that is for a tangible product (the phone), the rest is for an intangible service (access to their voice and data system).
Cell phone contracts (for the most part) are not about the subsidized phone. That's just the line they use when people complain about it.
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I think this is correct - I don’t think any telco subsidizes anything, they simply amortize the purchase price of the phone over the length of the contract, and assume some of the financial risk for the outlay on the device up front.
It’s no coincidence that the early termination fees, at their very lowest, usually cover the price difference between the “subsidized” and full price versions of the phones. Of course you usually pay even more than that, simply because they can charge more.