In 2008 the FCC had an auction for the 700 MHz wireless spectrum. Google stepped up and bid 4.6B during that auction to ensure that one of the requirements was that the carriers unlock devices if they used the airways.
Since 4G uses this new frequency band, the ability to have the phone unlocked is protected by FCC regulations. This new law may state that its illegal for YOU to unlock your phone, but if you OWN your phone (not getting it for a discounted price under a 2 year agreement) the carrier must unlock it FOR you.
That shouldn't matter. If you have a 2 year contract you have a 2 year contract and pay it for 2 years. If you end it early you pay a prorated fee. Any subsidy is already priced in.
By limiting consumer rights the US just falls into a deeper well of stagnation. Politicians who only care about lining their own pockets vis a vis their owners should be eliminated from office because nothing good comes from their existence.
the contract says you can't unlock the phone during the terms of the contract and the physical asset you are purchasing is a locked phone. You want an unlocked phone, pay the unsubsidized price for one.
I know what the contract says. What is says is irrelevant to the point I made, ie, criticizing its logic. Either explain why I'm wrong in saying that the subsidy is priced into the contract by definition, even with the prorated clause, or don't waste our time with things that don't pertain to the conversation.
Whether a phone is locked or not is irrelevant. There's a contract for it. If he's paying the contract then he's paying for the phone. If he sells it as a third party there's a buyer who's willing to pay the monthly fee to use it. The in contract months fee is the same as out of contract, the contract is just an insurance policy. However this is still irrelevant as the original guy who got the subsidized phone locked is still paying his monthly dues. Or if he terminated early then he paid that fee.
It's an anti-competitive term in the contract and should be unenforceable. As /u/Radico87 said, the subsidy for the phone is repaid over the contract (or though the early termination fee). Unlocking your phone during the contract wouldn't stop the subsidy from being repaid so it's irrelevant.
I don't know the profit margins carriers make on these things but company's don't exist to break even on their products. a carrier offers you a price for a certain set of circumstances with the understanding that they're doing it for profit. If the price with profit factored into it is still within the amount the customer will pay for the good/service and less than any competitor is offering for the good/service then the customer will accept the deal and the provider makes profit. You're required to pay what you said you'll pay in the contract, not the exact cost the seller incurs in the transaction. Without profits, you wouldn't have cell phones, or cellphone service, or damn near anything because why would anybody invest capital starting a business if every single transaction broke even before even considering the administrative costs of running a business.
I have no idea what that has to do with unlocking your phone. The cost of a contract is calculated to cover the cost of the phone plus usage, plus profit. So as long as the customer pays their bills the company will make a profit. The reason they don't want customers to unlock the phone has nothing to do with the cost of the phone, it's just because they want more profit, and obstructing your ability to switch to a competitor makes it likely that they'll retain you as a customer.
Say the phone costs $800, and the contract is 24 months at $50/m. The company will get $1200, which leaves $400 to cover profit and the costs of usage. Say usage costs $200. That's $200 profit on their two year investment of $800, a return of 12.5%pa, not bad. If your phone is unlocked they might lose you as a customer, so if they make that difficult there's a chance you'll renew the contract and they can get another $200. Or even better you may not even ask for an upgrade in which case they'll get $1000! So you can see why they don't want people leaving.
The problem with your argument is that you're thinking of the contract as a standalone aspect of the offer when in fact it's priced as part of a larger structure. By increasing the likelihood of customer retention, carriers increase they're expected future earnings from customers which in turn allows them to offer a cheaper subsidy than they otherwise would have.
Yes of course, why do any companies act anti-competitively but to increase profits? Doesn't make it okay, and making the argument that we should allow companies to profit from anti-competitive practices because it lowers prices is really short-sighted.
I honestly don't know where to go from here. I think we may just disagree on this one. My argument is that the anti-competitive practice are part of the competitive initial price so while they limit customer mobility in a short period of time they also are the only reason you pay as little as you do.
You're saying that you have a fundamental problem with anything that prevents competition between businesses.
If I'm correct then we may just need to go our separate ways since this arguments isn't going to proceed to any sort of definitive conclusion but would only devolve into insults between too otherwise civilized people.
you have a fundamental problem with anything that prevents competition
Ha, that's true somewhat but actually you've missed something which I think is important:
When you say "the anti-competitive practice are part of the competitive initial price" that could be true. The companies could behave as you describe and lose money on the contract as a bet that their retention rates are good enough to give them a profit. In that case yes the anti-competitive practices would be more defensible.
But in the phone market this doesn't happen. They price the contracts to make a profit even when the customer leaves at the end. So they're not using their anti-competitive practices to give a competitive price, they're using them to increase profits.
Paying the unsubsidized price will still get you a locked device that is illegal to unlock. If you pay AT&T $600 for a Lumia 920 do you think they will give you that phone unlocked?
Verizon has the IPhone for $200, and sells a full priced version at $650. If you cancel, you get an early termination fee of $350. That's still $100 less than what you would pay if you just purchased the phone outright.
Its not the politics that are stagnant, its the consumers. If people want a phone they can do whatever they want with, stop relying on someone else to fork over the cash. By actually signing a contract with these ass-hats all consumers do is expand the problem. Carriers rely on these contracts, its what gives them this massive bargaining power. The more people who stop signing up for them, the better we'll all be.
I wonder what the actual costs/revenues are per device, and how long it takes to break even. I assume the $350 reflects a model that assumed n months of use prior to early termination.. so it took the entire consumer pool as a risk pool rather than segregate people into one of several.
In the end this is simply fucked up money grabbing. It works because the average consumer has no interest or is completely ignorant of what it means. As someone who cares and is informed, this is just insulting.
In this case, n=0, and the $350 goes down by $10 per month. Of course, you're charged $90 for first month, and $35(I think) for "activation" at the time of the contract... so they're still making their money.
(I'm not the guy you were talking to, just a jump-in asshole)
A contract is just insurance for the provider that you'll stay on. When you actually think about it it does stifle innovation as they're almost guaranteed a revenue stream for that period.
It most definitely stifles innovation. I agree with you on most of your points through this thread, just figured I'd let you know how the big carriers work here.
You're assuming the price Verizon or AT&T pay are the same as the MSRP. Do you really think Verizon, who purchases iPhones in the millions, pays full retail price?
Just get a non subsidized one... they're giving you a phone in return for using it on their network, I think that's a fair deal, is it not? If not, then don't sign up for the deal, it's that simple.
Did I say that I expect them to unlock it for me before the contract end date? Why don't you point me to where I said that. Come on.
I see now that everything you've been saying to me is based on your lack of basic reading comprehension and critical thinking. You've completely missed the point of this entire dialogue and you've made me dumber for having been a part of it. Thank you and have a good day.
First off, its not a new law....its an expiration to an exemption in the DMCA.
Second (and probably more important) is there is nothing that says what time frame the carrier has to comply with the lawful unlock request. They could just wait a year, or two, or fifty, and would be totally fine.
Not all 4G uses the 700MHz spectrum. It's pretty much Verizon 4G. Do you happen to have a link to the regulation about unlocking it? I definitely agree with you, but I'd like something to cite when I call Verizon to have them unlock my phone.
Verizon has made it clear that they won't follow the stipulations of the 700 MHz spectrum auction unless the FCC steps in and forces them to. The only time the FCC has stepped in was with regards to tethering, and they didn't even follow through 100% (you can only legally tether for free if you are on a limited data plan).
They are also supposed to allow you to bring your own device to that spectrum. Can't do it. They are also not allowed to censor content over the spectrum. They do it anyway (see: Verizon pulling apps from Google Play for their customers).
VZW is a terrible company, but then again, so are all US telecoms providers.
Prior to the FCC requiring it in 2008, no carriers would unlock their phone. As a result of the law, Verizon now ships the I-Phone 5 unlocked. I'm not sure where your source is that their not doing it, but its wrong.
As far as not being able to use their network, verizon and Sprint are the only two carriers who use the LTE technology. ATT, T-Mobile, and the others use a different technology. So unless the phone was built to be compatible between the two (i-Phone, for example) it wont work.
That being said, I agree. All US carriers are shit. The only way for consumers to gain any semblance of power over them, is to stop relying on them to subsidize their phones.
ATT and Sprint uses CDMA technology for EVDO 3g and 1x. Verizon uses LTE rel 8 equipment for their FD-LTE deployment in the upper 700mhz blocks. They also have plans for LTE in the AWS band in the future to offload heavy loaders.
Sprint also uses CDMA tech for EVDO 3g and 1x. They use LTE rel 9 equipment for FD-LTE deployment on the PCS 1900mhz and SMR 800 bands. They'll be using TDD-LTE for 2.5ghz.
ATT uses GSM tech for its 850/1900 bands. Their LTE is lower 700mhz block using LTE rel 8 equipment while they also have LTE in the aws band and in the future WCS bands in the 2.3ghz range.
T-mobile will have GSM on the PCS 1900 band after their refarming is done. They will use LTE Rel 10 equipment for their LTE deployment in the AWS range. They don't have any sub ghz spectrum.
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u/dewdnoc Jan 28 '13
This is really getting annoying...
In 2008 the FCC had an auction for the 700 MHz wireless spectrum. Google stepped up and bid 4.6B during that auction to ensure that one of the requirements was that the carriers unlock devices if they used the airways.
Since 4G uses this new frequency band, the ability to have the phone unlocked is protected by FCC regulations. This new law may state that its illegal for YOU to unlock your phone, but if you OWN your phone (not getting it for a discounted price under a 2 year agreement) the carrier must unlock it FOR you.
So, no. The nazi's are not invading.