Comment by henrikschroder | Hacker News Reader

Comment by henrikschroder | Hacker News Reader

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When cell phones came to Sweden in the 90's, all the carriers did the exact same thing, offering phones and plans as bundles. But after a couple of years of fierce competition, margins were so thin that it was 100% obvious that any plan that came "with" a phone was essentially just their regular phone plans + a payment plan for the phone. You saved absolutely no money by paying for your phone through a carrier, and for the last decades I've always bought my phones separately, and getting phone plans separately.

And I'm amazed that this shit still flies in the US, that consumers still haven't figured this shit out.

I've lived in the US for almost a decade now, and I've never had a phone subscription or bought a phone through a carrier. Always buy unlocked phones. Always get a pre-paid subscription.

If I buy a phone and don't like it, it's between me and wherever I bought the phone, and I can look up their return policy before I make the purchase.

If I don't like the carrier I'm with, I can switch the next month, and the new carrier will happily help me port my number to them for free.

Don't get plans. Don't get multiple "lines". Don't get family plans. They're traps. Expensive, annoying, traps that cost you time and money and hassle.

Your premise that you don’t save money by buying your phone through the carrier is incorrect.

AT&T has had generous trade-in options to upgrade an existing iPhone to a new one since forever. I’m typing this on an iPhone 12 that was bought for list price, but AT&T offered somewhere around $350 for an old iPhone 7Plus that was half broken. There’s absolutely no way I would have been able to resell that old phone for so much in the open market or through Apple’s trade-in program.

If you paid attention, these kind of trade-ins have been possible ever since the second iPhone appeared on the market.

It’s true that the trade-in locks me into a 2 year contract, but I can live with that: the plan matches my needs very well, so I don’t care, and I don’t upgrade phones every year either.

That doesn’t mean that I like AT&T’s customer experience: they signed me up for a warranty plan behind my back that I had to cancel after seeing my first bill. But that’s orthogonal to the earlier point.

> There’s absolutely no way I would have been able to resell that old phone for so much in the open market

AT&T is not a charity, so how do they make that possible?

> It’s true that the trade-in locks me into a 2 year contract

> they signed me up for a warranty plan behind my back that I had to cancel after seeing my first bill.

There you go. That's how you're paying for it. You're not saving money, stop deluding yourself. TANSTAAFL. Was it worth the hassle?

They only need to "get you" once with a useless tacked-on charge, and they've made back every dollar that you "saved" by buying your phone through them. And if they get you a second time, it's pure profit for them.

Dude, this is not complicated.

All wireless carriers offer huge incentives to come to their network. Because there’s a lot of friction for people to change.

Offering generous trade-in programs is just part of the same tactics. They’ll make just a tiny bit less profit, but it’s way better than seeing a customer go to somebody else. The cost of a cell phone network is dominated by capital investments.

I can do math. It looks like you can’t? Because it’s really not hard to take the regular price of a phone vs what you get after incentives and compare which one is cheapest. And then do the same with plans and compare those with prepaid.

I see prepaid plans for $40+taxes and fees for prepaid and they don’t offer what I want, for which I pay $55 after all taxes and fees.

So for around $10 or $240 more over 2 years minus $350 in trade-in, I get the plan features that I want and the phone that I want. IOW: I get a better deal all around than what I’d get with prepaid. Financially and feature-wise.

Would you please care to explain me how I’m the dumb one here, because I clearly don’t get it.

As for that tacked on charge: the guy in the store obviously added it without my permission to pad his commission. I hate it too. It took me 5min on the phone to get it reversed. I already wrote that it was orthogonal to the concept of getting a better deal vs buying straight from Apple, but somehow you didn’t get that.

> Dude, this is not complicated.

No, it really isn't. A giant for-profit corporation is using every trick in the book, every little bit of marketing knowledge and know-how, to psychologically reassure you and lull you into thinking you're getting a "good deal". You're not.

> I already wrote that it was orthogonal to the concept of getting a better deal

It's not orthogonal, because that is how they make money off of you, which is why they're offering incentives to get you onto their network. Once you're on a plan, the bullshit starts, and you'll have to be on your guard so that your plan doesn't change from under your feet.

You might save some money in the absolute sense, but you're paying for it with vigilance and hassle and annoyance. And if you slip up once, they got their money back. A large part of their business model is simply to saddle their subscribers with high-margin useless crap, hoping enough of them won't notice.

As an example, if you compare 5G coverage for AT&T's prepaid vs regular plans, you'll see that 5G is available on cheaper regular plans than the prepaid ones. Why is that? Are they a charity? Is it out of the goodness of their hearts they're offering it to their loyal customers?

No, they're doing it, because they know they'll make more money off of you, on your $55 regular plan, than they'll do off of someone on a $55 total prepaid plan.

The plans let people who can't afford a $2,000 phone get one.

They end up paying %25 more.

Then they should use an "honest" and transparent credit service instead of thinking a disguised payment plan from a phone carrier is a better choice.

(Actually, people shouldn't buy things on credit in the first place, but this whole sub-discussion is about financially illiterate people, so...)

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