99% of the time this was because the cost of the phone is built into your plan. There was a serious risk (and still is) of fraud whereby the phone is fraudulently ordered to an address, the phone physically swiped, the customer never pays, and the telecom can’t recover the phone or its costs. More basically, it used to be pretty hard to get money from customers who just stopped paying. You could get a €2000 euro phone for €500, pay that up front, and walk to the local guy with a serial cable who unlocked your phone for €20.
Theres a lot more protections, technological and legal, that have slowed this now, but the profit is still high enough that jumping through hoops like embedding an ally in the contact centre or intercepting couriers is still worth it. Most of our phones are no longer locked to carrier as we just have better ways of dealing with it now, and all we were doing was feeding 20 euro to the guy who also sells vapes and buys gold.
You could get a €2000 euro phone for €500, pay that up front, and walk to the local guy with a serial cable who unlocked your phone for €20.
A world in which telecoms can’t use SIM locking to offer financing on ultra-expensive phones to people who would otherwise be bad credit risks sounds like an improvement to me. Most people who can’t pay cash for a 2000€ phone are better off not buying one at all.
Cool, you live in that world already. Most networks don’t lock phones anymore. Our first question to people who ask for phones to be unlocked is whether they actually tried the new SIM in it yet, as almost none of our phones are sold locked anymore.
As I understand it, the practice remains common in the USA. Verizon, the carrier in the article agreed to limitations, but other carriers routinely finance phones and lock them until they’re paid off.
I’m sorry the carriers you deal with are so shit but until mobile data transfer becomes a government utility (and let me tell you, there’s a reason telecoms are scrambling to diversify) they do have to make a profit. In most markets the margins are razor thin and new radio technologies (4G, 5G, 6G) are costing more and returning less.
So when poorly regulated markets let them merge into monopolies, or they cut costs by reducing human customer services, “based, I stole a phone from a shitty company” should hopefully be also followed up by you supporting legislation to make mobile data a government utility.
For reference I work in an EU telecom and our industry is heavily regulated. If software companies or supermarkets were hammered for what they do with the data we “just” transfer, they’d be a lot cleaner too.
DT is far more than a network carrier, it’s one of the largest IT services companies in the world. On top of that their largest profits in the mobile sector are from the, eh, less regulated T-Mobile.
Their operating margin is around 12%, way down on last year.
You are locked in to a multi-year contract where you pay for the phone + extra on top of your contract. Those providers aren’t going to make a loss on it.
Sometimes we do. Sometimes we’ll take a loss on the phone because we want you to stay paying the bill after your contract. Market segmentation and personalised offers are a big thing at the moment.
I can’t understand why people can’t use their devices whatever the way they want, greedy corps.
I work for a telecom.
99% of the time this was because the cost of the phone is built into your plan. There was a serious risk (and still is) of fraud whereby the phone is fraudulently ordered to an address, the phone physically swiped, the customer never pays, and the telecom can’t recover the phone or its costs. More basically, it used to be pretty hard to get money from customers who just stopped paying. You could get a €2000 euro phone for €500, pay that up front, and walk to the local guy with a serial cable who unlocked your phone for €20.
Theres a lot more protections, technological and legal, that have slowed this now, but the profit is still high enough that jumping through hoops like embedding an ally in the contact centre or intercepting couriers is still worth it. Most of our phones are no longer locked to carrier as we just have better ways of dealing with it now, and all we were doing was feeding 20 euro to the guy who also sells vapes and buys gold.
A world in which telecoms can’t use SIM locking to offer financing on ultra-expensive phones to people who would otherwise be bad credit risks sounds like an improvement to me. Most people who can’t pay cash for a 2000€ phone are better off not buying one at all.
Cool, you live in that world already. Most networks don’t lock phones anymore. Our first question to people who ask for phones to be unlocked is whether they actually tried the new SIM in it yet, as almost none of our phones are sold locked anymore.
As I understand it, the practice remains common in the USA. Verizon, the carrier in the article agreed to limitations, but other carriers routinely finance phones and lock them until they’re paid off.
Sounds pretty based to do that to a carrier ngl
I’m sorry the carriers you deal with are so shit but until mobile data transfer becomes a government utility (and let me tell you, there’s a reason telecoms are scrambling to diversify) they do have to make a profit. In most markets the margins are razor thin and new radio technologies (4G, 5G, 6G) are costing more and returning less.
So when poorly regulated markets let them merge into monopolies, or they cut costs by reducing human customer services, “based, I stole a phone from a shitty company” should hopefully be also followed up by you supporting legislation to make mobile data a government utility.
For reference I work in an EU telecom and our industry is heavily regulated. If software companies or supermarkets were hammered for what they do with the data we “just” transfer, they’d be a lot cleaner too.
But, like, Deutsche Telekom makes a lot of profit ( >10 billion € in 2024). So the margins can’t be that thin?
DT is far more than a network carrier, it’s one of the largest IT services companies in the world. On top of that their largest profits in the mobile sector are from the, eh, less regulated T-Mobile.
Their operating margin is around 12%, way down on last year.
https://companiesmarketcap.com/deutsche-telekom/operating-margin/
A more straightforward telecom example might be Vodafone in the UK who are at -4% this year: providing services cost them money https://companiesmarketcap.com/gbp/vodafone/operating-margin/
Telefonica in Spain are at 1.7% https://companiesmarketcap.com/telefonica/operating-margin/
Orange in France are at 10% https://companiesmarketcap.com/orange/operating-margin/
For comparison outside of the telecoms sector, Google is at 40%
https://companiesmarketcap.com/alphabet-google/operating-margin/
You’re right no one ever thinks of the shareholders smh
The reason they’re cheaper is because the carrier is expecting to keep you locked in their network.
Not worth it IMO. Similar to cheaper phones with loads of preinstalled crap, you’re not getting a discount, you’re signing a deal to be farmed.
I don’t buy very expensive phones, but I try to find ones that are mostly free of crap (not easy), and I’m ready to pay a bit extra for that.
I want to feel the same but from a purely financial standpoint it makes sense.
Don’t want a locked down phone? Buy directly from the manufacturer.
No it doesn’t make financial sense.
You are locked in to a multi-year contract where you pay for the phone + extra on top of your contract. Those providers aren’t going to make a loss on it.
Sometimes we do. Sometimes we’ll take a loss on the phone because we want you to stay paying the bill after your contract. Market segmentation and personalised offers are a big thing at the moment.