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  1.    #1  
    Can people here explain the business rationale? Do consumers save or merely break even when compared to buying a phone outright and signing up for a monthly plan? Is the money coming from other hidden fees?

    Trying to see the justification, as carriers are dictating features and designs to fit these subsidies.
    Palm Vx > Treo 650 > Centro > G1 > Pre > BlackBerry 9700
  2. #2  
    Customers don't save at all. The point of phone subsidies is to lock the customer into a long-term contract which will more than pay for itself. Suppose your monthly bill is $59.99 for a phone with both 900 voice minutes and unlimited data. Over the length of a two year contract, you will have paid $1439.76 of monthly fees over and above the $99 subsidized price of your Centro. That's a lot more than the $349 price of an unlocked Centro. On the other hand, you'll still wind up paying a monthly bill anywhere you go and on top of that, you will have paid three and a half times as much as you would have paid for a subsidized Centro.
  3.    #3  
    I understand but here's the difficulty. If all carriers price the plans more or less the same, it does not matter whether one stays with a particular carrier or not; the aggregate expenditure by all customers remains constant.

    When I bought unlocked phones I did not have access to cheaper plans, but paid the same rates anyway because I needed continuous service.

    With all the carriers taken together, it makes no difference if a customer is locked to AT&T or Sprint or Verizon. Perhaps what matters is that they are locked, which is either an opening for penalty fees or a way of supporting price fixing by reducing movement of customers.
    Palm Vx > Treo 650 > Centro > G1 > Pre > BlackBerry 9700
  4. #4  
    I think the SERO plan with Sprint might change the equation for some people. If it meets your needs and Sprint works well where you are, the monthly cost of $30 is so reasonable it's hard for me to imagine choosing a different carrier. As you've pointed out so clearly one's biggest expense is the monthly service, not the phone no matter what you pay for it.

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