Worrying News From The Netherlands

[Guest nedge2k]

[teaser]

Our man in NL, Peekie, has been keeping a watchful eye on a rather worrying story that could impact a lot of mobile phone users...

For many years now, mobile operators worldwide have subsidised the cost of mobile handsets in order to attract more customers. This happens not only with contract handsets but also, to a lesser degree, with pre-paid handsets. For the Netherlands and Germany, however, this situation is changing.[/teaser]

As of September, Dutch telecoms operator KPN will be stopping the subsidisation of all contract handsets. The reason? Well, they are of the opinion that the market has now become more adult and therefore subsidisation is no longer needed. This comes four years after they and four other Dutch operators were fined 88 million euros for mutually agreeing to stop the subsidisation of pre-paid handsets.

Furthermore, T-Mobile Germany are also said to be taking a similar stance on the subsidisation of handsets. Could this be the reason for the higher-than-normal price of the Vario II? Will operators in other countries follow suit based on the success of this decision? Would you pay sim-free prices for a contract handset?

Related links (in Dutch):

• NRC
  
• Brabants Dagblad
  
• Telecomwereld
  

[Guest Dr Who]

SIM free price to get locked into an 18 month contract?

Ha ha ha ha HA!

I'd be looking for more 'contracts' like this to appear

http://www.t-mobile.co.uk/Dispatcher?menui...nal_sim_only_pm

where you get a SIM with a monthly bundle of any network/time minutes but no monthly contract.

[Guest nedge2k]

ooo...liking that :)

[Guest Ingvarr]

They finally realized that there is no reliable way to "lock in" the client.

Too easy to unlock :)

[Guest Confucious]

Interesting to see how this pans out - what incentives will they give to get people to take out contracts? Most people only get new phones because they are free or very cheap. The phone market could stagnate with no one getting a new phone. I don't believe many people would pay SIM free prices for a phone - a few of us on here do but I think we are the exeption.

We shall have to see what happens!

[Guest Ingvarr]

They will have to live with less then 300% profits :)

Dunno how hard that will be ;)

The whole mobile market is a big bubble. It will burst, sooner or later.

[Guest Dr Who]

ooo...liking that :)

I was going to get this with Web and Walk Pro added to use with my 3G data card.

[Guest Samsonite]

its been a long time coming but i think it will be the norm in a few years if not sooner...

I think the bigger retailers will be the ones most at risk and therefore will pick up the slack. Is there anything stopping CPW or Phones4U running an 0% interest credit agreement running alongside the contracts (which would have to be 20 quid a month cheaper)?

The reason the contracts are averaging at

[Guest FerretAD]

I won't be tying myself into a contract, while paying the price of a SIM-Free phone.

I can certainly see the UK taking this approach.

[Guest pisquee]

I would pay for a SIM free phone, and have a contract, but the monthly cost fo the contract would have to be significantly reduced to factor in that we are not paying for a

[Guest NikLP]

To all of this: not bloody likely!

I won't pay, I can't pay, so they can b****cks. Neither will 99% of the population. Simple.

The UK does have it pretty easy when it comes to nice new handsets though, so how it will pan out in reality is another matter entirely.

[Guest loki_f]

Doesn't surprise me at all... the economics of a mobile phone network just don't make sense.

I want the market to move to a unsubsidized handset and cheaper rolling contract scheme

For example my current tariff is O2 Max which costs me

Edited August 13, 2006 by loki_f

[Guest mcwarre]

It is all about market forces. If some big operators start doing this then they will lose business elsewhere. There is very little brand loyalty associated with mobiles (than say, cars). If this is implemented, then vote with your feet and wallett and they will have to do something about it.

[Guest barrybryce]

I can see this happening - it strikes me that the economics just aren't there for mobile phone companies, especially ones that paid too much for 3G licences.

Sounds like very bad news for handset makers. Certainly less business, and without subsidisation they may have to drop prices a little themselves.

Could also stifle development of features a lot. We all buy our own home phones, and I suspect I'm not the only person that's just got a cheapy with no features.

Edited August 13, 2006 by barrybryce

[Guest tindo196]

hmmm lets see dunno ,dont care i like sim free phones anyway + its a good exercise in kamikaze from both the network operaters and the handset manufactures ,on second thought it might be good for me my handset would probably last longer than at present ie more money stays in my pocket hehe

[Guest Syphon Filter]

Is this not already the case in the US to a degree?

I remember the last time I was in the states their handsets were FAR behind anything we had in the UK (this was a few years back though).

The market for new handsets being developed and released is driven massively by the (what used to be) yearly upgrade cycle. People will NOT shell out

[Guest barrybryce]

They obvioulsy also don't think there's going to be the need to get future new chargeable features into our pockets... which is probably the case, suppose there can't be much extra that people might use left to add into the typical users phone.

Edited August 13, 2006 by barrybryce

[Guest danwatson1974]

I think that I would like to see subsidies by the networks reduced ...it would be nice to see the upgrade market cool down a bit, as it might mean the end to this incessant 'drip feed' of technology by the manufacturers.

You know what I mean ... 6 or 7 different handsets released , all virtually identical to their predecessor except for one or two tiny details .... point two of a megapixel here, a little EDGE capability there, all to pursuade people to upgrade early, or get another contract with a 'free' 'phone just because they are a little bored with their current model.

I would rather fork out a few quid for something that was markedly different every year and more advanced than what I had before, especially if some of the savings that the network made were translated into better value tariffs.

[Guest Socrates]

I think that if phones weren't subsidized here in the US, the prices for handsets would ultimately come down and there would be more choice.

Then with costs lowered, the cell phone companies would be able to compete more aggressively for pricing minutes either in contracts or on pre-paid plans.

Edited August 14, 2006 by Socrates

[Guest Webreaper]

Hmmm. Can't see it happening in the short term.

My XDA Mini S was

[Guest kam_]

The dutch market is very different to others across europe, and is fast aproaching the danish model where nearly every network charges about the same discount rate.

It's VERY VERY unlikely that this will happen in places like france, germany and the UK where competition between networks is still high. In the UK for example the prepay market is growing at an unprecidented rate and the only incentive networks have are promotional subsidies. If they reduce their prepay tariffs too low, they jeaprodise their contract tarrifs.

While prepay phones are being subsidised contract surely have to as well. At worst (or best depends how you look at it) the networks may try out contract only tarrifs again. If you look at the figures tho, the true price of the same tarrif varies drastically across the market.

On one side you have the clueless idiot who buys the cheapest phone the retail store pushed on him, with a super high line rental tarriff. Here the cost of the tariff is super high, and comission is huge for the retailer/network.

On the other side you have the shrude geek who's checked all over google and found the most subsidised handset on that same tarriff. Here the true cost of the tariff is much much lower and the retailer/network makes almost nothing - they expect to make calls on SMS or calls not covered by the plan.

On average the network makes somewhere between these two - so 'subsidy' makes sense for them.

Remember subsidy works both ways for them.

When they say the market is more adult what they really mean is that its got to a point where everyone knows the true value of a tariff. At this point there is no reason to subsidise since it can only work against them. They then think they may as well forget the subsidy and just be up front about the true tariff cost.

Do you really think markets like germany, france and UK have reached this point yet?

Just take a look at the new orange tariffs, surely there are some people out there signing up for these outpriced tarrifs or they would have been withdrawn.

[Guest kam_]

I think that I would like to see subsidies by the networks reduced ...it would be nice to see the upgrade market cool down a bit, as it might mean the end to this incessant 'drip feed' of technology by the manufacturers.

I don't agree.. If you want to, you can sign up for contract only today. They'll actually pay you the difference in cash (after month 3 or 6 etc). The networks won't do this directly, but smaller retailers will happily do it. It makes no difference to them, in fact they prefer it. For example take T-Mobile, they force retailers to buy phones from them. They won't allow any returns AT ALL, doesn't matter what the reason is.

I think all the networks are doing this now, which means the retailer is left holding the baby if the network decides to make stupid tariff changes (like orange for example), and no one wants to buy the phones.

Havn't you noticed alot of stores now only seem to hold one or two handsets in stock, and get it shiped to you direct if they can.

I think that if phones weren't subsidized here in the US, the prices for handsets would ultimately come down and there would be more choice.

Then with costs lowered, the cell phone companies would be able to compete more aggressively for pricing minutes either in contracts or on pre-paid plans.

Well that's the whole point. They DONT want to be more agressive on prices. Remember each network has a monopoly on calls to their subscribers. No one else but say t-mobile can connect calls to t-mobile customers.

All they have to do is enough to keep those customers. The outgoing call prices are also high enough that they make a fair ammount there as well. Why crash the mobile call price for now reason? No network wan't to do that - it just decreases profits for everyone!

If subsidy stops, all that will happen is it'll leave (ALOT) less room in the tariff for you to haggle over.

[Guest darrellr]

A couple of thoughts:

First would the operators still customise OEM (i.e. HTC) models and sell them? If they are not subsidising the 'phone why add to its cost?

Secondly it is already clear that people can be attracted by alternative 'sweteners' i.e. Orange and 'free' broadband.

I'd say it is inevitable.

[Guest peekie]

Kam sadly you are wrong its not only holland who are stopping the subsidie , T mobile germany are the first there with the reduction of the subsidie , the tmob vario2 is one of the first to carry the higher costs to the end user, normally if you get a 2 year contract the phones are always free , but now the vario2 will cost you 250 euros plus the 2 year contract on top. everyone has to remember all the free internet ect have to be paid for in the end ( seems strange the provider that offers unlimited internet are the first to sting you on higher phone costs ), and now the reaper is coming for his money, its best to get the phone you want now as i see the whole of europe in 2007 paying a hell of a lot for the phones , the uk included :)

[Guest Swampie]

I'm sure this will happen in the UK sometime - however, they will have to do it without the 12-month contract (which is there to reclaim the handset subsidy). If there is no subsidy, then there's no need for a contract.

Just go with SIM-only 30 day contract tariffs which are cheaper, and pay the full price for handsets. It'll level out sometime - but whichever network does it first is likely to be unpopular at first.