I'm always surprised when I go back to Europe and see so many people walking around with iPhone 4.
In Japan, where I live, a vast majority of people get their phones on a 24 months payment plan with a 2 years contract. The carrier gives you a generous discount of about 50% on the price of the phone but applies that discount not on the phone payments but on the data plan. So when the 24 months are done and you've finished paying for the phone, the discount goes away and you pay full price on the data plan and your total bill barely decreases.
In such a system, there is no advantage to keeping your old phone, you might as well just get the latest iPhone every 2 years and that's what 95% of people do.
As someone from Europe, I would rather buy a prepaid SIM card and cash out a couple of hundreds of Euros once for a phone, than be tied to a specific carrier with a contract.
It's interesting. Here in the US, the people I know who are single are almost universally on prepay, PAYG, or a la carte plans, and just buy our phones outright, because contract pricing works out severely in the carrier's favor. Meanwhile, those with families tend just as strongly toward family-plan contracts which come with a phone per person old enough to need one. I haven't sat down to characterize it in detail, but there seems to be an inflection point in line count past which contract pricing starts to make the most sense.
Not so much, at most you'll save $5 to $10 a line compared to an MVNO. Postpaid carriers primarily make their money by locking you in on plans mis-sized for your needs, does every family member use unlimited data? Rarely.
Equipment protection plans and other similar features are also another profit center to beware of.
All you gotta do is ensure that this 50% discount is tuned to be the actual realistic price, while the full price is secretly just a 200% cost of the real market rate.
That way, the customers pay exactly the same as they normally would, except now they are compelled to buy a new expensive product every 2 years.
And ensure that all 3 major carriers agree behind closed do to have the exact same prices, just obscured with a bunch of different discounts and mandatory options that makes them look wildly different until you get the bill in the mail and the totals are the same...
The same happens with other aspects of phone plans. Comparing two providers in Australia:
One provider’s plan (typical of the model adhered to by most providers): $10/month including $200 of value, with phone calls 99¢/minute plus 40¢ flagfall.
Another provider (with a less common model): an “as you go” plan, with phone calls 15¢/minute. (Actually it’s still 12¢/minute, but the increase kicks in next week.)
My phone bill has been well under $1 every month except for last month where it got to $3.84 because of phone calls associated with buying a house and a couple of other things. Meanwhile, most providers would have been trying to charge me at least $10, more likely $30–$50 per month, or more on a long plan with an expensive phone included when I simply don’t need anything more than what a $150 phone provides.
Look me in the face and tell me that the first pricing model isn’t deliberately deceptive. They’re essentially using a different currency which for their own purposes of misdirection they call dollars. (And if you do get over that 200 units of their magic currency… oh, boy. You’re in for a massive bill.)
I’m inclined to believe that mobile telcos’ advertising practices are probably illegal, as deliberately misleading, and that the only reason they get away with it is because everyone does it and so customer expectations have been ruined.
Most providers wind up leading with “unlimited” plans; I suspect that a substantial fraction of their users would actually fare better with simple cost-per-call plans, but giving you that isn’t in the telcos’ best interests, and almost no providers even offer such a scheme—and the main one that I know of that does, doesn’t exactly advertise it obviously.
With public and home/work WiFi everywhere, and data packages big enough for my needs available for a few pounds a month where I live, I've long since given up on expensive monthly contracts. SIM-free smart phones with all the features I care about are available for £200 or so, and amortised over their average lifetime in my hands (4 years), that's effectively about £5/month (phone) + £7/month (data/minutes/texts), i.e. much cheaper than standard "flagship phone" contracts and with the freedom to change provider or stop at any time.
In Japan, where I live, a vast majority of people get their phones on a 24 months payment plan with a 2 years contract. The carrier gives you a generous discount of about 50% on the price of the phone but applies that discount not on the phone payments but on the data plan. So when the 24 months are done and you've finished paying for the phone, the discount goes away and you pay full price on the data plan and your total bill barely decreases.
In such a system, there is no advantage to keeping your old phone, you might as well just get the latest iPhone every 2 years and that's what 95% of people do.