No More Free Phones

The mobile phone is just … finally
The recent announcement of Movistar, which will no longer subsidize devices can have very beneficial for users

Consumer Reports – Sun, 18 Mar 2012
A few weeks ago, during the Mobile World Congress in Barcelona, Cesar Alierta, chairman of Telefonica (Movistar matrix), made this clear: no more mobile phone. The policy of “mobile given away” has to end and date on the calendar. What once was a good marketing strategy to attract customers who wanted to hire an operator without having to pay too much, or nothing, a phone, now implies that the operators are left 26% of its turnover by tight profit margins involved mobile support a free market costs about 600 euros. This is the case of the iPhone, Blackberry, Samsung Galaxy S and others. Given this model, now proposed one involving pay in installments the phone, without interest and through a financial institution associated with the operator. How does this affect users?

Behind the fist on the table there is a reality Telefónica increasingly hurtful: in a crisis environment, traditional operators (Movistar, Vodafone, Orange and Telstra) lose a lot of customers from mobile virtual network operators (MVNO). It is a general scenario in Europe: consumers, besieged by spending, are written off telephone service or choose to find cheaper rates, even at the risk of not having the latest generation mobile, as they offer the OMV.

There are times for free phones

If you have a permanent contract, expected to expire, or that the penalty for its breach is minimal, to effect change because they are tired of the tyranny of such contracts. Sometimes pressure on the operator under threat if they fail to leave a better motivation. These tactics, given the loss of customers so far have led companies into line to change and will narrow their profit margin for the user so as not to lose him.

In that way, subsidizing expensive phones has become a very profitable strategy and making operators suffer, have to pay almost a third of the mobile customer to retain the face of competition from rivals, which offer portability more advantageous, but in reality they are and for any player in the sector. Traders lose money and users, freedom, subject to tariffs too high.

The solution proposed by Movistar is the same as proposed by Telstra in September 2011 and the one that prevails in most of Europe: “If you want an expensive phone, I pay.” Of course, the operating funds to pay for a residence time, which will be between twelve and eighteen months, with an interest-free financing through partner banks.

Do not give away the benefits mobile users?

This new model provides operators free of the bleeding cuts in the grant: stand to lose customers, but recovered 26% margin in the previous losing strategy. This margin reinvested back into the company will allow users to fight for a new strategy based on the rival who must beat the other operators are not traditional, but the OMV, and it will launch much more competitive rates. This translates into better prices for users and a wider range of companies they choose.

In France, the struggle for higher competitive offers, also known as “low cost telephony,” it has become apparent in the politics of the fourth operator, Free, which has launched a tariff that includes unlimited calls to 3 gigabytes and the Internet for 20 euros a month. The offer is the answer to another SFR-Vodafone, Orange and Bouygues, the other three incumbents, with the French government grant and proposes calls and Internet for 16 euros per month to unemployed citizens.

In Spain, Movistar has launched its youth branch, Myspace Mobile, a conversion of the popular social network it bought, a fee of three cents per minute and up to 3 gigabytes per month for 15 euros. The offer is aimed at young people who have low purchasing power but are intensive users of smartphones. Of course, Myspace Mobile will act as a MVNO.

Furthermore, the user will know what to expect when you buy a Movistar mobile and funded by Telstra, or another operator if apuntase to the same strategy as you see the time that you require and the months of funding. So you can know exactly what you pay for your mobile, compare with the price of free in-store appliance and know what interests you most.

Why is it better to opt for a free mobile?

A free mobile has great advantages over a subject to periods of residence, either by subsidizing their purchase or parallel financing subject to a bank. First, although the pay-funded mobile Movistar or Telstra, or any other operator, during the pay period, the months you have to pay the installments, the user can not break the company and switch to another with better prices.

The fact that the phone is not supported does not mean it is free: it will lock that applies the operator and only released after full payment of the apparatus. In contrast, a free mobile bought at an electronics store, has no locks, you can apply the SIM card you want, as we are interested in a fee or another. You can even have multiple contracts and play with them as times or areas. A common practice among those who travel extensively to other countries is to have a local card to avoid the effects of roaming and international calls. It’s something with a mobile operator can not be done.

Another advantage of free mobile is that we can avoid any price increases or abuse rate of the operator by asking the simple rule of portability to a new operator of our numbers, which by law must be done in one day. With increasing MVNO deals, access to competitive rates will be higher. It is hoped that, given these advantages, incumbents prefer to maintain a certain price advantage for the mobile user to finance through them, though perhaps not the case and the market gets rid of everything related to mobile companies telecommunications: the best scenario.

SOURCE: consumer.es

 

Tags: Barcelona, Cesar Alierta, consumer, free mobile phones, free phones, lyca, Mobile World Congress, mobilephones, ono, orange, telefonica, vodafone

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