#randall stephenson

Jean-Louis Gassée on the topic of the AT&T CEO bitching about carrier subsidies:

I don’t know if Stephenson is speaking out of cultural deafness or cynicism, but he’s obscuring the point: There is no subsidy. Carriers extend a loan that users pay back as part of the monthly service payment. Like any loan shark, the carrier likes its subscriber to stay indefinitely in debt, to always come back for more, for a new phone and its ever-revolving payments stream.

I was told as much by Verizon. In preparation for this Monday Note, I went to the Palo Alto Verizon store and asked if I could negotiate a lower monthly payment since Verizon doesn’t subsidize my iPhone (for which I had paid full price). Brian, the pit boss, gave me a definite, if not terribly friendly, answer: “No, you should have bought it from us, you would have paid much less (about $400 less) with a 2-year agreement.” My mistake. Verizon wants to be my loan shark.

 Ben Thompson:

Make no mistake – AT&T would rather not give this discount (and that is what makes Stephenson’s remarks duplicitous); until now, smartphone customers spent some number of months paying off their phones with higher bills, and then, once the phone was paid for, postpaid subscribers effectively gave AT&T cash equivalent to their phone’s monthly payoff amount because they didn’t know any better. People who kept phones longer than two years, for example, presuming that ~$20 of every month’s bill was intended for phone payoff, effectively gave AT&T et al. $240 of pure profit in that third year. T-Mobile exposed that, and AT&T is giving some of that money back.

Right, once again we have AT&T CEO Randall Stephenson talking out of his ass. It’s not that the carrier can no longer afford the subsidies on smartphones — these costs are baked into your bill, hence the two-year contract — it’s that the smartphone market is almost saturated (in the U.S.) and others are making it difficult for AT&T to make as much money as they once did while still subsidizing phones.

What jackassery.

I remember asking the question: Are we investing in a business model, are we investing in a product or are we investing in Steve Jobs? The answer to the question was, you’re investing in Steve Jobs. Let’s go after this thing. And we went after it, and the rest is history.

AT&T CEO Randall Stephenson (then Chairman of Cingular) on the early iPhone negotiations. 

Lots of good stuff in Brian X. Chen’s NYT post.