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Those ‘free’ smartphone deals offered by mobile carriers are anything but free according to an OECD report.

Of course you already suspected that. Now you have ammunition the next time a smooth tongued sales critter tries to tell you otherwise.

There are two parts to this. First a so-called subsidy is, in effect, a financial loan on poor terms.

The second part is that subsidies have the effect of hiding the true cost of using mobile services. Carriers use that lack of transparency to confuse consumers and squeeze more from them. Transparency also helps improve competition, which is good for consumers.

The OECD isn’t entirely negative about smartphone subsidies, it says by not making customers pay up front for their hardware, phone companies put a lot of kit in people’s hands fast. And bundles can still help consumers, it would just like the phone companies to be clearer about the way costs break down and not lock people into long contracts.

Reading this report I can’t help think New Zealanders get a relatively good deal from the carriers operating here. What do you think?

One thought on “Smartphone subsidies not always good

  1. I think we get a better deal than some other countries, but we don’t get the best deal.

    The thing that really irks me is everyone pays the same for a contract whether you decide to subsidise a phone or not. If there was a bit more flexibility in plans (really, is it that hard to give us three range sliders for minutes, txt and data choose what we want…) and a difference between subsidised and non- prices I would be very happy with telecoms.

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