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Get Your Subsidized Smartphone while they Last!
PUBLISHED: May 29, 2014

AT&T’s CEO Randall Stephenson told investors that with smartphone penetration approaching 90 percent, the existing business model – where carriers sell highly-subsidized smartphones to drive demand – will have to change.


“When you’re growing the business initially, you have to do aggressive device subsidies to get people on the network. But as you approach 90 percent penetration, you move into maintenance mode. That means more device upgrades. And the model has to change. You can’t afford to subsidize devices like that.”


Most U.S. smartphone buyers don’t realize the true cost of their handsets, as carrier subsidies mean they typically pay no more than $200. The full retail cost of an iPhone, however, ranges from $549 for a 16GB iPhone 5c to $849 for a 64GB iPhone 5s. The balance is paid by the carrier, then recovered back through the contract payments. 


Carrier business models are changing, with T-Mobile the first to separate monthly fees for device and phone service with its Uncarrier program started in 2013. AT&T seems to be thinking along similar lines, with the company seeing the future in financing, rather than subsidizing, devices.


AT&T also acknowledged that breaking customers of their habit of upgrading to a new phone every 18 months to two years is not an easy task. But he said a business model focused on financing rather than providing a subsidy would be transformative for the industry. He said the company’s new AT&T Next program, which offers no-money down and 0-percent financing, drives smartphone penetration in a way that is more sustainable over time.


Though you can still get a $200 phone with a contract through AT&T and Sprint, they don't advertise the plans, and it's difficult to sign-up on their websites. Verizon, at least for the time being, still has the subsidized plan as a standard offering.


Expect more changes when the iPhone 6 is released. Apple's new smartphone is rumored to be making its debut this August, and it's sure to spark a marketing frenzy.  However, you are probably going to have to decide if you should foot the bill for the entire cost of a new IPhone and get lower monthly payments.  Or, if you should get a deal with no money down and, in effect, finance the phone in your monthly payments.


Either way, as the cellular marketplace matures, HPA believes you will probably pay more than you're used to.  If you need assistance managing your cellular services HPA can help.  HPA can provide a one time analysis or we can manage your services. 

Tags: HPA Group News, Telecom Billing, Telecom Audits, Telecom Expense Management, cell phone audit, telecom cost, telecom expense, phone bill audit, telecom bill audit, Telecommunications Audits, telephone bill analysis, Telecom Cost Management, telecommunications billing, telecom invoice management, telecommunication cost management, telecommunication expense management, telecom expenses, telecom invoice, telecommunications expense, telecom charges, Reduce Telecom Expenses, Telecom Expense Reduction, tem telecom, manage wireless expenses, manage cellular expenses

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HPA Consulting Group

HPA Consulting Group, Inc. (HPA) is a privately owned consulting firm headquartered in Rochester, NY providing specialized consulting services in Voice and Data Communications. HPA was founded in 1994 by Bill Hughes and Tom Phelps. Together, the HPA Team has over 200 years of experience in many facets of voice and data communications.

HPA facilitates businesses in determining the best communications solution for their company. This involves voice and data networks, call centers and broadband applications. In addition, HPA manages the telecom expenses for businesses to get them the most cost effective telecom solutions possible. HPA also helps telecommunications providers and manufacturers with their marketing, sales and business planning.

Since HPA's formation in 1994, over 400 clients have contracted to HPA for services. HPA has planned, designed and implemented a variety of voice and data solutions that have enabled businesses to enhance their operations in a cost-effective manner. HPA has also audited telecommunications invoices and recommended changes to client’s telecommunications services that have resulted in millions of dollars in savings for HPA’s clients.

Finally, HPA has performed work in a variety of areas for Local Exchange, Wireless, CATV, Long Distance Companies, Manufacturers and Software Providers.

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Some HPA Projects Include:

  • Designed and implemented a complete new voice, data and security network for a regional bank and their branches. Results included improved customer service in their call center, improved communication between locations and redundancy at all locations including the branches.
  • Designed and implemented a new VoIP telecommunications network including new equipment and services for a Rochester based not-for-profit with over 15 locations.
  • Redesigned a not-for-profit organization’s telecommunications system in five cities by implementing new services and pricing and auditing telephone bills. The savings paid for all new telephone equipment in less than two years.
  • Manage the communications network for a regional hospital in central New York. HPA has lowered the costs for the hospital and at the same time implemented a more up-to-date network with more functionality and redundancy.
  • Designed and implemented a Call Center for a Benefit Company in Rochester. Project resulted in drastic improvements in customer service.
  • Planned and designed a new voice and data network for a Law Firm with six locations in New York State.

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