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Let’s be honest – some of us would not have the best smartphone in the world (you tell me what that is) if it... Why Handset Subsidies Are Bad Deals

Let’s be honest – some of us would not have the best smartphone in the world (you tell me what that is) if it weren’t for the subsidized plan that telcos offer their subscribers. In some parts of the world, prepaid plans are the norm, and postpaid plans are considered a luxury. With the handset subsidies that telcos make, however, postpaid plans do make more sense and as such, have become more popular. Or am I wrong?

Why Handset Subsidies Are Bad Deals

I am just an average consumer who takes time to go over plans, subsidies, discounts, and all that stuff. According to an authority in these things, though, handset subsidies are bad deals. In general.

The Organisation for Economic Co-Operation and Development (OECD) carried out a study that might very well turn it into a Santa killer. The study took into consideration the overall cost of two different setups. One, handset subsidies, or as they prefer to call it, phone plus contract bundle. Two, separate contract and phone. (The second setup basically being that you buy your own phone.)

The study discovered that in some countries, subscribers have no option to buy their own phone if they want a contract with a telco. That is, they always have to buy the bundled deal. In other countries, those two options exist, and it is in t

The OECD study points out that in countries where those two options are offered, the chances are that the consumer is getting the bad end of the deal. This is because of the fact that the bundled option ends up costing the user more than if he had bought his phone separately. In short, the contract is priced so as to cover the “subsidized” handset!

France and the United States were pinpointed as such countries, where handset subsidies with contracts end up $10 to $20 more expensive per month. That surely adds up over the months, especially with a 2-year contract!

So, have you checked your contract lately? You might want to give it a think before getting your new “subsidized” phone!

[Image via imore]