nolesrule
Senior HTF Member
DaveF has it right. AT&T can't afford to subsidize a new phone once a year when the subsidy is amortized over a 2-year period. If they did, eventually there'd be no hope of recovering the subsidy as their customers get in to deeper and deeper debt getting a new phone once a year. There's a reason that early termination fees are so high.
Let's say the subsidy is $200. That works out to $100 a year on a 2-year contract. If you want a new phone after 1 year, you've now been subsidized $400, and paid back $100 through the contract, so you still "owe" $300which you'll pay back through the contract over a 3-year period. Do it again after another year, you're now on the hook for $400. Again the next year? $500. Sooner or later the length of the contract will become overly long and the contract termination fee will be ridiculously high. AT&T will have difficulty recovering the subsidy if they allow their customers to get into debt over a glorified cellphone.
Let's say the subsidy is $200. That works out to $100 a year on a 2-year contract. If you want a new phone after 1 year, you've now been subsidized $400, and paid back $100 through the contract, so you still "owe" $300which you'll pay back through the contract over a 3-year period. Do it again after another year, you're now on the hook for $400. Again the next year? $500. Sooner or later the length of the contract will become overly long and the contract termination fee will be ridiculously high. AT&T will have difficulty recovering the subsidy if they allow their customers to get into debt over a glorified cellphone.