Alternatives to Handset Subsidies
2012.11.27   |   32 pages   |   MVNOs & Distribution Strategies

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In a report entitled Handset Subsidies - Legacy Overhead or Marketing Essential? (December 2008), Mobile Market Development explored many of the arguments for and against handset subsidies, with examples and a discussion on their relevance and efficacy.

Since that report was written, there have been further examples of changes in the status of subsidies in certain markets and some operators have sought innovative ways of reducing the burden of subsidies, or at least reducing the dependence of acquisitions and retention of customers with expiring contracts on wholesale contributions towards customer hardware costs.

In this report, using the examples of recent systems and ideas adopted by some MNOs, MVNOs and mobile service retailers that demonstrate interesting initiatives towards modifying or replacing subsidies, Mobile Market Development reassesses the role and importance of subsidies to see whether they can be safely removed without market damaging consequences and produces a series of concrete recommendations to operators about how they should proceed in this area.

Keywords: Handset Subsidies, Subsidies, Alternatives to Handset Subsidies, Handset Repayment,

Table of Contents
1 Overview 1
2 Introduction 2
2.1 Background to the Report 2
2.2 Report Content 3
2.3 Currency and Conversions 4
2.4 Further Questions and Feedback 4
3 Handset Subsidies 5
3.1 Decoupling Subsidies 5
3.1.1 Subsidies in the Retail Environment 5
3.1.2 Legal Challenge to Subsidies in France 8
3.2 Subsidies and BYOD 8
3.3 Usage Related Term Payments 13
3.4 Separation of Service and Handsets 15
3.5 Mobile Repayment Plans 18
3.6 Other Retail Incentives 20
3.7 Subsidy Removal in Spain 22
3.7.1 Telefonica's Experience 22
3.7.2 Vodafone Spain's Approach 24
3.7.3 Reactions Outside Spain 26
4 Key Findings 28
4.1 Subsidy Values to MNOs and the Market 28
4.2 Downsides of Subsidies 29
4.3 Alternatives to Subsidies 30
5 Recommendations 32
  Appendix - Feedback Questions 33

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