Can someone explain ETFs to me?

omgitswes · Mar 26, 2012

What is the point of them? Seems like carriers would want you to get a new phone whenever a better one comes out instead of locking their customers into 2 year contracts.
I understand if the customer was switching carriers, but if you're just buying a new phone and staying with the same carrier why do they charge you for that?

faint dj3 · Mar 26, 2012

ETF?

but basically you probably didnt pay full price for your phone since you did a 2yr contract you are getting the phone at a subsidized price. When we get a new phone for $200 usually the msrp of the phone is around $500-$700.

omgitswes · Mar 26, 2012

Early Termination Fees.

Oh yeahhhh, I didn't think about that. You're right, I could buy the phone at retail price and not be locked into the contracts

redman · Mar 26, 2012

Wireless providers loss money on each cell phone sold. The reason why you get a new iPhone for 200 bucks when the retail is really 700 or 800 bucks. Wireless providers recoup their money thru continuation of service.

getthismoney · Mar 26, 2012

Originally Posted by omgitswes

Early Termination Fees.

Oh yeahhhh, I didn't think about that. You're right, I could buy the phone at retail price and not be locked into the contracts

yeah · Mar 26, 2012

There are a lot of reasons for ETFs, but the easiest way to explain their usage is to compare US carriers with carriers overseas.

The prices of the mobile devices on the American market are HEAVILY subsidized. That's why you can get a new device (e.g. the Samsung Galaxy Note) for $150-$200 with a new contract, but you have to spend $600 if you want to get it without a contract. Carriers in the US use the contract to subsidize the price of devices for new customers, and the ETF is a safe guard so that if a new customer decides that they no longer want a contract with the carrier, the carrier can make some of it's money back.

That's why mobile devices over seas tend to be a lot more expensive, and why contracts here tend to be a lot longer.

faint dj3 · Mar 26, 2012

The thing is tho, pre paid / no contract carriers (metro pcs, virgin, boost) have really stepped up their game in my opinion. I've been in the cell phone game awhile now and it used to be you had to get w/ xyz company to be able to even have a decent phone. But unless you really care about having the bleeding edge technology in your pocket, depending on your area where you live you can do just fine with those pre pay guys.

Myself, I MUST have the best (at least what I believe) technology in my pocket lol so I don't mind my high bill