Re: About bloody time
"Subsidy? What subsidy?
They have long gone. The actual cost of handsets are typically £200 to £250 max. (Google Nexus 4 series).
Contracts usually costs upwards of £600 (includes minutes). Where's the subsidy."
The exception does not prove the rule. Nexus was an operator rip-off.
A typical high end Smartphone on a ~£36 per month contract will be around £400-500 to buy. So Around £20 per month is 'subsidy / installment'. Since the handset was already bought from Samsung/HTC/LG/Sony, this will not vary. Of the rest, some went as commission to the retailer, and again this is fixed. Getting to the business end, the rest of the cash is split 3 ways, OpEx, CapEx and profit. Let's peg these as evenly split so around £5 each.
Of these, CapEx is typically fixed for 3 years or so by an RfQ process, and in fact has some price erosion in, so the network kit bought at the end of the contract has negative inflation. So all that is left that the operators cannot fully plan for is OpEx. BUT: A good portion of this is now Managed Services, which are on a 3 to 7 year contract, so no scary price rises there. So then it's down to Operator Staff, who are being slowly whittled away.
In short, around £2.50, or 7% of your contract is subject to RPI/CPI of around 3%*. That's 8p per month increase. Run the same calculation on a mid-range device at £200 cost and £15 per month and you are looking at £8 per month of subsidy and variable costs of around £1.25 per month so 4p per month paper increase.
If T-Mobile want to justify why they could not fiscally manage to plan £0.04 to £0.08 of cost increase per year into my contract, I'll be happy to have that meeting. However, the latest T-Mobile price increase is "typically about 79p". It is incumbent upon me to prove that this is of 'material detriment' to me, but it should be incumbent upon them to show why they need a price increase of 1000% of their variable cost rise.
* Not that any TelCo is paying 3% pay-rise in any case!