AT&T CEO Randall Stephenson said that the model that has prevailed in the U.S. wireless industry for years of customers getting subsidized devices in exchange for signing two-year contracts is radically shifting.
LAS VEGAS--I've asked almost every company I've met with so far here at the 2014 Consumer Electronics Show the same question: How would a shift in the U.S. market from device subsidies to device financing affect your business and the wider market? The responses I've received, mainly from handset companies, tended to indicate that if such a shift does take place, the onus will be on OEMs to provide value, either in terms of price or innovation--or both.
Although Apple is the world's No. 2 smartphone maker and, for now, the most popular U.S. smartphone producer, the company's position could be eroded as carriers in developed markets shift away from providing handset subsidies, according to a financial analyst.
Huawei is not giving up entirely on the U.S. market, even if it has concluded that it's not worth it to pursue a substantive network gear business amid continuing security concerns. Instead, the Chinese vendor will focus on building up its handset business, and it may benefit from an ongoing shift away from device subsidies.
Even though Verizon Wireless will follow T-Mobile US and AT&T Mobility with a new smartphone upgrade program, Verizon Communications CFO Fran Shammo said he doesn't think many customers will use the plan and Verizon won't change its service pricing as a result.
T-Mobile US struck back hard against AT&T Mobility's "Next" handset upgrade program, arguing that while the plan tries to copy T-Mobile's "Jump" upgrade program, AT&T is essentially making customers pay for their phones twice with Next.
KPN said it has abandoned its handset-leasing model because of an underwhelming response from subscribers, who told the operator they wanted to own their mobile handsets at the end of their contract terms.
AT&T Mobility will now make customers wait 24 months instead of 20 months to upgrade to a new, subsidized device. The move mirrors one that rival Verizon Wireless announced in April.
The purported plan by the European Commission to launch an investigation into Chinese vendors Huawei and ZTE has run into resistance from European Union member countries over fears that European equipment manufacturers would be shut out of the strong growth market of China in retaliation, Reuters reported.
Concerns over possible state subsidies and security threats have prompted the European Union's trade commissioner to seek the backing of EU states to investigate Chinese equipment vendors Huawei and ZTE, according to a Reuters report. The report cited unnamed EU diplomats.