Un recent study which focuses on the mobile phone market in Europe claims that the telecom operators in this region will definitively stop subsidizing mobile phones in a few years. It seems that in Western Europe more than 30 operators have decided to stop offering subsidies for certain categories of customers, as they are forced to choose alternatives. The alternatives are taking a loan, because the operators have replaced subsidies with financing plans, which involve taking a loan and repaying it in installments to which an interest is added.
The rising cost of devices like the iPhone means operators have to pay increasingly large subsidies to offer 'free' phones. Financing allows operators to continue offering phones for a low up-front price without subsidizing them; as an added bonus, it makes it easier to market smartphones to consumers on pay-as-you-go.
Users are now left with the option of buying the expensive terminals at full price or taking a loan to pay them in installments, and for a long time none of the solutions is acceptable. Operators seem to be moving towards other ways of offering services, especially since in some countries the law allows customers to cancel contracts if the operator increases the prices of some services. Practically, operators will refuse to create the impression that smartphones can be purchased cheaply with subscriptions, users will have to look at the process of buying such a terminal differently, and manufacturers will be the most affected.
