[Dave L]

I workedED for Nokia for 5 years.


The manufacture sells a phone to a carrier for $250

the carrier then "sells" the phone to the customer for $20.

Where did the other $230 go???

The $230 a subsidized and is recouped though your monthly usage and fees that you pay the carrier. This is why you sign those contracts.


Why do they do this? When I go to Blockbuster they dont give me a free DVD player?

In the earlier days of cellular they had to entice people to sign up and not many people would be willing to pay $250 for a phone. The customer didnt have a cellphone so wouldnt have seen the need, by "selling" the phone for $20 customers bought them. No one ever reads the contracts so everyone is happy.

If you break the phone, drop it in the water or just plain "want to upgrade" expect to pay the full price. If you are well into the contract and are willing to resign an extension then you can get a break on the price.

If you cant get a break on the price it can get ugly. Supply and demand, you are in a contract, still have to pay the contract, but now dont have a phone. Where is gets really nasty is that the carrier can take the $250 phone and sell it for $300, $400 or really what ever they wish.

All of this may seem painfully obvious to some of you but I have seen a HEATED exchange of words between a cellphone store rep and a LAWYER over the cost of a phone. The lawyer just didnt see why he shouldnt get another phone for free after he dropped his in the lake.