How much does that cheap smartphone really cost?

For years, mobile operators have based their commercial strategies on offering smartphone devices at very low upfront prices. Consumers have become accustomed to commercials such as “free smartphone” or “smartphones at $0 on a two-year contract”. Most of these offers provide devices for free or at very low prices in exchange for contract commitments.This strategy has proven extremely successful in recent years, as shown by the rapid uptake of smartphones, which exceed 50% in some countries. But how much does that cheap phone cost you? A new OECD report sheds light on mobile handset acquisition models, and provides pricing information from selected operators in 12 OECD countries for 2012.When consumers sign up for a mobile communication service, they may either bring their own device (BYOD), purchased at the full price directly from the operator or from an independent retailer, or enter into a contractual agreement for a specified period with a mobile operator, which includes a handset at a reduced upfront price.This is inaccurately described as a “handset subsidy” by most stakeholders, whereas it should rather be termed as a “bundled” purchase of a handset device. This raises the question of whether the total cost of ownership (TCO) of the device, together with a mobile service contract, would be higher if customers chose a bundled purchase or a stand-alone acquisition of the handset device.So, are you better off when bundling devices and mobile plans?

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