By Claire West
In some countries, consumers do not have the choice of buying a bundled discounted handset or not, as some of the most popular smartphones are only made available upon signature of long-term contracts (e.g. three years for the iPhone in Canada until recently, where authorities took steps to make markets more competitive).
In many other countries, most mobile plans always include an entitlement to a handset discount - discounts usually being higher for costlier mobile plans - which makes the BYOD option unattractive (e.g. Canada, Italy or Spain). In countries such as Korea, however, the associated handset discounts are relatively small, even for the heavy users, as operators have relied on handset discounts to a lower extent.
For those countries where both options exist, such as in France or the United States, the report concludes that the bundled option (with discounted smartphone) was, on average, between $10 and $20 a month more expensive than the BYOD option. Of course, these differences may depend on other aspects, such as the quality of the network or additional customer service. It is, however, of concern that these differences are not always made evident to consumers.
Finally, in a few countries such as Australia and Italy, operators disaggregate the cost of the handset device in their monthly bills, which empowers consumers by revealing the associated cost of a smartphone.
Smartphones play an important role in the development of the Internet economy. 3G and 4G mobile networks, together with the rapid adoption of smartphones, have facilitated mobile broadband uptake. The bundled sale of a smartphone device, with a significant upfront discount together with a mobile communication plan has played a substantial role in users taking up or upgrading their smartphone devices at a faster pace.
Both the mobile ecosystem and consumers can benefit from these practices by reducing consumer lock-in (e.g. by purchasing smartphone through monthly instalments), increasing transparency (e.g. by disaggregating the cost of a smartpone in the monthly bill) or promoting handset unlocking, which could stimulate switching. Consumers can still benefit from the bundled purchase of smartphone devices as long as they are sufficiently informed and empowered to compare different mobile plans, including quality and prices.