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Carriers brace for a nasty quarter
Posted: 21-Jan-2013 [Source: CNN Money]

[The subsidy model is causing problems for carrier profits according to this report.]

David Goldman -- "Here we go again. It's time for a ride on the wireless carrier profit roller coaster.

It sounds backwards, but the more smartphones carriers sell, the worse their profit margins get. The new phone you buy for $199 costs your carrier two or three times as much when they buy it from the manufacturer. They pay the heavy upfront subsidy to get you hooked on a long-term contract. The longer you hang on to your phone, the better their bottom line gets."

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