How do mobile phone operators do it?

[VJ]

Hello,

I just extended the contract for my mobile phone with Orange Poland. The offer was for 2 years, 39.99 PLN (= 9.56 EUR = 13.09 USD) per month. It includes 192 minutes to all networks, unlimited sms, unlimited calls to one chosen number (can be changed every month), and some other benefits (half price to cinema on Wednesdays, ...). But because I have fixed internet with the same company, I get 15 PLN/month discount.
So for me, total cost of the contract is 24*(39.99-15) = 599 PLN = 143 EUR = 196 USD.

For 1 PLN (pointless to count this), I got this (unlocked) phone: LG Swift L3II, and for another 1 PLN, I got this tablet: Pentagram TAB7.6 (sorry for the Polish spec sites, I could not find it on others).
EACH of these cost about 400 PLN if you buy them in a shop here.

I know they are not top or high end models, but I don't like to carry a very big phone anyway, so it felt like a good offer.

But how do they manage? Are things really that cheap and are we usually just paying too much? Are they hoping for additional income?


Jörg

[UtwigMU]

Prestigio 10.1 3g tablet 1280x800 with Android costs about 260 EUR if you buy 10s, it's not bad at all. online price is 300. Equivalent Samsung Tablet costs 450.

So your telecom pays probably close to the price they gave the item to you.

[VJ]

Still, even at half price, they barely seem to have a profit margin...
So basically, things are really so cheap, and we just overpay often.

[UtwigMU]

about half of GDP of european countries goes to taxes. somewhere more, somewhere less. Things like health, politicians, agencies for equal opportunities, watching climate changes, aparatchiks, state huge IT projects that never work, 12 kids per teacher schools, regulations... cost a lot.

All this is built into price of services and products. In countries where they have more economic freedom, stuff costs less.

[ZokesPro]

Mobile operators make their money on data plans, and when people go past their minutes.

[UtwigMU]

I pay 19,90 EUR (27,20 USD, 29 CAD, 16,66 GBP) for 999MB, 999 minutes and 999 SMSes. Every couple of years I get 60 EUR bonus which I can spend on new phone or phone bills (I chose latter as it's better to buy used phone and spending 50 EUR to have phone without a scratch for 2-3 months is not worth it).

[VJ]

Yes... but still... weird economy nowadays...

The tablet is this no-brand, cheap 7", but it is surprisingly good. It has USB2GO and a standard HDMI connector. One thing I noticed though is battery life: a switched on wifi kills this device fast. My father's Samsung Galaxy Tab stayed connected to the wifi for over 3 weeks: he left it at home when going on holliday but forgot to switched it off. I could see him online on skype the whole time! Quite amazed with that. So I'm guessing the cheap tablets are worse in the power saving department.

[cjolley]

Or, batteries are expensive. The other parts are just stamped out at this point.