All three major Russian carriers dump iPhone

http://www.rethink-wireless.com/2013/07/16/all-russian-leaders-dump-iphone.htm

by yread • 13 years ago

207 128 13 years ago

surge3• 13 years ago

I wonder how much of it's related to fears that every iPhone is a secret NSA listening device?

I mean if you knew the KGB could possibly listen in on your phones, how likely would US carriers keep it?

I've been thinking an overseas consumer and business/government backlash against US technology products is inevitable now that the NSA being in bed with every major US technology company is public knowledge.

stephengillie• 13 years ago

What phone isn't? Is even cyanogenmod safe from the NSA?

rthomas6• 13 years ago

Well, if you don't use Google Apps with it, then yeah probably.

mtgx3• 13 years ago

I think so, since it's fully community made, and beyond the "official" CyanogenMod team, there are hundreds more developers making "unofficial" CM ROMs for other phones, and they get to see the code, too.

Plus, the CyanogenMod team is now working on encrypted end-to-end messaging that is built-in:

https://plus.google.com/+CyanogenMod/posts/23vfN2qdZTu

mitchty• 13 years ago

If that were the case then why are Russians buying Microsoft phones too? Sorry doesn't pan out as an acceptable reasoning.

Kurtz79• 13 years ago

Seriously, unlike 99% of hackernews users, if the average smartphone user even knows what PRISM is, he/she probably doesn't give a damn.

And carriers go where the money is. This sounds like a purely economics driven decision.

surge3• 13 years ago

Well, if people over hear heard something like the KGB can spy on people who use Russian tech company products, people would avoid them even if it isn't necessarily true. Supposedly, the encryption iOS implements is supposed to be NSA proof. But public perception and consumer confidence in a product is everything. Reddit talks about it as much if not more so then Hacker News on the common front page reddits and I've seen quite a bit of griping about it from non-techie friends on FB.

I think its very likely the contractual disagreement, but I'd be very interested to know if sales for US-based technology products have fallen since recent revelations came to light.

gcb0• 13 years ago

Any one care to tell us how good/bad is a market that outlaws phone subsidies?

Is there better competition on service quality and cost or does it end up being just the same?

ak0s4• 13 years ago

Unlimited mobile internet is $13(Beeline) — $20 (MTS) per month in Moscow region. Quality is far from good, can't compare to other countries though.

tikhonj• 13 years ago

My impression from visiting there a couple of times is that there is much more healthy competition among phone companies. It is very easy just to buy whatever SIM card you want--I could just walk into one of many phone stores and get one for my trip. There was also quite a bit more advertising for the bigger brands, which leads me to believe they have to work harder to acquire and keep customers.

Dealing with phones and SIM cards there was much nicer than in the US, but that isn't saying very much! The US phone market is a complete mess.

That said, I have no idea how much the law about phone subsidies helps this.

xentronium2• 13 years ago

There was also quite a bit more advertising for the bigger brands, which leads me to believe they have to work harder to acquire and keep customers

Nah, don't be fooled. Most of the time, The Big Three (MTS, Beeline, Megafon) have almost identical pricing. They have been under regulatory scrutiny for price fixing more than once. Besides, there are several ridiculous features here (like inter-regional roaming, when you pay significantly more in different cities). However, it's really easy to buy a sim card, and that's what many people do, they have a Moscow SIM card and a Saint Petersburg SIM card.

Quality of data connection is usually about average, could be better, could be worse. FWIW, I live in a small city (<300k pop).

mtgx3• 13 years ago

Yes, much better when there are none or very little phone subsidies. They actually compete on services.

Unfortunately, since the iPhone, carriers in many countries have started adopting a very similar subsidy program to the one in US, and the value/buck has done downhill since then. But the pre-paid market is still alive and well at least, and you can get a ton of minutes and data for small prices.

guard-of-terra4• 13 years ago

It's not that they compete on services in Russia (the only service they compete on is ripping you off) but you can always change your SIM card and get full service, data included.

You can buy a SIM card for $5 and have it working in a matter of minutes on any phone.

guard-of-terra4• 13 years ago

It doesn't actually outlaw phone subsidies. There were a Beeline booth selling simple phone with contract for 200 roubles (~$7) at the musical fest I've visited last week.

(Carrier can lock phone; carrier would have to unlock it after the contract ends; but nobody does that on any scale)

It's just the marked shaped itself that everyone first buys phone then decides on carrier; everyone is on prepaid; thus no long-term contracts.

You just dump money into a terminal once or twice per month and use that credit for calls/data/options.

mynegation2• 13 years ago

In three words: it is great! Not sure what lack of phone subsidies has to do with it though, or even if there is such a thing.

I lived in Russia and now live in Canada, and I would take Russian mobile market over Canadian any day. Dirt cheap, fierce competition between operators, over-abundant coverage, hidden fees are much less prevalent, there are contracts but pretty much everyone is on prepaid, buying new SIM card is a breeze.

I do not know if subsidized phones are forbidden, but much more likely the tradition of buying own phones is historical. Back in 90s owning a phone was a status symbol, there were no credit bureaus, no credit histories, inflation was rampant and ruble FX rate was very volatile. Everyone trusted only cold hard cash (preferably USD).

Later the country was swamped with lots and lots of cheap phones. So-called "grey" phones (euphemism for "smuggled") were brought in circumvention already lax or non-existent import regulations.

So I guess it is just not in the Russian tradition to sell subsidized phones.

geoka9• 13 years ago

buying new SIM card is a breeze

The situation is similar in Ukraine with one exception: in Russia, you'll have to let the store scan your passport to buy a SIM card. In Ukraine, you can buy SIM "starter packs" in bulk if you please, completely anonymously.

_nkl1• 13 years ago

I completely disagree. Passport information is collected upon purchasing a SIM-card diminishing all hopes of privacy. Furthermore, there is roaming between states/provinces in Russia, so a SIM bought in one state is extremely expensive to use in another. I know for a fact that this isn't the case in the US and Canada. But, yes, generally prices are lower in Russia.

PeterisP9• 13 years ago

You get cutthroat competition both on price and availability.

If any operator is ignoring poor service in some countryside region, competition will put up a few towers, make a local advertising campaign, and people can switch immediately.

Midsize companies (a few hundred employees) have enough negotiating power to ask for perfect coverage in a freshly built office building in the middle of nowhere, as they can trivially switch all their business phones overnight to a different operator otherwise.

And the cost, well, in my place are teenager plans for ~$5/mth that cover unlimited minutes/sms. I'm paying ~$10/mth to get data as well (speedcapped after 2gb, unlimited is a bit more).

enra• 13 years ago

Finland had also a ban for phone subsidies for a long time, and I guess now they're allowed in some limits.

For a customer, it's great. You use whatever phone you want, you buy it where ever you want, change operators easily, and pay way way less than in US.

My plan, with unlimited data & 3/4G speed, with 2-simcards (so I can use the plan in two devices), costs 15 euros a month. Compared that to ATT & T-mobile, $60+ a month and get an abysmal coverage which doesn't even work inside a house most of the time.

neonhomer• 13 years ago

FTA "which has helped enable the Microsoft OS to overtake iOS, gaining 8.3% of smartphone sales compared to 8.2% for Apple"

So maybe windows phone will actually become a competitor to android in russia?

ak0s4• 13 years ago

Not yet. The most popular shop Svyaznoy seems like promoting however.

mcintyre1994• 13 years ago

Unless they have a very loose definition of smartphone or I'm missing something, it doesn't sound like anything is competitive with Android in Russia?

ak0s4• 13 years ago

Not a single Russian iPhone user I know bought it in carrier store. Mostly they've got it from Europe trips, others in non-official stores where prices 15-20% lower.

So, despite official sales numbers are low, there is a remarkable iPhone user base here.

roc3• 13 years ago

If the iPhone is considered "expensive" due "high import taxes" at $920, how is it selling on the black market for $3500?

textminer• 13 years ago

Traditional well-regulated customer-supporting carriers don't have the margins that black market dealers do?

roc3• 13 years ago

But if you can buy it from the carriers more cheaply than the black market, who would pay more than triple that to the black market?

They're not carrier-locked, when purchased direct from Apple for $920, are they?

And if they're selling for $3500 on the black market, exactly how "expensive" can they be, at $920, let alone how could they be "expensive" due the import taxes that result in an official product that's less than one-third the price of the illegal product that skirts those taxes?

mkevac• 13 years ago

$3500 is a price for a iPhone on a next day after it is released in US. After that price gradually decreases.

bayesianhorse• 13 years ago

Distributing iPhones at scale for $920 is a different beast than selling a couple of them for $3500. In the latter case, the costs per iPhone for the seller are much higher.

The game for selling $920 iPhones is "find a price point were demand times price minus cost is maximized".

The game in the black market is "find the highest price point at which the inventory sells out quickly enough".

roc3• 13 years ago

But who would buy them for $3500?

If the price of a black market iPhone is higher than that of the legal-market iPhone, with any regularity, it suggests that $920 isn't a problem, let alone the import tax portion of that: supply must be the problem.

And if the price only hit $3500 in a couple rare situations (errors, morons), I'm not sure why they even brought it up as if it were common, as that fact completely undercuts the argument about the iPhone being too expensive.

aptwebapps• 13 years ago

Perhaps they weren't officially available right at launch and that high price was seen then. I can't imagine that kind of disparity persisting.

Unless there's something special about them, maybe jail-broken with a few grand worth of apps on it? (Not really buying that, just noodling).

keltex• 13 years ago

  On the black market, iPhone 5s have even been reported reaching over $3.500

Maybe a typo but this is an unreleased product.

nathana• 13 years ago

That's "iPhone 5s", the plural of "iPhone 5". "iPhone 5S" is the unreleased product.

xentronium2• 13 years ago

http://shop.beeline.ru/msk/iphones this is weird. Maybe they haven't updated their site though.

guard-of-terra4• 13 years ago

People around me link this to official Apple Store opening.

You can now order iPhone there over the internet, carriers can't realistically compete with this because they'll lose money selling for less that Apple Store and sell zero phones selling for more.

(I've never owned nor bought anything from Apple)

fvrghl• 13 years ago

The carriers sell the phones for less and make money back through the service plan. That's the basic model for carriers offering phone subsidies.

muyuu• 13 years ago

Not sure about Russia, but in other countries there are tight regulations for phone subsidies (treating them for what they are: dumping of retail price with the purpose of locking in users - a blatantly anticompetitive practice that would be illegal in most industries).

Strong competition has a similar effect. If the SIM free contracts are good enough, people are not going to get into lengthy, expensive contracts. This doesn't happen in places like the US because there's a very strong cartel/oligopoly there that affords them the right to simply deny you a terminal if it's not under the carrier's conditions.

If Apple is selling for cheaper than the carriers can afford to sell, then they will simply do what they are doing: stop selling it.

specialp• 13 years ago

In the USA this is the predominant model. In Europe and Russia customers prefer to buy a SIM unlocked phone and not have a contract. These carriers were getting killed selling subsidized iPhones because it is far cheaper to import an unlocked one and pay less monthly. T-Mobile is doing this in the USA now and eventually people will learn that that "$199" iPhone is not 199 when you are paying $30-40 more a month over T-Mobile unsubsidized cost forever.

chmodd• 13 years ago

mobile contracts are very rare in Russia, almost everyone is on a prepaid plan

prostoalex• 13 years ago

Russian market is primarily prepaid.

Adirael• 13 years ago

It varies country to country. That was the norm for Spain but has since changed, now you get two contracts, one for the service and another for the phone financing.

I pay 25/mo for my iPhone plus an 8/mo data plan. I don't do much calls but they're 8/c minute IIRC. I can move from a plan to another or cancel the data but the 25/mo will stay there until the phone it's paid.

It was 50€ cheaper to buy it this way than to pay full retail price.

PeterisP9• 13 years ago

In a proper free market they can't really do that, as I can buy a handset through operator A and immediately switch (with no penalties allowed) to a cheaper operator B.

If there is no legal/monopolistic lock-in like in USA (where the phone is locked to a certain operator), but instead operator B can jailbreak&unlock your phone for you when you switch, then you can't extract huge monthly prices just because you sold a phone 9 months ago.

d2vid• 13 years ago

FTA: "notably, Russia bans handset subsidies"

gtrubetskoy• 13 years ago

"Apple dumps all three major Russian carriers" is how I would read this heading. Everyone I know in Russia has or wants an iPhone, Apple isn't losing any market share there, because you can get an iPhone from Apple directly.

gdy• 13 years ago

Yep, we have our share of Apple funboys here in Russia)

isalmon• 13 years ago

> Russia has over 180m mobile subscribers

The whole population is 143M (2011) including infants and very old people. How is it possible? Multiple phones per person?

mhurron• 13 years ago

Business and personal phones? Lots of 'Russian Business' around the web.

mynegation2• 13 years ago

Several factors: people use separate phones for business (paid by employer usually) and personal calls, often people have phones from different operators, because of significant discount for calls within the same network, illegal immigrants that do not get counted in the census also own mobile phones (sometimes several phones, like I mentioned)

tucaz• 13 years ago

Brazil has around 190 million people[1] with about 249 million mobile phone lines enabled [2].

People that have more than one line usually buy one line from each provider so they can talk "for free" between the same providers. It is not uncommon for people to ask you what is your provider so they will mark it and call from a phone that uses that provider when trying to reach you.

We also have a high number of people with phones that allow multiple providers with one device.

Business and personal cellphones are not uncommon either.

[1] http://www.ibge.gov.br/home/estatistica/populacao/censo2010/... [2] http://extra.globo.com/noticias/celular-e-tecnologia/quinto-...

speeder2• 13 years ago

To make a example as brazillian:

My close family is 4 people (my dad, mom, me, sister).

We have 6 lines from one carrier (we got it in a special package, we use 1 line per person + 2 backup lines for whatever we need, since those lines can call very cheap each other, one use for backup line for example is borrow it to extended family)

Also my dad has one workplace line with another carrier, and a Nextel Android.

And I had for a while a extra line to communicate cheaply with people of the same carrier, thus in total we have 9 mobile phone lines for 4 people.

Sometimes you see particularly important business people (like a CEO) here walking with 4 or 5 phones on his belt (one of each carrier + 1 for strictly personal stuff)

zorlem• 13 years ago

I have seen it in another Eastern European country - the sum of all mobile subscribers each operator claimed to have, exceeded the population by 50%. I attribute it mostly to marketing tricks like counting pre-paid cards that have not been explicitly canceled towards the general tally of active users. In general the operators try to appear to have more subscribers in order to entice more new subscribers to choose them.

I seriously doubt that the telecom regulatory bodies in these parts of Europe pay much attention to the coverage/subscription rates claimed by the mobile operators' marketing departments.

Of course some of the people have more than one SIM card, but with at least 3 major operators this simply doesn't add up.

EDIT: added the sentence about the lack of regulation

icebraining2• 13 years ago

Here in Portugal, we have 124 active cellphone plans per 100 people, and the numbers are published by a governmental agency, not the carriers.

It's not that odd: even I, who barely makes calls, have two SIM cards (on a dual-SIM phone), for personal and work related calls. My teenage brother has three (one for each carrier).

Almost everyone uses prepaid, so there's really no cost associated with getting another SIM card - you just pay for what you use.

lostlogin2• 13 years ago

I think the definition of subscriber could do with some definition - presumably it means the number of sims as this thread suggests prepaid is the majority of the market. If this was applied to me, I'd count as about 8.

carlob• 13 years ago

http://www.wolframalpha.com/input/?i=scatter+plot+of+number+...

many countries fall above the y=x line in this plot for example

http://www.wolframalpha.com/input/?i=mobile+phone+users%2Fpo...

Lusake• 13 years ago

Montenegro has population of ~600.000 people and ~1.200.000 mobile subscribers.

ash2• 13 years ago

I currently have 2 SIMs for 2 different Russian regions. Calls via local SIM are cheaper. Even for the same operator. And I think I have 5 or more abandoned SIMs for more regions I've been to. And this is a norm. I'm surprised the number is not higher.

vardump2• 13 years ago

  This is a country which Apple has never found easy - notably, 
  Russia bans handset subsidies, making the iPhone an expensive 
  option for most customers.

The effect is exactly the opposite; those countries where phones are mainly subsidized have also the highest total cost of ownership and ARPU (average revenue per user). The subsidized phones aren't cheap, quite the opposite.

Carrier subsidized model should be ended to bring down consumer telecommunication costs. It only benefits the carriers.

snitko3• 13 years ago

That's very true. I'm in Russia and telecommunications are dirt cheap here. I barely spend $10 in 3 months on my cellphone (that's including occasional internet browsing, although unlimited traffic would cost you more). Broadband internet is also very cheap, my bill is $8/mo for a 30Mbps connection and unlimited traffic.

I buy a new phone every 2 or 3 years. Go ahead and count on your own if I'm better off with this model.

sigsergv• 13 years ago

That's true for a few major cities maybe, in province prices a not so cheap.

aetherson2• 13 years ago

Well, I think in context, what they mean is:

Russia bans handset subsidies, so customers compare actual handset costs from one handset to the other, and notice that iPhones cost hundreds of dollars more than other smartphones, making them expensive relative to alternative handsets.

Rather than:

iPhones in Russia are expensive relative to iPhones in America.

snitko3• 13 years ago

No man, you don't get it. MOST people in Russia really never buy expensive smartphones with subsidies. They actually pay the full price. My guess is, carriers tried this model, realized it doesn't really work very well and decided to dump it altogether.

farmdawgnation• 13 years ago

Carrier subsidized model should be ended to bring down consumer telecommunication costs. It only benefits the carriers.

In the US at least, everyone has to get on LTE before that becomes a reality. Sprint and Verizon 3G and older handsets can't speak the same language, I don't think. AT&T and T-Mobile both use GSM based systems so phone calls are possible using a handset form the other carrier, but their 3G frequencies are different - so you're hosed on mobile data. So, there's a de-facto lock into a carrier with your device even if there isn't one in the contract. (And $600 for a new device just for a different carrier is a hard sell, in a world where subsidies are gone.)

It's happening though. The problem is that companies like HTC charge the same price Apple does for the iPhone for what is a lower quality of product, in my experience. Once again, personal experience, but the number of hardware problems I've had within the walled garden of Apple are few compared to those in my Android days. And those that I've had have been fixed quickly by an Apple store representative, whereas with HTC or Verizon it was a multiple week ordeal.

That's something that makes the product itself even more valuable to me.

bretthoerner• 13 years ago

I've always wondered: can a single phone have radios for all the different carriers? Could they share a single antenna? Could one be activated by the user selecting which network to get on?

dfrey• 13 years ago

The problem is that companies like HTC charge the same price Apple does for the iPhone for what is a lower quality of product, in my experience.

HTC charges a similar price for a lower quality phone that has a bigger display, more RAM, higher resolution display, more internal storage, external storage capability, etc, etc.

kalleboo3• 13 years ago

In the US at least, everyone has to get on LTE before that becomes a reality

Many (most?) Verizon/Sprint phones support GSM already in order to gain worldwide roaming capabilities. If they just allowed R-UIM cards or allowed foreign ESNs to be registered on their networks, handset manufactures would quickly follow suit and ship multi-standard phones that aren't software locked to prefer a certain standard.

AT&T and T-Mobile both use GSM based systems so phone calls are possible using a handset form the other carrier, but their 3G frequencies are different - so you're hosed on mobile data

High-end phones nowadays (such as the Xperia Z) support both 3G frequencies. Also, T-mobile are refarming their frequency allocations to open up 3G on their 1900 spectrum, same as AT&T. I could use my Euro-model iPhone 5 on T-Mobile 3G this year at WWDC.

alinspired• 13 years ago

It's about the culture of using prepaid vs contract phones, ie it's not like carriers don't understand ARPU, it's subscribers who stay away from contracts.

eeky• 13 years ago

Russia leading the way once again.

dotcoma• 13 years ago

So, none of the operators were angry about possible (likely) NSA leaks?

ak0s4• 13 years ago

Why would they bother? There is a local version of PRISM named <a href="http://en.wikipedia.org/wiki/SORM">SORM</a> deployed at every provider.

andreiursan• 13 years ago

"draconian contracts" for me this means unlimeted Data Plans, some carriers only offer that for iPhone - at least this is valid for Romania (last time I checked).

abbot2• 13 years ago

Ex-russian here.

This might be counter-intuitive to many people who never lived in Russia, but: mobile phone service contracts in Russia almost do not exist, entire market model for carriers is quite different.

Carriers don't sell SIM-locked phones for over decade now in Russia. Most common contract features are implemented as pay-as-you-go with extra packs (quite similar to what giffgaff does in the UK). This is probably due to the fact that CRA and other similar financial institutions in Russia are currently in their earliest stages of development.

Mobile phones are usually purchased absolutely independently from the mobile service contract, and almost never purchased from carriers: electronics stores usually offer better prices, and all Russian carriers are happy to sell SIM-only prepaid contracts (also see PAYG model notice above).

So overall you should read this news as: "major russian mobile companies decided that long-term contract model required to sell 'cheap' iPhones in russia is still too risky and not feasible", no conspiracies.

markdown• 13 years ago

This is not Russia specific... it's like that in most countries of the world.

All three major Russian carriers dump iPhone

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