In the United States subsidized prices for smartphones is standard, but that's coming to an end, according to AT&T CEO Randall Stephenson. He says the market has reached a point where it can't continue to support phone subsidies and at some point carriers will have to change their business model, which means higher phone prices.
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Doing away with smartphone subsidies will scare off some shoppers at first because they don't get that the lower prices they currently pay are made up for in their monthly cell service bill. Higher up front prices should equate to lower bills in the long run, and will do away with paying higher rates for cell service even after the subsidy price is paid off.