The first obvious conclusion I reached is that if you look at the total cost of ownership (TCO) of a phone, including both the phone cost and the monthly tariff cost multiplied by the term of the contract, there's surprisingly little elasticity in the bottom line until you get into the eye-wateringly high usage tariffs. The TCO for a sample phone on 18 month contract varied by only £102 between the Talk 75 and Talk 500 tariffs (75 included minutes and 100 included texts per month, versus 500 minutes and 1000 texts per month). The same pattern held on 12 month contracts, with a £60 spread. Which is, frankly, ridiculous, because you get so few minutes and texts on Talk 75 that the actual cost per minute is nine times higher, and the cost per text is eight time higher than on Talk 500.
What I had discovered looked weirdly like a classic bathtub curve — only plotting price against contract time, rather than the more familiar failure rate against time. It's a familiar curve: airline seat price allocations often follow the same distribution. At one end of the curve, you've got the chancers who want a flashy phone but no commitment to use it. Typically they'll sign up for a short, cheap contract with an expensive phone. Fashion victims, in other words. The cellcos are set up to recognize and fleece them, however. At the other side of the curve you've got the gabby heavy users, and they're going to throw money at you whatever you do, so you might as well take it. In between, you've got a highly price sensitive market, which you want to encourage to use their phones more (and graduate into being heavy users), so you dangle some promising discounts in front of them, weighted towards the heavier tariffs.Charlie also has this revelation about airline pricing:
(Airline seats for long-haul flights: if someone books a flight six months ahead of departure, it is a Big Deal to them, so they value it, so you can price it high. If they book at two day's notice to go to Aunt Irma's Funeral in New Zealand, it's a coercion purchase, so you can price it high. In-between, there's a trough where people have time to pick and choose which carrier to use ... so seat prices are at their lowest in the period 8-12 weeks before departure. It's the same bathtub-shaped curve.)Interestingly, railway companies don't do this (they sell a small amount of cheap tickets first, then progressively more expensive ones as each price level sells out, culminating with walk-up fares; at least Eurostar and Britain's railway system do this). This is undoubtedly partly due to any railway route between two stations taking the same duration being a monopoly, though that doesn't explain everything. Why, for example, are air travellers booking early willing to pay over the odds, while rail travellers are not?
Though is the bathtub curve the whole story for air fares? As flying a jumbo jet from one airport to another has a rather large fixed cost, it would make sense for the airlines to make an effort to fill as many seats as they can, whilst taking as much per ticket as the market will bear. I imagine they may have worked out a way of, at the last minute, selling off the remaining empty seats to whoever will pay for them without disincentivising other passengers from, in future, paying as much as they would otherwise be willing to, perhaps by making last-minute discounts inconvenient or cumbersome to obtain.
Anyway, while we're on the subject of mobile phones: here is a piece on how unwanted mobile phones are recycled. (Some are sold to people further down the new-shiny-toy chain; ancient, obsolete bricks often end up in countries where their network technology is still in use; some are refurbished or used for parts in countries with lower labour costs (and lower gadget-buying power), and those at the end of their useful life can end up melted down for their precious metals (of which there is a lot). If they're lucky; if not, they may end up leaching toxins into the water table somewhere in Africa.
It’s hard to track ReCellular’s or Collective Good’s phones. But Jack Qiu, a professor at the Chinese University of Hong Kong who has studied the movement of used computers and phones in China, describes one route phones take. In Kowloon, in Hong Kong, Pakistanis and other immigrants (often asylum seekers) import phones from Europe by the shipping container. These are fixed or cannibalized for parts in stalls at a local market. In the past, Nigerians and other African exporters swept in to buy tens of thousands of phones at a time, particularly so-called “14-day phones” — those that have been returned under warranty and used little. But recently, Qiu says, the markets for these phones have become saturated in African cities. So the Nigerians, needing to take their business to poorer African villages, have been leaving Hong Kong for Chinese cities like Guangzhou, where they can purchase cheaper, more heavily used phones from the larger refurbishing companies there. Many Nigerians have learned Mandarin in order to do business in Guangzhou, Qiu says, and the city now has an African-style coffee shop.
cellphones are not easily abandoned — and, when they are, someone somewhere is still likely to see some value in them. Jim Puckett, the coordinator of the Basel Action Network, a nongovernmental watchdog group that focuses on e-waste, visited Nigeria in 2005. He describes, at one Lagos electronics bazaar, repairmen sitting on dirt floors under shelves of scavenged parts, jury-rigging phones back together, over and over again, until the things are absolutely dead.And here is a discussion of what the signal strength bars on a phone actually mean. (The answer is: often not much.)