Subsidized tablets were a terrible idea to begin with

Taylor Martin
 from  Concord, NC
| July 4, 2012

Late last month, Verizon rather quietly rolled out its new Share Everything plans to "help" bring down the cost of having multiple lines. For $40 per smartphone line and $30 per basic phone, families (and individuals) now get unlimited minutes and messages and share data buckets, which range from 1GB to 10GB for $50 to $100 per month, respectively.

Prior to and following the arrival of the new plans, I voiced my opinion on Share Everything multiple times. For families with several lines who may not use a ton of data but text message and place or receive calls like fiends, Share Everything can and will cut their bill by a significant amount. For me, a data-centric user who doesn't use carrier messaging or place very many phone calls, these new plans are more of everything I don't want.

As TechCrunch reported yesterday, though, when Verizon made Share Everything official, they also quietly stopped offering subsidized tablets. This doesn't affect the iPad, as it was never offered at a discounted rate. But what that means is that instead of signing a contract, agreeing to keep service without interruption for two years and getting a break on the upfront price of the device, all tablets are now sold at full retail value and can be used month-to-month. Hallelujah!

Now, it may sound like a bad thing, and it may seem odd that I'm cheering for such a move by Verizon. But it's one that should have been made long ago. In fact, tablets never should have been subsidized in the first place. (Neither should cell phones, but that's another rant for another time.) And we can only hope the other three major providers follow in Big Red's footsteps.

Let me explain.

For starters, A two-year contract for a smartphone can be justified by most, simply because most people will keep their phone for two years. If nothing else, they will at least keep service for two years while they switch out devices. They will use their smartphone constantly, throughout the day, every day. And while smartphones and tablets are very similar in nature, the two are very different beasts.

Not everyone is going to carry a tablet everywhere they go. (I generally do, but I'm far from your average consumer.) From the little recreational observation I've done, I've noticed that many tablet users hug Wi-Fi connections like they're going out of style, even when they have a tablet with a built-in 3G/4G radio. Tablets were only offered with unlimited data plans for a limited amount of time and are generally best suited for streaming and consuming various forms of media. As we saw not long after the launch of the new iPad, tablets are an easy way for users to burn through their monthly data allowance unexpectedly. So in fear of overages, people tend to utilize Wi-Fi connections as much as possible. This, in a way, defeats the purpose of even having a 3G or 4G tablet altogether.

On top of that, tablets have never been offered at recommendable or adequate subsidized pricing. With the exception of the Kindle Fire, Nexus 7 and potentially a few more budget-friendly slabs (Nook Tablet, Nook Color, etc.), tablets are widely viewed as overpriced, especially for being supplementary, luxury devices. Most higher-end, 10-inch models start at $400 and top out at upwards of $900, depending on connectivity and capacity. High-end smartphones usually range from $500 to $800 without a contract.

However, smartphones are more deeply subsidized due to higher rate plans (read: overpriced calling and messaging plans). In other words, since carriers can charge you for more services with a smartphone, thus making more money back over the same amount of time, they are willing to knock more off the retail price of the phone. For example, the Samsung Galaxy S III is $599.99 without a contract, but sign a two-year agreement and it can be yours for $199.99 plus tax. That's a fairly steep discount at $300. Because tablets are only subjected to data plans, though, the effect of subsidization is much more weak. When Verizon introduced the DROID XYBOARDs in December, the 10.1-inch 16GB model started at $699.99 without a contract. With a two-year contract, the price only dropped to $529.99.

Why anyone would agree to pay at least $30 per month for two years to save $170 upfront (instead of just paying more to buy the tablet without contract and choosing when to pay for service) is beyond me. I can't even begin to wrap my head around that.

Luckily, that's no longer a problem – not on Verizon at least. And, best of all, there are two unique features included in the new Share Everything plans, both of which can make owning a tablet worthwhile: cheap tablet monthly access and included hotspot or tethering. For just $10 per month, you can add a tablet to your account and simply pull from the same data bucket your smartphone uses. Or, if you don't want to pay an extra fee, you can simply purchase a Wi-Fi tablet (which will save you money over a 3G/4G model) and use the hotspot feature for free.

Kudos to Verizon for realizing just how ridiculous subsidized tablets were and getting rid of the monstrosity. And kudos a second time for enabling the hotspot feature free and for actually making it respectably cheap to add a tablet to your account. (If you're already paying an arm and a leg each month for next to no data and overpriced minutes and messages, what's $10 more per month to use your tablet on there, too?)

Image via CNET