Bloomberg reported earlier this year that Apple is working on a subscription service model for iPhones: For a monthly fee, customers will be able to lease a phone instead of buying it outright. Last week, Fairphone announced a similar subscription plan for their customers in the Netherlands. We’re big fans of Fairphone (their phones always top our repairability scale, with easy-to-swap batteries and upgradeable storage) but we’re not big fans of the move toward hardware subscriptions.
Cell phone subscription services worry us—and not just because we’re annoyed that everything’s a subscription now. We often say, “If you can’t fix it, you don’t own it.” The inverse is also true: If you don’t own it, you can’t fix it.
How Do Smartphone Subscription Programs Work?
The concept of a phone subscription program is simple: You pay a monthly fee. You get to use a phone. Maybe you also get other services bundled along with your subscription. Fairphone offers battery and screen replacements, for instance. When your contract is up, you return the phone.
Why would manufacturers want to do this? The upgrade cycle has slowed. When the iPhone was released, users replaced their phones about every 18 months. Now it’s every four years. That’s great news for the planet—every additional year we keep our phones on average is the carbon equivalent of taking 636,000 cars off the road. But slower upgrades mean slower profits, so it’s no surprise manufacturers are looking for a steadier way into our wallets. Investors like predictable profits, and a hardware subscription model helps manufacturers make revenue promises they can keep.
From Apple’s perspective, an iPhone subscription model makes perfect sense: They get a consistent revenue stream, provide incentives for customers not to switch to a different model of phone, and are guaranteed to be able to recapture retired devices for their refurbished phone market.
Subscription is Worse Than Lease-to-Own
Wait, those of you plugged into the Apple ecosystem might say, doesn’t Apple already have an iPhone subscription service, the iPhone Upgrade Program? In the US, UK, and China, yes, you can pay a monthly fee for an iPhone. And many cell phone carriers offer financing programs with a regular upgrade structure. AT&T calls theirs Next Up. Google offers the Pixel Pass.
All of these programs, however, are lease-to-own models; you’re paying for your device in installments. At the end of the contract term, you’ve got a device that’s yours. You can upgrade per the terms of the contract if you want—but if you’d rather pass it on to a kid, sell it, or use it as a baby monitor, you can. Plus, most of these programs let you get out of the subscription contract by paying the residual value of your device.
The “Ultimate Lock-In Trap”
A subscription model, on the other hand, locks you in for a monthly charge without the benefits of ownership at the end. You’ll be just as tied into iPhone apps and services as if you owned your device, but it’s never yours to keep. That’s why MacWorld’s Michael Simon calls the proposed Apple program the “ultimate lock-in trap.”
Think of it as a rental, and Apple is your new landlord. And hey, sometimes renting is easier than owning—if you have a compassionate landlord with an attentive maintenance schedule, that is. If you’ve got a landlord with investors breathing down their neck, looking to flip your apartment every year to jack up the rent … well … that looks a lot less like home.
Why Phone Subscription Plans Aren’t Worth It
Subscription plans are worse than lease-to-own or buying outright for three main reasons:
- They’re usually more expensive in the long run.
- They limit your repair options—no DIY repair, no picking your repair provider.
- They drive repair costs up for everyone.
More Expensive in the Long Run
MacWorld predicts that the Apple subscription plan probably won’t let you upgrade until you’ve paid at least the cost of the device into the program. Fairphone’s upgrade proposition is less clear, since they don’t release a new model every year, and the lease agreement doesn’t include an upgrade discount. The company has historically released upgrade modules between models; when they release camera or other upgrade modules, they will offer them to subscribers for an additional fee.
Currently, however, the Fairphone plan is more expensive than buying new, in the long run. Each year a user goes without making use of the repair services, Fairphone offers a discount on their monthly subscription fee: One year without repairs gets you a 2€/month discount, two years gets you a 4€/month discount, and so on. Even with this discount, the program would have a user who needed no repair services paying 996€ over five years, which is 280€ more than the cost of buying the phone outright—without a phone of your own to show at the end of your term.
Limited Repair Options
But a leasing model isn’t just more expensive in the long run. If you don’t own your phone, its manufacturer can legally restrict you from fixing it yourself. You won’t be able to recover that toddler-flushed iPhone by learning to microsolder, like Jessa Jones did. Say goodbye to hardware upgrades like Hugh Jeffreys’ dual-SIM iPhone 12 mod.
People who don’t care about getting inside their own phones might say, Well, so what? Fairphone’s subscription model includes one screen or battery replacement per year—but additional repairs require a charge on top of the subscription fee.
Even for programs that include repair services, the manufacturer gets to decide not only if your repair qualifies but whether they’re willing to do the repair at all. Many users have reported manufacturers refusing to do repairs because of a small scuff. Fairphone’s subscription service only covers repairs if there’s no water damage, “evidence of obvious abuse,” or evidence you’ve removed the case. We hear all the time from iPhone users who are told a repair is “impossible” at the Apple Store only to find out that an independent repair shop can do the repair easily and inexpensively. If you’ve bought outright or are leasing-to-own, you have options when a manufacturer says a repair is “impossible,” your fault, and not covered by the plan. Not true if you’re just a subscriber.
Repair Monopolies Drive Up Repair Costs
Even for people uninterested in DIY repair, a subscription model means more pressure to upgrade, fewer rights to your phone, and maybe more-expensive repairs for everyone. Virtually all of the ways companies restrict repair illegally now would be legal under a subscription system. They can void your warranty if you open it (not true now). They can set repair prices wherever they want. They can eliminate any market pressure to keep those prices low by blocking out independent repair technicians entirely (following Nikon’s model). It’s not illegal to maintain a repair monopoly on a leased device.
More Manufacturer Accountability vs More Mining
There is one significant environmental benefit to rental programs: They extend manufacturers’ responsibility for their hardware. Manufacturers will reclaim virtually every phone in the program, which means they’ll refurbish what they can and recycle what they can’t. Given that many devices sit in drawers for years or end up in the trash when they could be helping fill out the refurbished market, this could be a boon.
That being said, the biggest environmental impact of a phone is in its mining and manufacturing. A leasing model that incentivizes people to upgrade sooner means more new devices, more mining, and more waste. Even without incentives, you’ll have monthly statements implying an expiration date on your phone. And when the manufacturer gets your phone back, are they thinking of the environment, or their bottom line? If the calculus is shredding more phones than it’s saving, even if they’re not bribing you to upgrade, that’s a net negative. Faster consumption and more waste are bad news for the planet.
Locked Devices = Less Learning
There could be another insidious side-effect of a leased hardware future: When we can’t get into our stuff, it’s very hard to learn how it works.
So many engineers get their start by taking stuff apart. Adam Savage (of Mythbusters fame) often talks about how the experience of tinkering with electronics as a kid inspired him to become the maker, engineer, and repair enthusiast he is today. If all our stuff is locked away behind rental agreements and repair restrictions, security experts like Tarah Wheeler worry that it’ll be harder to inspire “people with curious minds who want to know how things work.”
Repair teaches engineering, and subscriptions prevent that kind of learning.
When You Own It, You Can Fix It
Given manufacturer strangleholds on repair, Gay Gordon-Byrne of The Repair Association points out, “the rental concept is more honest than the pretense of a sale without having the advantages of ownership.” But setting Apple’s ownership of your phone in stone and officially signing away your rights doesn’t feel very good. And for companies like Apple and Fairphone who purport to pick people and planet over profit, this doesn’t look good, either.
Let’s not lose sight of the meaning of ownership: When you own something, you can fix it—and have all the hardware control and potential for engineering discovery that repair enables. Don’t let manufacturers take that future from you.