Phone subsidies: Are they just bad loans in disguise?

Iliad’s Free Mobile has opened a new front in its war with France’s incumbent operators. It’s taking Vivendi’s SFR to court over the handset subsidies it charges, claiming they amount to usurious loans that consumers wind up paying back in the form of hidden fees in their contracts. The subsidies, which depend on the consumer committing to a one- to two-year service contract, are effectively hidden consumer credits that skirt the rules governing such offers, and therefore constitute “usury rates of 300 to 400 percent that consumers don’t see,” said Iliad founder Xavier Niel.