GlobalCom Inc.is an Internet service provider.It provides a router free of charge when users sign up for a two-year wireless service plan.In this plan,users pay in advance irrespective of whether they use the Internet package during the two-year period or not.Which of the following business models does this scenario best illustrate?
A) a combination of the razor-razor-blade model and the subscription-based business model
B) the pay-as-you-go business model
C) a combination of the freemium business model and the pay-as-you-go business model
D) the direct sales business model

Question

Quizplus · Accepted Answer

In this scenario, GlobalCom Inc. uses a combination of the razor-razor-blade model and the subscription-based business model. Telecommunications companies combine the razor-razor-blade model with the subscription-based business model. They provide a basic cell phone at no charge or significantly subsidize high-end smartphones when you sign up for a two-year wireless service plan. Telecom providers recoup the subsidy provided for the smartphone by requiring customers to sign up for lengthy service plans.