TELECOM Digest OnLine - Sorted: Re: Is the iPhone an AT&T Time Bomb Against Cell Users?

Re: Is the iPhone an AT&T Time Bomb Against Cell Users?

Mr Joseph Singer (joeofseattle@yahoo.com)
Thu, 5 Jul 2007 16:15:25 -0700 (PDT)

hancock4@bbs.cpcn.com Mon, 02 Jul 2007 13:47:11 -0700 wrote:

> How much do people pay for their wireless handsets? Why?
> I got mine (original and replacement) for free.

You got it for "free" because the mobile carrier wanted to induce you
to be a customer. The phone indeed did cost the mobile carrier money
to buy the phone from the equipment manufacturer. The carrier is
gambling that the "investment" that they've made in you will come back
to them in the way of the charges that you pay every month for service.
They're hoping that the ARPU http://en.wikipedia.org/wiki/ARPU will
make it attractive to have you as a subscriber. It's also part of the
reason why GSM handsets are very often "locked" to a carrier so you
don't use the subsidized equipment with a competing carrier.

> At retail, including carrier-owned stores and kiosks, most handsets
> seem to be for sale, not for free with plenty of buyers. At Verizon
> stores, all were for sale, though on the Internet they had free
> promotions. At Cingular, they had some for free as part of a
> promotion.

Generally phones sold by a carrier are sold at discount or "given" to
a subscriber at a significant discount to make service attractive to
the prospective subscriber. Apple's iPhone is a definite exception to
this since there's no carrier subsidy at all which to me seems a wee
bit strange as I don't see what the incentive is for you to get this
phone to just give AT&T the "privilege" of having you indebted to them
for two years with no advantage for the subscriber but lots of
advantage for the carrier.

Some of the handsets weren't cheap, like around $50.

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Date: Thu, 05 Jul 2007 19:27:26 -0700
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