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Russian iPhone delay based on old deals

updated 10:20 am EDT, Mon June 16, 2008

Russian iPhone 3G delay

Old pricing schemes are to blame for Russia not being included in iPhone 3G plans, writes the Moscow Times. The newspaper notes that two of the country's major cellular carriers, MegaFon and Mobile TeleSystems, have confirmed that they were previously in talks for iPhone sales, but that Apple's terms were considered unacceptable. It was asking local carriers to buy phones wholesale, says one unidentified company, and additionally demanding 10 percent from each device sold, as well as 10 percent from each subscriber's monthly fee.

That revenue sharing requirement has since been dropped with most carriers in other countries, in exchange for subsidized prices meant to lure in more buyers. Russia's VimpelCom is now said to be "looking at the possibility" of negotiations with Apple, particularly as it is deploying a 3G network in 20 cities over the course of the summer. Apple CEO Steve Jobs has been quoted as saying some sort of Russian deal is likely by the end of the year.

Locals may still have to pay fairly high prices however, as the country does not currently have a contract-based subsidy system. Equally problematic is that carriers are not entitled to compensation should a subscriber break his contract.




by MacNN Staff

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Comments

  1. ViktorCode

    Joined: Dec 1969

    +4

    Country specifics

    Please note that there are some specifics to the country mobile networks.

    Since customers are free to break contract with a carrier any moment and lose nothing, monthly contract payments are moderate in Russia. Competition among leading three networks led to the customers' habit of having more than one active SIM card that are used to gain most benefits from different networks / tariffs. IMO majority still prefer using pay as you go tariffs over subscription-based contracts.

    As a result there are no carrier locked phones in Russia. iPhone would have a hard time competing with the rest of the market, having a contract "disadvantage" and being locked to specific carrier. It would sell though, but in no way it could have become a mass selling device under these conditions.

  1. Jonathan-Tanya

    Joined: Dec 1969

    +4

    It's a good thing

    Keep in mind too, that Russia's system is called the 'free market' and is a good thing, that other countries should emulate.

    The 'lower priced' iPhone only comes at the cost of paying every bit of the difference and MORE back to AT&T through your contract.

    In other words, you are paying too much, because there is no real competition.

    In this case, be envious of Russia.

  1. Jonathan-Tanya

    Joined: Dec 1969

    0

    It's a good thing

    Keep in mind too, that Russia's system is called the 'free market' and is a good thing, that other countries should emulate.

    The 'lower priced' iPhone only comes at the cost of paying every bit of the difference and MORE back to AT&T through your contract.

    In other words, you are paying too much, because there is no real competition.

    In this case, be envious of Russia.

  1. testudo

    Joined: Dec 1969

    -6

    Re: It's a good thing

    The 'lower priced' iPhone only comes at the cost of paying every bit of the difference and MORE back to AT&T through your contract.

    Where do you get the "and MORE" part (let alone the "every bit of the difference" part)? The mistake you're making (and others as well) is that you're not looking at all the variables:

    1) You're comparing the price of the new phone, plus add-ons, to the price of the old phone. Yet the two aren't comparable (since the new phone has more features). You would need to know the true retail value of the iPhone (which no one knows, since Apple won't sell it unlocked, and even if they did, they'd probably sell it at a premium to discourage it).

    2) AT&T has to pay it's subsidy to Apple up-front, and then covers that over the terms of 2 years. As anyone with any bit of economical knowledge will tell you, $200 now is not the same as $200 spread out over two years. This is why a state lottery, say, gives you far less if you choose a lump-sum payout instead of a 20-25 year annuity.

    3) Most of the extra payout is most likely going to cover the cost AT&T has to pay Apple. Why not blame apple for the amount they charge AT&T for the phone itself?

    4) Heaven forbid AT&T try to actually make a profit. Apparently the only one who's allowed to gouge Apple buyers is Apple itself.

  1. bjojade

    Joined: Dec 1969

    +2

    It is more

    Cell companies have it figured out.

    Which is cheaper, a $199 phone or a $399 phone? Of course people look at the $199 price and say it's cheaper without looking at the details of the monthly fee.

    Well, AT&T's minimum iPhone plan is $10/month more than before. That's $240 over the 2 years of the contract. That means a 20% price increase versus buying the phone outright on the old plan. However, they now market the phone as being cheaper.

    Yes, the new phone has more features and may be better. That's not the point. The point is cell companies are king at hiding your true costs. When all is said and done, owning an iPhone costs around $1000 per year. Is it really worth it?

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