View this article at: http://dev.macnn.com/articles/08/04/29/potential.iphone.subsidy
Tuesday, Apr 29, 2008 6:20pm

AT&T may subsidize 3G iPhon...

AT&T will begin offering a subsidy on iPhones with a two-year contract when the 3G iPhone is introduced, bringing the estimated, subsidized cost of the device to $200 – half of its current suggested retail price. According to CNN Money, the agreement would only be available through AT&T; Apple stores would not be eligible for the discounted rate. The move is said to be a recruiting tactic, in the hopes it will coerce T-Mobile, Sprint, and Verizon customers to switch teams.

Subsidizing cellular devices is extremely common in the North American market, allowing telcos to quickly acquire a wider customer base by netting exclusive distribution deals with companies such as Samsung or Sony Ericsson. At the rate that cellular providers accrue monthly bills from customers, the cost a telco would have absorbed to net the subscriber is quickly repaid. Although iPhone plans net more income per month, AT&T has to pay between 9- and 25-percent to Apple as part of its arrangement. When contacted by MacNN, AT&T declined to comment on the report.