AT&T's Long Wait for iPhone Break-Even
A new report by the Yankee Group focuses on the subsidies wireless carriers pay to device manufacturers. In particular, as C|Net found, despite the fact that AT&T's bottom line has been heavily boosted by the iPhone, it takes a long time for the company to make back it's money from the bandwidth-sucking Apple device.
The report is titled "The Golden Subsidy Egg's Goose is Cooked: Welcome to the Brave New Subsidy-Free World." Most consumers know about mobile phone subsidies, which wireless carriers provide to customers lower prices on the latest phones, smart or not. The problem is, as the Yankee Group noted, as more consumers buy bandwidth-hogging devices, it takes longer for carriers to make back their money.
According to the Yankee Group, it takes AT&T 17 months out of the typical two-year contract to go from "in the red" to "in the black" with the iPhone. With Android devices and webOS devices coming out on all networks, you can imagine that soon other networks, along with AT&T, are going to feel the crunch.
And despite what people may think, it's unclear that the Verizon network could handle something that sucks as much bandwidth as an iPhone. As the Yankee Group posits, as more of these devices arrive, carriers are going to have to either reduce their subsidies, or face the prospect of going further into a two-year contract before a device pays off. The choice will be to raise prices on devices, or raise prices on services. Either way, the consumer will feel the pinch.
The report is titled "The Golden Subsidy Egg's Goose is Cooked: Welcome to the Brave New Subsidy-Free World." Most consumers know about mobile phone subsidies, which wireless carriers provide to customers lower prices on the latest phones, smart or not. The problem is, as the Yankee Group noted, as more consumers buy bandwidth-hogging devices, it takes longer for carriers to make back their money.
According to the Yankee Group, it takes AT&T 17 months out of the typical two-year contract to go from "in the red" to "in the black" with the iPhone. With Android devices and webOS devices coming out on all networks, you can imagine that soon other networks, along with AT&T, are going to feel the crunch.And despite what people may think, it's unclear that the Verizon network could handle something that sucks as much bandwidth as an iPhone. As the Yankee Group posits, as more of these devices arrive, carriers are going to have to either reduce their subsidies, or face the prospect of going further into a two-year contract before a device pays off. The choice will be to raise prices on devices, or raise prices on services. Either way, the consumer will feel the pinch.
