AT&T rivals seen driving down cost of iPhone service

[AppleInsider]

Tough macroeconomic conditions are causing wireless carriers like Sprint and T-Mobile to become more aggressive with pricing of their monthly service plans, a move which could ultimately help drive down the cost of owning an iPhone.

In a report published Monday, Kaufman Bros analyst Shaw Wu compared the trend to that of DSL and broadband pricing, which has fallen considerably over the past several years.

"It used to cost $50 per month for access and now there are many plans for $15-$20 per month as well as faster tiered pricing," he said. "Customer adoption of broadband accelerated as pricing dropped."

While top tier providers AT&T and Verizon have yet to follow their smaller rivals with similar reductions, Wu thinks it may be only a matter of time before they do, or at least consider implementing several more tiers of internet data pricing.

"Sprint's Boost Mobile unit now offers a $50 plan that includes unlimited talk, messaging, web, and walkie-talkie while T-Mobile is test marketing a $50 unlimited voice plan and $25 more for unlimited data/Internet," he wrote. "This compares to $130 for both AT&T and Verizon for unlimited voice and unlimited data/Internet."

The analyst cites high service plan pricing -- as opposed to hardware pricing -- as the cause for slowing iPhone sales and reduced smartphone adoption in general. And while he acknowledges that Sprint and T-Mobile aren't catering to the majority of smartphone customers, he believes their "lower prices will likely help them participate more in this secular trend and cause AT&T and Verizon to also lower prices in response."

Going forward, Wu said any reduction in service plan pricing at AT&T and Verizon would be seen as a positive that should help smartphone adoption remain healthy despite the troublesome economy.

For the current quarter ending March, Wu is 'erring on the conservative side' and modeling Apple to sell approximately 3 million iPhones. However, his supply chain checks suggest the Cupertino-based company could actually sell anywhere from 3.25 to 3.5 million of the handsets.

In recent weeks, several Wall Street analysts have combined to suggest that some of the biggest news surrounding the next generation of the iPhone will be pricing. Wu cited his own sources as saying that Apple and AT&T are discussing the possibility of offering customers more data plan options, while Bernstein's Toni Sacconaghi came away from a chat with Apple interim chief Tim Cook believing the company is looking into "different pricing/price points" for the next-gen handset itself.

On Friday, RBC charted over a half-dozen emerging iPhone competitors as yet another reason why Apple and its wireless partners may inevitably elect to trim the cost of owning the touch-screen handset.

[ View this article at AppleInsider.com ]

[BlackSummerNight]

LOL, I need to hurry up and put mine on ebay.

[irnchriz]

Originally Posted by BlackSummerNight

LOL, I need to hurry up and put mine on ebay.

The iPhone price will stay the same its the monthly service plan charges that 'should' drop.

[Enigmafan420]

I have been saying all along that the thing holding up more rapid adoption of the iPhone is NOT the price of the hand set.

God, $200 is NOTHING when you figure that the service will cost NO LESS than $1,680 over 2 years, and that is before cell plan taxes.

I just don't see a price cut to $100 for the phone making that much of a difference.

BUT-a voice and data plan that included some sort of texting (400?) for $50 per month per line WOULD BE THE "KILLER APP" for adoption.

[tink]

Like I said before, service pricing is the only reason I don't have an iPhone.

[saarek]

I have to say that I find O2's pricing in the UK really reasonable, I am on the £35 a month contract (around $50) which gives me the unlimitted internet and a fair amount of calls/texts.

From what I can see the American pricing is a rip off, especially as Americans seem to have to use their minutes when people call them as well as when dialing out (I could be wrong here)

Roll on competition worldwide, bring those prices down!

[Enigmafan420]

Originally Posted by saarek

I have to say that I find O2's pricing in the UK really reasonable, I am on the £35 a month contract (around $50) which gives me the unlimitted internet and a fair amount of calls/texts.

From what I can see the American pricing is a rip off, especially as Americans seem to have to use their minutes when people call them as well as when dialing out (I could be wrong here)

Roll on competition worldwide, bring those prices down!

You are not wrong-we pay for incoming and outgoing calls.

[vercordio]

Originally Posted by saarek

...Americans seem to have to use their minutes when people call them as well as when dialing out...

That is correct. Pretty stupid, huh?

I'd love to see the service costs go down a little, but I'll believe it when I see it. "Should" means nothing when it comes to Apple and lowering prices :-P

Alternatively, they're somewhat stuck. The cost of the equipment is much higher than what they're selling the individual phone for. Could they basically re-release the current phone (which now costs less than it did a year ago) at a lower cost (both individually and for the service)? Sure. But people expect a newer, better phone. Newer, better equipment costs more money. So unless you want Apple to lose money on each phone sold, I'm afraid there's not much that can be done.

[dr_lha]

Originally Posted by saarek

From what I can see the American pricing is a rip off, especially as Americans seem to have to use their minutes when people call them as well as when dialing out (I could be wrong here)

You're not wrong, but the difference is that USA cell phones have local numbers, so people calling your cell phone from a regular phone don't pay an arm and a leg for it, unlike in the UK where cell phones have special high rate numbers. In essence the cost of calling a cell phone is put on the cell phone owner rather than the person initiating the call.

We also tend to get more included minutes in our plans than people in the UK, from what I've seen, although I may be wrong on this.

[diamondsw]

Yup, I'd love to switch to an iPhone, but the data plan is the sticking point. Sprint gives me unlimited data for $15/month versus $30/month on AT&T. I also get a better corporate discount on Sprint than AT&T, and the voice plans have more features for the price. Multiply all of this by multiple lines, and I'd spend about $40 more per month just to switch to the iPhone.

Every time I see one I'd love to, but it's just not happening. I'll keep trucking along with my old Treo 700p.

[saarek]

Originally Posted by dr_lha

You're not wrong, but the difference is that USA cell phones have local numbers, so people calling your cell phone from a regular phone don't pay an arm and a leg for it, unlike in the UK where cell phones have special high rate numbers. In essence the cost of calling a cell phone is put on the cell phone owner rather than the person initiating the call.

We also tend to get more included minutes in our plans than people in the UK, from what I've seen, although I may be wrong on this.

Well for $50 I get unlimitted internet, 600 minutes to landline or cell and 500 text messages, don't know how that compares with you guys but I bet it's better.

[solipsism]

I have doubts the iPhone data plans will drop, even if AT&T drops the unlimited data plan rates of their other phones. My reasoning is that the iPhone has shown to be dominate in phone-based internet usage and, so far, has shown to be pulling many from other carriers.

For AT&T to drop the plan of the iPhone I think that other touchscreen smartphones have to start showing up on other carriers as major threat and have these lowered plans attached to them. While there are some potential contenders in the works none of them have yet to be released in the US as of yet. Once they are released they will have to gain some momentum and affect the sales of the iPhone--which may be hard considering a new model should be released come June/July--before AT&T would even consider dropping the data plan on the iPhone.

[Dave K.]

Originally Posted by tink

Like I said before, service pricing is the only reason I don't have an iPhone.

Me too!

[Clive At Five]

A cheaper plan would make it a lot more appealing than having a modest family plan and hacking an iPhone sans data.

I can afford the phone, it's the following $4000+ between my wife and I that is a bitch.

-Clive

[BenRoethig]

I love competition.

[jasonfj]

Originally Posted by saarek

Well for $50 I get unlimitted internet, 600 minutes to landline or cell and 500 text messages, don't know how that compares with you guys but I bet it's better.

It sure is better. For $80 on AT&T I get data, 400 mins (incoming and outgoing, so you can basically halve that compared to the UK) and 200 texts. Total rip-off.

And since I don't have a land line, I don't 'benefit' from cheaper local calls to mobiles.

[samab]

Originally Posted by jasonfj

It sure is better. For $80 on AT&T I get data, 400 mins (incoming and outgoing, so you can basically halve that compared to the UK) and 200 texts. Total rip-off.

And since I don't have a land line, I don't 'benefit' from cheaper local calls to mobiles.

There is also nights and weekends and rollover minutes.

[solipsism]

Originally Posted by vercordio

That is correct. Pretty stupid, huh?

I wouldn't say it's stupid. The cell companies servers and towers are still being utilized when your receive a call. Perhaps archaic and certainly unusual for the EU, but it's just the way business and competition evolved in the States. Like roll over minutes, data plans, free long distance, etc., perhaps one day one company will try to compete by allowing unlimited incoming calls and others will feel need a follow suit to compete.

[saarek]

Originally Posted by solipsism

I wouldn't say it's stupid. The cell companies servers and towers are still being utilized when your receive a call. Perhaps archaic and certainly unusual for the EU, but it's just the way business and competition evolved in the States. Like roll over minutes, data plans, free long distance, etc., perhaps one day one company will try to compete by allowing unlimited incoming calls and others will feel need a follow suit to compete.

Yes, but they are already receiving payment for the call from the one who places it, do your landlines work the same way, do you have to pay to receive a call from someone else?

You are right, it's certainly an idea that would never work here, no consumer would accept it.

[jasonfj]

Originally Posted by samab

There is also nights and weekends and rollover minutes.

I hardly use it for nights or weekends. And I'm not often left with roll-over minutes.

[cameronj]

Originally Posted by AppleInsider

While top tier providers AT&T and Verizon have yet to follow their smaller rivals with similar reductions, Wu thinks it may be only a matter of time before they do, or at least consider implementing several more tiers of internet data pricing.

Unfortunately, customers are fleeing those companies for ATT and Verizon, so I'd say the market has spoken - as a whole the market prefers the great coverage and devices that the bigs have to the low prices and whatever trade offs come with Spring and others.

[cameronj]

Originally Posted by saarek

I have to say that I find O2's pricing in the UK really reasonable, I am on the £35 a month contract (around $50) which gives me the unlimitted internet and a fair amount of calls/texts.

From what I can see the American pricing is a rip off, especially as Americans seem to have to use their minutes when people call them as well as when dialing out (I could be wrong here)

You are right, but we get correspondingly more minutes as a result. So instead of worrying about who we are calling and how much each call will cost, we can get for a reasonable price truly unlimited calling, in and out, to any phone in the country, land line or mobile, local and long distance. I prefer it to all the worrying I hear about Euro plans and how you need to know what kind of a phone you are calling etc.

[cameronj]

Originally Posted by saarek

Yes, but they are already receiving payment for the call from the one who places it, do your landlines work the same way, do you have to pay to receive a call from someone else?

You are right, it's certainly an idea that would never work here, no consumer would accept it.

The opposite is also true - Euro style pricing would not be accepted here.

Can we drop all the BS comparing cell phone plans internationally? IT ALL EVENS OUT. Both sides of the pond have oligopoly market structures, and similar levels of personal income. The price of using a cell phone works out about the same no matter where you live.

[Timon]

Verizon now has "Friends and Family" so I'm wondering when AT&T will add it. That would totally solve my major issue moving to AT&T which is the rest of the family that I normally call is on Verizon.

That and adding some text messages to the data plan and I'll move when the new iPhone is released in June.

[NeilM]

Yes, the iPhone's upfront device price is largely irrelevant in the TCO.

However AT&T could make a marketing decision at any time to offer some lower tier of iPhone data/minutes if they think that makes sense from a competitive point of view. For instance in the several years that I had my previous Verizon phone the service plans changed numerous times.

Remember though that in the roughly $70/month basic plan there's some amount that's paid to Apple as a hardware subsidy, and that's not going to change (unless the upfront price does). As a result AT&T has less room to move on price than the $70 number might suggest.

[dualie]

I've said it before and I'll say it again: AT&T is a complete and total rip-off and only fool would pay those ridiculous prices for a freakin' PHONE!

I'll stick with my pay-as-you-go phone for less than $10 a month thanks. If the time comes that I can make money using my phone, only THEN will I consider paying more because it will justify the cost. Otherwise I'd just be throwing money away for what? Coolness and convenience?

[TenoBell]

You guys need to look at the point of this article along with the current reality.

AT&T and Verizon charge the most, but they are also growing the fastest. They are not forced to lower their costs.

Sprint is loosing customers and T-Mobile isn't growing nearly as fast. So they both are forced to compete on price.

As long as AT&T/Verizon continue to grow their isn't as much reason for them to compete on price.

[8CoreWhore]

MetroPCS gives everything - EVERYTHING - for $50.00 per month. Unlimited nationwide calling, unlimited web, SMS, MMS, etc... anything, and everything... and NO contract what-so-ever. No credit check and no contract. Ever. They are stealing a ton of people away from Sprint, Verizon, AT&T, T-Mobile, etc. They are the first domino driving down these prices. While they don't have a phone as cool as the iPhone, they are improving the selections - Data is new to them so you'll see more smart phones...

[aaarrrgggh]

AT&T and Verizon might think they are insulated from the price-cutting, but based on my call quality with AT&T I might switch the office over to the "little guys." The reality is that a cell phone doesn't provide $70 in value over a month, even an iPhone.

For once, I think Shaw Wu is actually right. Ouch, that hurt.

The trend in a business like cell phones should be towards unmetered, unlimited service for a flat fee, except for the artificial monopoly out there.

Does T-Mo have a 3G network yet? Could Sprint switch to a GSM standard?

[solipsism]

Originally Posted by 8CoreWhore

MetroPCS gives everything - EVERYTHING - for $50.00 per month. Unlimited nationwide calling, unlimited web, SMS, MMS, etc... anything, and everything... and NO contract what-so-ever. No credit check and no contract. Ever. They are stealing a ton of people away from Sprint, Verizon, AT&T, T-Mobile, etc. They are the first domino driving down these prices. While they don't have a phone as cool as the iPhone, they are improving the selections - Data is new to them so you'll see more smart phones...

Does MetroPCS still only do the one-way nationwide calling. IOW, you can call anywhere in the nation from your home area, but you get charged roaming fees if you call from outside that area?

Either way, MVNOs like MetroPCS do serve their purpose for those that live in the right areas, but they couldn't suit my needs. I wasted $150 on a CDMA-based phone that I used for less than 2 months. I wanted good phone and data coverage and they just can't supply that.

[NasserAE]

Originally Posted by samab

There is also nights and weekends and rollover minutes.

Plus no roaming when you travel between states. I remember back in the mid 1990s your phone would not work once you leave your area code or state if you don't enroll in roaming plan.

People don't realize that what work for Europe might not work in the US. Being able to use my phone when traveling 500 miles from home without paying roaming charges and call anyone in the US without paying long distance fees are very important. However, I don't know if this is possible in Europe or not.

[Kibitzer]

Originally Posted by Timon

Verizon now has "Friends and Family" so I'm wondering when AT&T will add it. That would totally solve my major issue moving to AT&T which is the rest of the family that I normally call is on Verizon.

That and adding some text messages to the data plan and I'll move when the new iPhone is released in June.

Our family had the same situation in that the majority were on Verizon Wireless before the iPhone came on the market. We stayed within Verizon and got unlimited free calling to our kin on Verizon Wireless in Illinois, Indiana, Pennsylvania, Florida and Texas. Since then almost all of us have migrated to AT&T upon Verizon contract expiration, simply because the IPhone features still run rings around any competitors, even with introductions of new products from Blackberry and LG.

Verizon Friiends and Family is a nice plan if you choose a family plan with two or more lines, which lets you set up to 10 family and friends on any wired or wireless U.S. network for free unlimited calling.

In our case, however, with my wife and I both having AT&T iPhones on a 700 minute family plan, we never get close to our monthly limit since the big family migration. Accordingly, we have a cushion of rollover minutes.

AT&T's Family Plan options all include the following:

- Unlimited Nights and Weekends calling from 9 p.m to 6 a.m.
- Unlimited Mobile to Mobile (M2M) calling to other AT&T wireless customers
- No domestic roaming or long distance charges
- All lines sharing Rollover Minutes which lets you save those unused minutes

So you may want take a fresh look based both on your own calling patterns and what your family members would like to do when their Verizon contracts come up for renewal. You all may want to migrate to AT&T like we did, even if AT&T never introduces a copycat version of Verizon Friends and Family.

Last word - everybody in our family loves their iPhones!

[solipsism]

Originally Posted by NasserAE

eople don't realize that what work for Europe might not work in the US. Being able to use my phone when traveling 500 miles from home without paying roaming charges and call anyone in the US without paying long distance fees are very important. However, I don't know if this is possible in Europe or not.

That is a good point. I went to Hawaii and I was covered under my normal AT&T plan. I travel all over the US yet I never have to switch SIM cards. I get 3G from AT&T most of the time, even on highways and on trains. For example, it is about 2,600 miles (4200 km) from San Francisco to New York City.

[SHAPIRO2]

"Unlimited data/voice" is actually a 5GB limit per month. They'll need to change this when tethering is available.

[solipsism]

Originally Posted by SHAPIRO2

"Unlimited data/voice" is actually a 5GB limit per month. They'll need to change this when tethering is available.

I would imagine that they would make it the same as their 3G USB and EC/34 cards, $60/month. That is what I pay for mine.

I go quite a bit over the 5GB limit. I did about 70GB last month and I have never been called, throttled or, obviously, dropped because of my usage. I do also pay for 2 iPhones so perhaps they are showing me some leniency, but I doubt that as I've never hard of anyone else getting booted for excessive usage on AT&T's network.

[cameronj]

Originally Posted by dualie

I've said it before and I'll say it again: AT&T is a complete and total rip-off and only fool would pay those ridiculous prices for a freakin' PHONE!

I'll stick with my pay-as-you-go phone for less than $10 a month thanks. If the time comes that I can make money using my phone, only THEN will I consider paying more because it will justify the cost. Otherwise I'd just be throwing money away for what? Coolness and convenience?

Just curious - how old are you?

As people get older, they tend to start valuing their time more. So that little throwaway word, the last word in your post... that's kinda important. Convenience. $2 per day is all the iPhone costs. For people who value their time and appreciate well made things, that's probably the best deal around. And you know what, the sales numbers bear it out.

[rain]

Doesn't do anything for us up here where Rogers has a monopoly.

As far as getting charged for minutes on incoming calls, Rogers also charges us for incoming text now, even if it's spam. We get charged both ways.

Monopolies suck.

[code4fun]

When the iPhone 3G first came out, a lot of us 1st gen iPhone owners complained about the monthly fee hike and refused to upgrade our phones. Lot of people justify the iPhone 3G by saying it's just an extra $10/month for faster speed and the aggregate cost is the same more or less. Yes, but you pay it in installment over a recurring monthly fees... For some of us, that relationship with the carrier lasts longer than a 2 year contract. Hence, the complaint about the fee increases.

The iPhone 3G is nice except that some of us actually like our iPhones to be used as phones and don't have all that bandwidth requirement. Furthermore, I am close to a wireless network most of the time so I can get access to a fast network without using AT&T's network. So, at least for me, it was already difficult to sign up for the $65/month iPhone/Edge plan and I hardly use the phone for accessing the internet anyway.

So, I do hope AT&T changes their plan. I already cancelled my AT&T DSL and phone line and went with cable for data and voice. So, I say let the competition duke it out. I'm willing to wait until the dust settles.

[mrob]

Originally Posted by Enigmafan420

I have been saying all along that the thing holding up more rapid adoption of the iPhone is NOT the price of the hand set.

God, $200 is NOTHING when you figure that the service will cost NO LESS than $1,680 over 2 years, and that is before cell plan taxes.

I just don't see a price cut to $100 for the phone making that much of a difference.

BUT-a voice and data plan that included some sort of texting (400?) for $50 per month per line WOULD BE THE "KILLER APP" for adoption.

Absolutely. Lower the price to $50 and I'm at the ATT store in a heartbeat.

[hill60]

In Australia I pay $A79 a month ($US51) on a 24 month contract the 8GB is free, the 16GB is $A121 ($US78).

For that I get $A550 calls SMS or whatever else I want to use, which is around 600 minutes and 1000 minutes of free calls intra Network on weekends.

The calls cover anywhere in Australia and it's free to receive calls

Plus 400MB of data which I use in full as open wireless networks are few and far between.

My monthly fee costs around 3 hours of average weekly earnings.

My iPhone is officially unlocked, if I travel I can use any SIM.