Verizon may pay Apple to keep iPhone away from T-Mobile, Sprint - Page 2

Because not every single owner of Apple is rich. That's why. Many are widows and orphans. Or something like that.

IMO, there is nothing suspicious about a for-profit company seeking to profit. Apple seems to be very good at doing exactly that.

I don't think you really can stop the android "onslaught". With the rapid releases of new models and choice of almost every single carrier in the US, how do you compete with that? Granted I don't think that MetroPCS or Cricket is a priority for Apple.

Do people really think this is unusual? How do you think AT&T exclusivity works? AT&T just said "hey, would you mind not letting VZN or the others get their hands on the iPhone?" They're paying AAPL for exclusivity. Now VZN will pay for semi-exclusivity. Nothing illegal about this. It happens with just about every phone.

Meanwhile, great news for AAPL. More money for nothing (margins up!), while they're more than doubling their potential customer base in the US.

There are two different situations here. One is exclusivity and the other is refusal to sell. Once the iPhone is available on more than one network, exclusivity is gone. Now it becomes a situation of discriminatory selling by offering to two customers but not to two others. The FTC and Justice Dept. don't look kindly on discriminatory selling.

Baloney. Recent reoprts show Android uptake leveling off and still behind (but close to) the iPhone in the U.S. All this paranoia about Android taking over the world is unfounded to say the least.

Winner for who? Certainty, not the consumer. Verizon is the worst cell provider out there. Sure, the call coverage is good, but it rapes you on everything else. AT&T is a near second. These types of exclusive choices hurt consumers because they essentially put companies like T-Mobile and Sprint out of business (at least in the US). Hart to compete when you are being shut out of the all the hot phones.

I will admit it is a bit personal for me. T-Mobile is a million times better then AT&T (at least for me) in terms of both quality, plan variety, and customer service. I'd rather shot myself in the foot then deal with Verizon again.

The fact that Shaw Wu's name is connected to this piece is reason enough to ignore it. He is serially wrong.

Exactly. For Apple, it's all about getting as much kickback as possible from their carriers. This lowers their price point and increases profits. Does anyone think that Apple could have sold 14 million iphones if they were priced at $600?

There's no way Verizon Wireless could afford that.

Apple's gross margin is about 50% on the iPhone. With the averaging worldwide selling price (retail, unsubsidized) is probably $700 per handset, meaning Verizon would have to probably need to shell out $350 per potential customer.

From a business perspective, this makes even less sense. This is a whole new group of customers and the halo effect can spread to additional hardware sales. Also, in every single market that Apple has ended iPhone exclusivity, they have gone to another GSM/UTMS-based carrier (like T-Mobile USA).

Apple doesn't need bribes; it doesn't really add much value to the company. They have something like $50 billion in cash.

I don't believe the theory of paying for semi-exclusivity either. AT&T looking toward the end of exclusivity and Apple has already hinted that exclusivity may be hindering sales growth. Plus, I still have little faith that we will see a CDMA iPhone. An LTE iPhone won't be on store shelves until 2013 based on the current rate of worldwide LTE network deployment.

It would definitely cause an FTC investigation if any memos, meeting minutes, or other hard correspondence to this effect were to surface. But if a gentleman's agreement was reached to pay a higher purchase price than AT&T to subsidize the iPhone with the understanding that they and AT&T would maintain exclusivity for a given period and no actual contract stated such then they could get away with it and any investigation would only afford hearsay evidence of meeting conversations. Should anyone make a note to that effect then all bets are off and Verizon and possibly Apple would be in for a legal battle with the Government and possible fines. For Price fixing and restraint of fair trade.

Its
Its not as easy as you think. Unlike GSM you cannot simply unlock it and switch SIM cards. You have to get Rep at Sprint to activate the MEID number onto their network.

Actually , not only will you need a lock code from Verizon, then you will need a PRL updater tool for the Qualcomm chipset. There are some around but I will be willing to bet that Apple uses some specially developed method for the iPhone ...

Taking the exclusivity money makes no sense given the likely reason they are moving to Verizon (i.e. the increase in potential audience).

I can't see Verizon paying it either, as their biggest competition is AT&T and they already have iPhone. Between iPhone on Sprint, iPhone on T-Mobile and iPhone on Verizon most people are going to pick the network which rules the air anyway. From their perspective the strength of the network will win out anyway.

Now Verizon might be prepared to pay big for a 6 month exclusivity window on iPhone 5, but that is an entirely different proposition and one which I doubt Apple would be willing to grant.

Yeah, except 99% of the user base will never do this.

We shouldn't forget why companies want to wall off the competition. They're afraid of something their competitors offer. While T-Mobile doesn't have good service in the hinderlands, it has excellent service in major cities and along Interstate routes. What AT&T and Verizon fear (among other things) is its prepay service, which can't be beat.

Those who're trying to defend exclusivity need to keep in mind that many of the irritating features of cell-phone contracts are born out of them. If you enter AT&T's walled garden, you have to play by their rules, and the same is true with Verizon. A choice between two walled gardens may not be quite as bad as not having any, but it isn't ideal.

Things used to be worse. Remember when cell phone providers crippled the phones they sold to push customers toward their own costly services? Apple deserves credit for forcing AT&T to abandon almost all those policies. Verizon's refusal to do so left them out in the cold.

But I fear Apple has grown addicted to the money it makes from subsidy pricing. People get an iPhone well below cost, but pay back the difference and more in two years of service costs, inflated costs that don't end when an iPhone is paid for. Nor does locking end then, as it should. Apple is playing the same consumer-hostile, keep the garden-walled-in game that the carriers are playing. It just has a different set of rules.

While it certainly isn't as simply as a SIM, there are indeed programs out there right now that will flash the network preferences onto CDMA phones and allow them to be activated with other carriers.

I've seen Pageplus activate Verizon and Sprint phones and it uses Verizon's network as a sub-leasee. Craiglist will show people advertising to flash phones to Cricket, metroPCS, etc. I'm of the view that there is a hollowing out of the subsidy model by prepay carriers and at some point soon, prices are going to have to crash for service. The rate of phone advancement is too fast for a two year cycle with regard to smartphones and also many other phones have hit a point of good enough and thus there is no real reason to subsidize them. With unlimited talk and text being offered for $30-40 a month, most large carriers can't compete even with a free phone.


As someone who is with T-mobile, I can tell you it isn't that bad. I've got two iPhones with unlimited (but slow) data, and all four of our phones share 1500 minutes and unlimited texting for $110 a month. It would be nice if the data rate were higher than 15 Kb a sec, but I sit get my push, my email, etc. Web browsing is good if you use Opera Mini and I would use it even on 3G because it saves data and it is fast. Home wifi is for Safari.

Think about what that would cost on AT&T or Verizon. Plus new features are coming down the pike all the time to stop these artificial data delineations. Between Viber and Kik, I might be able to knock a few more minutes or messaging plans off that already low amount.

So you basically don't think EULA's exist? That you didn't agree to anything? Now that's mindless.

I'm not talking legal or illegal, but right and wrong. Continuing to take advantage of Apple's software support after jailbreaking your phone is morally wrong. Didn't your parents teach you right and wrong?

So as long as Apple doesn't know you're breaking the EULA....? This is like those criminals that only regret their crime after they're caught. If they're not caught, well no crime then. BS.

Its an anti-trust action and/or collusion to suppress competition.

To pay a vendor not to sell with others and prohibit competition in that manner is a monopolistic act.

Thats even more flagarant than Apple's monopolistic practices against Adobe...

The feds would never allow Verizon to do this.

Its impossible. The poster you were replying to was too busy snarking to realize his facts were wrong.

Also, while you can use an unlocked ATT iPhone on TMobile's networks, you will be limited to EDGE data speeds, rather than 3G (ATT and TMobile have different 3G bands).

Morally right does not equal contract language.


No BS is telling you what you can do with your equipment after you completed the terms of the contract. If you sign up for a two year contract and complete the terms of it, but afterwards by no means other than software, Apple and others desire to keep you from using your device, then it is morally right to circumvent this just as it is morally right to lie to a man with a gun who wants to murder the child hiding in your closet when asked the child's location.


One can hope...

Dear "Everyone With an Inkling",

You make up a very small percentage of the population and will likely remain so regardless of your threats. Go ahead and bolt to T-Mobile or Sprint. Make our day.

Sincerely,
Verizon Business Managers

People unlock Verizon phones for use on Cricket here in Phoenix. $55 per month for unlimited everything.

I'm pretty sure that the other poster's point (which is mine as well) is that Verizon doesn't care about the small fraction of people that could jailbreak and migrate to another (competing) carrier. It's just too small of a number to impact their business decisions. Your "letter" made it seem like you were bringing something to Verizon's attention that they should really care about. They shouldn't.

By the way, I too have a jail-broken iPhone. Saying that people like us don't really effect Verizon's business model much is not the same thing as saying that you shouldn't be doing it.

Thompson

I really don't believe that Apple cares much whether a small fraction of people jailbreak their phones.

Thompson

This report lost all credibility the moment I saw the name Shaw Wu. The guy is a total Moran. His rate of correct predictions is in single digits. And more often than not he has basic facts all wrong.

A Verizon iPhone is still just a rumor. Yes it is a very likely rumor but at this point it is not confirmed by any party actually in the know. All these suppliers could be leaking this stuff to raise their stocks. Or it could be that yes Apple ordered the parts, but for the iPad, not the phone. And given the lack of proof that the AT&T contract is ending this year or could be paid off to end this year, it is possible that Apple is mealy in the beginning phases of working out if a Verizon iPhone is worth the efforts needed.

Also given all the flack over the years it seems a foolish move for Apple to enter into any kind of exclusive deals. Wu hasn't shown us why Apple would benefit from such a term, rather than being open to both Verizon and Sprint and letting consumers choose what they wish.



But what is the harm. There are some areas, particularly in the Midwest where sprint and t-mobile have the better service, so why should they be cut out on the whim of some outside company that wants to demand terms.


I am inclined to agree with you. Or rather make it an option. I go to Apple, I buy it full price, unlocked. If I choose to go to a carrier for a deal then yes it can be locked to that carrier for the period of that deal, with the right to buy out early via paying the ETF

But at the same time, service fees and device costs should be separate line items. If I am not paying back a device subsidy I should not have to pay the same monthly as someone paying for the same level of service plus his device. And the device cost should be spread equally across the months of the contract, spelled out on each monthly bill and the ETF should be the remaining cost, not a penny more or less.


Those a likely the terms Apple put on the table that Verizon is allegedly willing to agree to if they have a contract exclusivity.

I am torn on this issue. Yes jail breaking is legal in the US. And yes it is legal for Apple to not support the phones if you do it. But if the issue does come from the jailbreak then why shouldn't it be supported, especially if you can restore the phone to factory settings and the problem still exists. So in cases like that i'm not going to damn someone to h*ll for a little subterfuge. It is tacky but understandable.


Apple isn't making that money. AT&T is. Apple might get a tiny cut of perhaps 5%, but the vast majority of that subsidy goes to the carrier. Apple's money was made when AT&T bought the phones at full price from them.

Thanks for enlightening us. All this time I thought Wu's ancestry was Oriental. The Irish connection explains everything!

Doesn't matter if it's unusual. You have pissed off new york senators and agency heads not liking the apple/att exclusive ... so you can kiss those deals good buy within 2-5 years.

There's a difference between the terms of AT&T's service contract and the EULA you agreed to when you bought the phone. You agreed to a set of rules. Now you're breaking those rules. You're like an unruly child with a new toy - mine! mine! mine!.

Wu also asserted that Google's Android operating system has begun to "lose some of its luster" at Verizon.




Seems to me this is just as important a part of the quote. Why is it android is losing its luster?

Thats even more flagarant than Apple's monopolistic practices against Adobe...

And it suddenly appears you have no idea what you're talking about.

Well, he is on an enterprise network. A company can distribute what apps they like. It does not require jailbreaking.

please tell me thats sarcasm. as of right now, im laughing as if it is.

IME, in big deals like this, there are dozens of different things that the two sides want, with varying degrees of importance. So there are dozens of different points of leverage.

My guess is that 30 -50 percent greater iPhone sales in the US might be a point of leverage that Apple values highly. But I'm less likely to come to any real firm conclusions on complicated situations. Especially wheen I have no hard information.

I think that the Feds sometimes frown upon combinations in restraint of trade.

When a smartphone with zero market share was made exclusive on ATT, who had less then half the market, I'm pretty sure nobody cared. But when the single most dominant smartphone is made exclusive the two oligopolistic carriers, who together own nearly all the market, I don't know enough to predict what might happen.

please curmudgeon, let the adults talk. go home and tell your mommy that we're doing something bad.

I'm not sure that I would make the same guesses as you do.

One very important point no one has even mentioned in this thread is why Verizon and indeed AT&T are both desperate to keep the iPhone from T-Mo and Sprint. That reason is their monthly plan prices. Both T-Mo and Sprint would be far cheaper. I am a Sprint user with a discounted plan. I currently have an Evo and I think it is fair to assume my plan price would not change if the iPhone were available. I pay $50 a month which includes unlimited data, unlimited text messages, unlimited calls to any mobile network, and 500 minutes for calls to landlines between 7AM and 6PM on weekdays. Granted my plan is heavily discounted, but the standard Evo plan is only $79 and pretty much everyone qualifies for some type of discount. Corporate discounts can be as much as 28% off and people with a credit union account can get 10% off their bill.

Because T-Mo and Sprint are smaller, they have far cheaper and more flexible options for their plans. I have excellent coverage with Sprint and no dropped calls, unlike I had with Cingular before I switched. Sprint's 3G map is also a lot bigger than AT&T, but smaller than Verizon. I have stayed with Sprint because I am getting great service for an awesome price. SUre I would love to have an iPhone, but a similar plan on AT&T or Verizon would be over $100 a month. I like the iPhone, but not enough to pay an extra $600 to $800 a year.

So I would not be surprised if AT&T would work with Verizon to pressure Apple to keep the iPhone off of T-Mobile and Sprint. They know they can't keep their exclusivity, but at least with Verizon they know they will gouge their customers the same and not have to lower their plan rates.

How many of you wouldn't consider at least trying Sprint out since you have a 30 day full refund option
if they carried the iPhone and you could get it for around $70 a month with unlimited data?

Jailbreakers lost all their excuses now that the iPhone multitasks. Jailbreakers steal software. Period.

So it's adults that can blow off EULA's? Do you believe you get to ignore the EULA on software products? If Adobe declares in their EULA that installing PhotoShop on multiple computers is wrong, do adults get to ignore that and install it wherever they desire? You don't get to ignore the rules just because you don't like them. If you agreed to the rules, you must abide by the rules. That's what adults do.