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US Cellular rejected iPhone over upfront expense

post #1 of 47
Thread Starter 
US Cellular, the sixth largest mobile carrier in the country, told analysts it opted against carrying Apple's iPhone because of its upfront expense, describing the investment as "unacceptable from a risk and profitability standpoint."

According to a report by FierceWireless US Cellular chief executive Marry Dillon explained during the company's quarterly earnings call that its decision not to carry the iPhone was not related to any concerns that its network couldn't stand up to the data demand of the smartphone, and added that the company remains open to carrying the iPhone in the future.

This year, Apple has added two major US carriers, Verizon Wireless (102 million subscribers) in February and Sprint (51 million subscribers) last month with the release of iPhone 4S, which join AT&T's 97 million subscribers. It also added its first smaller, regional carrier in the US, C Spire (700,000 subscribers), which will begin carrying iPhone 4 and 4S next Friday.

Other significant carriers who don't carry the iPhone in the US include T-Mobile (34 million subscribers) and fourth place MetroPCS (9 million subscribers). Next largest US Cellular and Cricket Wireless both have around 6 million subscribers.

Tough terms for iPhone

Apple has leveraged the unique features of its iPhone, and the resulting demand from consumers for the product, to push carriers to support exclusive features (such as Visual Voicemail) and higher subsidies, an expense that makes iPhones more affordable to users and therefore more attractive.

Apple has also required its carrier partners to stop loading phones with junkware apps and prevents them from adding layers of software that would delay the release of iOS updates, two issues that have plagued the users of alternative mobile platforms.

The company also maintains exclusive control over app, music and video sales on the iPhone via iTunes, cutting into the revenues carriers formerly sought to own through monthly charges for rented games, ringtones, video clips and other added service fees.

Coming around to iPhone

Apple partnered with the fledgling AT&T in 2007 to release iPhone in the US, helping to launch the new brand of what was formerly Cingular. The new phone dramatically increased AT&T's subscriber numbers and reduced churn at a time when the company's GSM/EDGE network was several steps behind Verizon Wireless in terms of modern 3G coverage.

Verizon publicly announced that it had initially rejected Apple as a launch partner, citing its iPhone terms as unacceptable. In late 2009, Verizon bet heavily on Android models as its RIM BlackBerry smartphones began to lose their luster at the failed launch of RIM's iPhone-like Storm at the end of 2008.

Verizon mocked the iPhone in 2009 with an iDon't ad campaign and continued to assail iPhone 4 through the middle of 2010 in ads that promoted Motorola Droid X.

However, Android as a platform couldn't match the iPhone in attracting valuable customers to Verizon's network. As a result, Verizon embraced the iPad at the end of 2010 and added a CDMA version of iPhone 4 at the beginning of 2011. As a result, the company announced its largest launch ever.

Third and fourth place US carriers Sprint and T-Mobile have similarly noted to investors that their inability to carry the iPhone were their top reasons for losing customers to rival carriers. After Sprint joined Apple as a carrier, it too announced its most successful smartphone launch ever.

T-Mobile is unable to carry iPhone 4S because it uses non-standard AWS-band UMTS service, due to limited bandwidth in the US to split among every carrier. The carrier has since announced a series of Android models it hopes will help it to reach new subscribers over the holiday season, the first ever for Apple on multiple US carriers.
post #2 of 47
If C-Spire sees significant growth because of the iPhone, I think US Cellular will make a deal..
post #3 of 47
Quote:
Originally Posted by Wurm5150 View Post

If C-Spire sees significant growth because of the iPhone, I think US Cellular will make a deal..

Getting a carrier more recognition and potential longterm retention of customers does sounds like what Apple is banking on if they are pushing them to make deals that won't be profitable, though I suppose its possible Apple's bean counters over extended what they thought US Cellular and Telefónica Czech Republic would be willing to pay for the iPhone.
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post #4 of 47
Perhaps this is why they are the sixth largest carrier in the US? And since at&t and Verizon have 58% of the market who gives a shit?
post #5 of 47
Now that iPhone is on a bunch of carriers, let's hope that it encourages price competition among them. Maybe even add some competitive services like Apple initially did with visual voicemail with AT&T.
post #6 of 47
Have you looked at the phones that they DO offer? A phone has to be at least 2 years obsolescent before it makes it on the US Cellular list.

US Cellular used to rip people off mercilessly with roaming charges. I understand that policy finally changed. It drove me to Verizon, and I have not looked back since.
post #7 of 47
I applaud carriers for rejecting Apple's terms. The result of acceptance is increased costs for ALL subscribers. What would be great is if the Big 3 (or 4, 5, 6) US carriers came together and negotiated common terms in the best interest of all carriers and consumers.

I guess it made sense financially for US Cellular. Looking at platform growth, why lay out cash for something with a slower adoption rate?
post #8 of 47
Quote:
Originally Posted by am8449 View Post

Now that iPhone is on a bunch of carriers, let's hope that it encourages price competition among them. Maybe even add some competitive services like Apple initially did with visual voicemail with AT&T.

Don't hold your breath. If anything, they'll use it as an excuse to cut services back even more than they already have. For example, refer to the death of "unlimited" data.
post #9 of 47
Quote:
Originally Posted by bstring View Post

What would be great is if the Big 3 (or 4, 5, 6) US carriers came together and negotiated common terms in the best interest of all carriers and consumers.

1) It would be great if they did it for the benefit of customers (unless you're investing that company) but that' not how companies work.

2) It's not illegal for a product to be popular. Apple has the right to sell their product at the price they want just as carriers have the right not buy the product. What you suggest sounds very anti-competitive to me. I think it would fall under refusal to deal.
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post #10 of 47
Once again Apple has failed miserably!

With the loss of the enormous power and reach of US Cellular, soon dark skies will hover over anyone with an iPhone.

After all, just think about it!

What country contains Apple's HQ? The US!

What kind of phone is the iPhone? CELLULAR!

Put those two facts together and it's clear that once again the end is near. Apple has basically just conceded the entire US cellular market!
post #11 of 47
Quote:
Originally Posted by bstring View Post

What would be great is if the Big 3 (or 4, 5, 6) US carriers came together and negotiated common terms in the best interest of all carriers and consumers.

That's called "refusal to deal". It is anti-competitive and illegal.

Thompson
post #12 of 47
Apple also controls the end-to-end user experience when it comes to activating the phone: you do it through iTunes or more recently on the phone itself. There's no need to deal directly with the carrier for activation. Apple also forbids carriers from sticking their logos on the phone or on the screens. That's pretty amazing, and I like Apple for not compromising with carriers. If US Cellular doesn't want to play ball, so what?

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #13 of 47
I don't know what the terms would be for Telefonica here in the Czech Republic. They, T-Mobile and Vodafone all sold the iPhone generally at full price. Now that Apple has a web store here selling the unlocked phone I don't know what the draw would be to buy it from any of the carriers.

I'm writing from my new 4S with a Telefonica sim card. Mine came unlocked from Canada via the USA a couple days ago (cheaper) and it's working just fine on their network. I don't think their lack of selling the phone will hurt them since plenty of people will buy it elsewhere and bring it to the network.
post #14 of 47
Quote:
Originally Posted by Cash907 View Post

Don't hold your breath. If anything, they'll use it as an excuse to cut services back even more than they already have. For example, refer to the death of "unlimited" data.

I'm not saying you're wrong overall, but I think that a lot more than sheer greed went into the ditching of unlimited data.
post #15 of 47
Quote:
Originally Posted by Relefunt View Post

Once again Apple has failed miserably!

Put those two facts together and it's clear that once again the end is near. Apple has basically just conceded the entire US cellular market!

*By the end of next year*

In other news, U.S. Cellular has declared bankruptcy for being complete idiots. More at 11.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply
post #16 of 47
US Cellular: "Sorry customers, you just aren't worth it."
post #17 of 47
Quote:
Originally Posted by Relefunt View Post

Once again Apple has failed miserably!

With the loss of the enormous power and reach of US Cellular, soon dark skies will hover over anyone with an iPhone.

After all, just think about it!

What country contains Apple's HQ? The US!

What kind of phone is the iPhone? CELLULAR!

Put those two facts together and it's clear that once again the end is near. Apple has basically just conceded the entire US cellular market!

Yeah. Apple is doomed.

(I know, I know....)
post #18 of 47
Quote:
Originally Posted by bstring View Post

I applaud carriers for rejecting Apple's terms. The result of acceptance is increased costs for ALL subscribers. What would be great is if the Big 3 (or 4, 5, 6) US carriers came together and negotiated common terms in the best interest of all carriers and consumers.

ANd that would very likely get them sued for price collusion

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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post #19 of 47
Quote:
Originally Posted by charlituna View Post

ANd that would very likely get them sued for price collusion

Implying they don't already do that in private

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply
post #20 of 47
Another also-ran. So long, U.S. Cellular.
A.k.a. AppleHead on other forums.
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A.k.a. AppleHead on other forums.
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post #21 of 47
Ironic that the Google ad said buy T-Mobile phones on exactly this article which said it was losing subscribers to iPhone. When or if iPhone appears on T-Mobile, that's exactly when its fortunes will turn around. Till then, it'll be continually losing value (and subscribers). Sadly, I might be forced to move to another carrier if T-Mobile goes under... or gets bought out by AT&T.
post #22 of 47
Quote:
Originally Posted by bstring View Post

I applaud carriers for rejecting Apple's terms. The result of acceptance is increased costs for ALL subscribers. What would be great is if the Big 3 (or 4, 5, 6) US carriers came together and negotiated common terms in the best interest of all carriers and consumers.

I guess it made sense financially for US Cellular. Looking at platform growth, why lay out cash for something with a slower adoption rate?

That would be price fixing which is illegal.

"A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools." Douglas Adams

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"A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools." Douglas Adams

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post #23 of 47
I'm from Europe and I don't understand why a provider should halve any say in what kind of phone I use.
post #24 of 47
Quote:
Originally Posted by tsa View Post

I'm from Europe and I don't understand why a provider should halve any say in what kind of phone I use.

I don't follow. Are you saying that US Cellular shouldn't have a choice in whether it sells the iPhone? It's a CDMA-based network so unless you can get a baseband flash it's not going to work like with an unlocked GSM-based device.
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post #25 of 47
deleted
post #26 of 47
Quote:
Originally Posted by boriscleto View Post

Perhaps this is why they are the sixth largest carrier in the US? And since at&t and Verizon have 58% of the market who gives a shit?

People might give a crap because AT&T and Verizion have crappy customer service and US Cellular's is excellent. I was planning on dumping AT&T for them if they got the iPhone. The only way this makes sense is if she's trying to sell to Sprint, who could Use the extra customers and more importantly its LTE infrastructure.
post #27 of 47
The problem is that they also lost the lucrative High Rollers.
post #28 of 47
Quote:
Originally Posted by boriscleto View Post

Perhaps this is why they are the sixth largest carrier in the US? And since at&t and Verizon have 58% of the market who gives a shit?

You said it man, WTFGAS!
post #29 of 47
To :

With the loss of the enormous power and reach of US Cellular, soon dark skies will hover over anyone with an iPhone.

After all, just think about it!

What country contains Apple's HQ? The US!

What kind of phone is the iPhone? CELLULAR!

Put those two facts together and it's clear that once again the end is near. Apple has basically just conceded the entire US cellular market!

Thompson[/QUOTE]
What an idiotic rant!!!
post #30 of 47
Quote:
Originally Posted by AaronJ View Post

I'm not saying you're wrong overall, but I think that a lot more than sheer greed went into the ditching of unlimited data.

Well, actually, if you think about it, V and AT&T were losing line customers for their other services like wired phone and DSL. I'm just say'n.
post #31 of 47
Quote:
Originally Posted by NuMoo View Post

What an idiotic rant!!!

I think you need to recalibrate your sarcast-o-meter. It obviously didn't detect anything in the post you were trying to quote.
post #32 of 47
Quote:
Originally Posted by aBeliefSystem View Post

The problem is that they also lost the lucrative High Rollers.

Is that people who just take their iPhones to other carriers after an unlock?

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply
post #33 of 47
Quote:
Originally Posted by Suddenly Newton View Post

Apple also controls the end-to-end user experience when it comes to activating the phone: you do it through iTunes or more recently on the phone itself. There's no need to deal directly with the carrier for activation. Apple also forbids carriers from sticking their logos on the phone or on the screens. That's pretty amazing, and I like Apple for not compromising with carriers. If US Cellular doesn't want to play ball, so what?

Not entirely true, my iPhone has always said at&t at the top left of the screen
post #34 of 47
Quote:
Originally Posted by MauiJoe View Post

Not entirely true, my iPhone has always said at&t at the top left of the screen

That's a word, not a logo. It's a company name, not a logo.

And it's not physically on the device, which is the point.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply
post #35 of 47
They probably had a simple financial choice: spend money on a 4G LTE network or subsidizing iPhones but not both. As a CDMA carrier, the longer you don't have a 4G network, the worse off you are going to be in the future, regardless of what phones you offer.

I predict they'll get the next iPhone with LTE built-in.
post #36 of 47
Quote:
Originally Posted by Tallest Skil View Post

Is that people who just take their iPhones to other carriers after an unlock?

AT&T has never offered to unlock an iPhone, even if it's out of contract. Verizon and Sprint will not activate an iPhone that was not initially provisioned for their network on day of sale.

The fear that customers will get an exclusive phone then unlock it and run off is kinda silly since you end up paying an ETF anyway to cover the full cost of the phone. And at least for AT&T, going to T-Mobile means a loss of 3G. Unless they really care than much about phones being exported to other countries, AT&T wouldn't loose that much business from unlocking their phones.

If the iPhone has LTE next year, then the standard will require that all subscriber info be stored on the SIM card, meaning an unlocked phone should work on all 3 networks.
post #37 of 47
Quote:
Originally Posted by dagamer34 View Post

AT&T has never offered to unlock an iPhone, even if it's out of contract. Verizon and Sprint will not activate an iPhone that was not initially provisioned for their network on day of sale.

I know. I don't mean that.

Quote:
The fear that customers will get an exclusive phone then unlock it and run off is kinda silly since you end up paying an ETF anyway to cover the full cost of the phone.

Or you just buy the unlocked one and use whatever carrier you want. Unless the carrier is a fricking idiot and doesn't let you, like these morons.

Quote:
If the iPhone has LTE next year, then the standard will require that all subscriber info be stored on the SIM card, meaning an unlocked phone should work on all 3 networks.

Except Sprint doesn't use LTE, and any attempt for them to do so would bankrupt them even more quickly than if they hadn't ponied up for the iPhone. It's not going to work on WiMAX, so the next iPhone will be limited to 3G on Sprint. Which is absolutely wretched if current testing is true.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply
post #38 of 47
Quote:
Originally Posted by AppleInsider View Post

and higher subsidies, an expense that makes iPhones more affordable to users and therefore more attractive.

I wonder how long Apple will be able to maintain those higher subsidies. My understanding is carriers subsidize iPhones by a hundred dollars more than the equivalent top of the range Android phones. Will carriers start pushing back, either demanding Apple reduces the unsubsidized price or raising the price consumers must pay?
post #39 of 47
Quote:
Originally Posted by Orlando View Post

I wonder how long Apple will be able to maintain those higher subsidies. My understanding is carriers subsidize iPhones by a hundred dollars more than the equivalent top of the range Android phones. Will carriers start pushing back, either demanding Apple reduces the unsubsidized price or raising the price consumers must pay?

As long as the public demand remains high the carriers don't really have much choice.

"A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools." Douglas Adams

Reply

"A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools." Douglas Adams

Reply
post #40 of 47
Quote:
Originally Posted by tsa View Post

I'm from Europe and I don't understand why a provider should halve any say in what kind of phone I use.

The biggest reason carriers have so much say is that American consumers are conditioned to pay little or nothing upfront for a phone rather than pay the full purchase price and accept a lower monthly fee. T-Mobile tried offering such a plan last year, but it didn't work. Google, Nokia, etc. have tried offering SIM-free phones, but with little success.

Also, CDMA networks don't require SIM cards, meaning that carriers who use CDMA can decide which phones to carry. Most of the regional carriers, as well as Sprint and Verizon, chose CDMA about 10 years ago. This situation is changing a bit, since LTE requires SIMs, but unfortunately the other issue is spectrum incompatibility. US airwaves are pretty crowded and fragmented, so none of the carriers' LTE spectrum overlaps to a meaningful degree. Unless manufacturers make phones capable of several bands of LTE, it will be difficult to sell SIM-free LTE phones in the US.
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