iphone has been good for AT&T

in iPhone edited January 2014
"AT&T made a good choice

When AT&T decided to offer the iPhone, some people in the mobile industry criticized it for making too many concessions to Apple. The terms of the Apple-AT&T deal have not been released to the public, so it is impossible to judge its precise effect on AT&T. But based on the findings of our study, it looks very likely that AT&T made a good decision.

AT&T gains services revenue from the iPhone in two ways. First, the iPhone increases the average monthly phone bills of existing AT&T customers who switch to the iPhone. Second, because AT&T is the exclusive carrier for the iPhone in the US, it causes some people to switch from other carriers to AT&T.

Based on the findings of the study, AT&T is probably getting about $2 billion in incremental yearly service revenue due to the iPhone deal, and that figure will increase as more iPhones are sold.

Here?s how the $2 billion figure was calculated:

Total number of iPhones activated by AT&T to date: 3,000,000

Number switching from other operators (47%): 1,410,000

Annual revenue increase from switchers (@ $97/month): $1.64 billion

Number upgrading current AT&T accounts (53%): 1,590,000

Annual revenue increase from upgraders (@ $19/month): $360 million

Total revenue increase per year: $2 billion

An unannounced part of that revenue gets shared with Apple, so not all of it goes to the bottom line for AT&T. But it is still a substantial source of growth in a US mobile phone market that is saturating, and doesn?t have many new users available.

These numbers mean the iPhone probably accounted for a substantial proportion of AT&T Wireless? total new subscriber growth in the second half of 2007."

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