Rumor has AT&T lopping $10 off future iPhone rate plans

Posted:
in iPhone edited January 2014
A new report is rejuvenating chatter of cheaper iPhone service plans from AT&T that could be announced alongside the introduction of new models in the coming months, such as a $10 drop in the cost of the most basic service plan.



Cote Collaborative analyst and pricing strategist Michael Cote said this week there's a "strong possibility" the exclusive US iPhone carrier will drop its entry-level iPhone plan to $59 from $69, adding that the announcement could come as early as next month at Apple's annual developer conference.



The move, which would theoretically shave 14% off the cost of owning an iPhone -- dropping combined 2-year service fees to $1,640 from approximately $1,880 -- would represent a concerted effort on the part of both Apple and AT&T to push the iPhone into the hands of consumers who find the pair's current offerings too pricey for their shrinking budgets.



In particular, Cote noted that sales of the touch-screen handset have thus far proven disappointing at Wal-Mart, the largest big-box retailer in the U.S. catering to a less than affluent demographic. Wal-mart has proven critical to Apple's iPod business and is believed to move considerable volume for the Cupertino-based company each quarter.



Cote's comments on the matter are fairly inline with earlier remarks from a couple of his peers. In February, Kaufman analyst Shaw Wu similarly characterized current iPhone service plans as "too high" for the handset to have broad market appeal. He cited sources who said Apple and AT&T were therefore mulling a plan that would offer future iPhone customers the option of selecting from a tiered set of data plans rather than continuing to pitch the current $30 take-it-or-leave-it option.



Less than a week later, Bernstein analyst Toni Sacconaghi sat down with Apple interim chief Tim Cook, chief financial officer Petter Oppenheimer, and marketing chief Phil Schiller, who similarly told him that the company was considering "different pricing/price points" for the iPhone this year, with Cook reportedly adding that he was "examining iPhone's business model" to see if there was room for other possible changes.



A rocky economy and pullback in discretionary spending on the part of consumers aren't the only factors that may compel Apple and AT&T to rethink their pricing strategies going forward. The 1 billion+ global cell phone market is quickly becoming saturated in certain regions, meaning carriers will need to begin offering existing wireless subscribers heftier incentives to switch carriers rather than fishing in a evaporating pool of potential new customers.



In recent months, Apple has also faced increasingly worthy competition from BlackBerry maker Research in Motion, which sold twice as many smartphones in its most recent quarter than the iPhone maker.
«13456

Comments

  • Reply 1 of 107
    icarbonicarbon Posts: 196member
    That would be awesome -- I live in an area that doesn't have 3G, if I could have unlimited 2G with some limit on my 3G usage, it would workout perfectly without limiting my usage.



    Moreover, I get more minutes I can use each month (most phone conversations are with AT&T customers which don't count), so if I could get less minutes for less money it would be awesome.



    Add to that I know my pops is waiting for a cheaper plan to get an iphone (he wants one, but is retired and can't justify it). I think that this could be a worthwhile plan going forward.
  • Reply 2 of 107
    virgil-tb2virgil-tb2 Posts: 1,416member
    Quote:
    Originally Posted by AppleInsider View Post


    A new report is rejuvenating chatter of cheaper iPhone service plans from AT&T ...



    sounds believable, but also sounds like the old "bait and switch."



    When iPhone 3.0 is announced, the possibility of multiple devices on one plan goes up also. So they lower the price by ten bucks, then (surprise!), you are allowed to add a device for your partner or kid or maybe even a tablet for yourself, for... twenty bucks more.
  • Reply 3 of 107
    neilmneilm Posts: 956member
    Quote:
    Originally Posted by AppleInsider View Post


    - dropping combined yearly service fees to $1,640 from approximately $1,880



    That's not the yearly service fee; it's the estimated total 2-year contract amount.



    And while we're talking about bad writing, must Apple constantly be referred to as "the Cupertino-based company"? This is nothing more than a pointless verbal tic. It's irrelevant to the story whether Apple is based in Cupertino or Colchester, and anyone who cares already knows.
  • Reply 4 of 107
    Good. The raise in service charge when the 3G came out is the reason I haven't upgraded. I never really saw the reason to pay more for less.
  • Reply 5 of 107
    macxpressmacxpress Posts: 5,386member
    One of the things that has kept me from getting an iPhone 3G is I don't have 3G coverage anywhere near me and I am NOT going to pay for something I cannot get on a daily basis. Thats just ridiculous! Until they fix that, I refuse to get a new iPhone. I'll stick with my original iPhone with my pay-as-you-go plan w/unlimited data.
  • Reply 6 of 107
    dr millmossdr millmoss Posts: 5,403member
    Quote:
    Originally Posted by NeilM View Post


    And while we're talking about bad writing, must Apple constantly be referred to as "the Cupertino-based company"?



    As clichés go, it beats "the Apple faithful," though not by much.



    To the story, this would be an encouraging move if it happened. Lowering rates is so much more important to increasing adoption of the iPhone than lowering handset prices. The current AT&T iPhone rate plans are designed for people who live on their mobiles. It has always puzzled me why AT&T assumes that only heavy mobile users would be interested in owning an iPhone. It's why I don't own one. Give me a two-phone plan for $70-80 a month with limited minutes and I'm in.
  • Reply 7 of 107
    davebarnesdavebarnes Posts: 334member
    Quote:
    Originally Posted by NeilM View Post


    And while we're talking about bad writing, must Apple constantly be referred to as "the Cupertino-based company"? This is nothing more than a pointless verbal tic. It's irrelevant to the story whether Apple is based in Cupertino or Colchester, and anyone who cares already knows.



    What?

    When did Apple relocate to Colchester?

    Colchester, Essex, UK ?

    Colchester, Vermont, USA ?

    Colchester, Connecticut, USA ?

    Colchester County, Nova Scotia, Canada ?
  • Reply 8 of 107
    mrjoec123mrjoec123 Posts: 223member
    Quote:
    Originally Posted by Dr Millmoss View Post


    As clichés go, it beats "the Apple faithful," though not by much.



    To the story, this would be an encouraging move if it happened. Lowering rates is so much more important to increasing adoption of the iPhone than lowering handset prices. The current AT&T iPhone rate plans are designed for people who live on their mobiles. It has always puzzled me why AT&T assumes that only heavy mobile users would be interested in owning an iPhone. It's why I don't own one. Give me a two-phone plan for $70-80 a month with limited minutes and I'm in.



    Didn't we learn anything from tiered iTunes pricing?



    Tiered pricing is a way INCREASE customer costs, not decrease them. Sure, they'll offer a $10 cheaper plan, but that plan will include 2MB of data. And then they'll charge you $2 for every MB you go over that. If you want unlimited data, look for the price to be even higher than it is now.



    What we need is a more reasonable price for unlimited data, not multiple pricing levels, with only one practical one that's even more expensive.
  • Reply 9 of 107
    galleygalley Posts: 971member
    Quote:
    Originally Posted by DestructoTex View Post


    Good. The raise in service charge when the 3G came out is the reason I haven't upgraded. I never really saw the reason to pay more for less.



    Same here. $60 per month is what I pay now.
  • Reply 10 of 107
    gmhutgmhut Posts: 242member
    That's nice, but I don't think 10 bucks, constitutes "lopping off.
  • Reply 11 of 107
    freenyfreeny Posts: 128member
    Yes, charge the same rate for 3G as they do Edge, throw in more free texting and im sold!
  • Reply 12 of 107
    dimmokdimmok Posts: 359member
    wow 10 bucks...thats it?
  • Reply 13 of 107
    ivan.rnn01ivan.rnn01 Posts: 1,822member
    my 1 year iPhone 3G contract is nearing its end.

    This is what I plan to take from Orange after it expires:

    Basic voice plan: 7 eur/month;

    iPhone data plan: 25 eur month;

    Mobile TV: 6 eur/month;

    -------------------------------------

    Total: 38 eur/month ~ $51.

    Ok, because it's still better than what ATT proposes, I'll redeem some my Orange fidelity points for unlimited SMS option.

    Sorry AT&T you're not there again
  • Reply 14 of 107
    solipsismsolipsism Posts: 25,726member
    Quote:
    Originally Posted by DestructoTex View Post


    Good. The raise in service charge when the 3G came out is the reason I haven't upgraded. I never really saw the reason to pay more for less.



    How would you be getting less?



    Quote:
    Originally Posted by Dr Millmoss View Post


    To the story, this would be an encouraging move if it happened. Lowering rates is so much more important to increasing adoption of the iPhone than lowering handset prices. The current AT&T iPhone rate plans are designed for people who live on their mobiles. It has always puzzled me why AT&T assumes that only heavy mobile users would be interested in owning an iPhone. It's why I don't own one. Give me a two-phone plan for $70-80 a month with limited minutes and I'm in.



    The emphasis should be on plans, not rates as $30 for unlimited data is not excessive in the US. But I know people that have iPhones that they use excessively at work on the company's WiFI so they don't need multiple GB from AT&T each month. Having a cheaper plan that is limited would be great for many but I hope that they just lower the unlimited rate for the iPhone back down to $20. Since it's required, unlike other phones, and it currently accounts for an estimated 14% of their subscriber base (as I've been told) they are collecting on 10M data plans a month just from the iPhone. When you consider how many phones are smartphones on AT&T and how many people have optioned for an unlimited data plan it's possible that the iPhone by itself is more data revenue than all their devices data revenue put together (excludes SMS). If that isn't the case it can't be far off from the truth, especially with the next iteration of the iPhone looming.
  • Reply 15 of 107
    $10 off would be nice, but what they need is an option without a data plan.



    But that likely won't happen until AT&T is forced to compete for iPhone customers.
  • Reply 16 of 107
    Quote:
    Originally Posted by macxpress View Post


    One of the things that has kept me from getting an iPhone 3G is I don't have 3G coverage anywhere near me and I am NOT going to pay for something I cannot get on a daily basis. Thats just ridiculous! Until they fix that, I refuse to get a new iPhone. I'll stick with my original iPhone with my pay-as-you-go plan w/unlimited data.



    but you paid double for the actual phone than 3G buyers paid.



    first gen iphone people tend to leave out that nugget of info when complaining about costs of the new plan.



    so over two years of you using the first gen phone, for $10 less a month, I saved $200 on the initial cost of the phone. end of the day, over 2 years, the difference is only $40. so you are complaining about $40 over 2 years, or less then 2 bucks a month to have the newer phone...
  • Reply 17 of 107
    thomprthompr Posts: 1,516member
    Quote:
    Originally Posted by AppleInsider View Post


    In recent months, Apple has also faced increasingly worthy competition from BlackBerry maker Research in Motion, which sold twice as many smartphones in its most recent quarter than the iPhone maker.



    Correction:



    RIM "sold" fewer smartphones than Apple but also "gave away" a bunch of them. Or you could look at it like they sold more phones at half price. Either way, the result was that they "shipped" more units than Apple, but profit took a big hit.



    If they had to do it in order to sell iPhones, Apple could also do a "buy one get one free" promotion. Apparently, they don't need to.



    Thompson
  • Reply 18 of 107
    anantksundaramanantksundaram Posts: 20,348member
    Quote:
    Originally Posted by DimMok View Post


    wow 10 bucks...thats it?



    If the article had said 'ATT says you can have the iPhone for $59', would you have thought it was a good deal?*





    *Assuming zero time discount rate, for simplicity.
  • Reply 19 of 107
    stompystompy Posts: 390member
    Quote:
    Originally Posted by Dr Millmoss View Post


    Lowering rates is so much more important to increasing adoption of the iPhone than lowering handset prices. The current AT&T iPhone rate plans are designed for people who live on their mobiles. It has always puzzled me why AT&T assumes that only heavy mobile users would be interested in owning an iPhone. It's why I don't own one. Give me a two-phone plan for $70-80 a month with limited minutes and I'm in.



    The good Dr has quickly become one of my favorite contributers here, I would jump at the two phone plan described.



    Quote:
    Originally Posted by mrjoec123 View Post


    Tiered pricing is a way INCREASE customer costs, not decrease them. Sure, they'll offer a $10 cheaper plan, but that plan will include 2MB of data. ...What we need is a more reasonable price for unlimited data, not multiple pricing levels, with only one practical one that's even more expensive.



    I'm not sure I'm following you, are you saying unlimited data is the only practical plan? I don't want to see a rate hike, hopefully your worst case scenario stays confined to these boards.
  • Reply 20 of 107
    paradymparadym Posts: 13member
    I really hope this is true in some aspect. I'm paying way too much for what I'm using. I love my iPhone and use it almost constantly (replying to emails/text messages, listening to music/podcasts, checking info online or thru and app). What I don't do is make phone calls. I have the 450 minute plan with unlimited text messages and my bill comes out to about $95/mo.



    Over the past month I've used almost 30 minutes of voice, 20 of that from the 5000 Night/Weekend minutes. I've accumulated over 4000 Rollover minutes. I wish I could sell them to someone who would use them.



    I've used less than 20MB of unlimited data. That can vary greatly, but I doubt I would go over 100MB using my 1st gen iPhone. That may go up when I upgrade this summer at the end of my contract. I'm fine with paying for unlimited data.



    I've used over 500 of unlimited text. I use the hell out of text and am fine paying for an unlimited plan for that, although it's a total rip-off charging as much as they do for text as it's such a small amount of data used.



    Now, why doesn't someone offer custom plans? Tiered and pay-for-what-you-use plans, and separate ones for each service (voice, data, text). If you're a heavy phone user, say, then you might opt for one of the tiered packages so you can save a little money, whereas I would be happy to pay a little more per minute for calls as it would still be less overall than paying for excessive minutes I never use. I'll save a little on tiered/unlimited data and text plans, but will really use those anyway.



    Or better yet, start with a basic service plan (say $9.95/mo.) just to have service, then be billed for exactly what you use. Usage and loyalty would earn discounts, price per could be tiered during certain hours and to specific customers (same carrier is a lower rate than across carriers, etc.). Data rates could be based upon type of data; text messages would be really cheap whereas audio/video would be at a premium rate. The more bandwidth you use, the more you pay. Just an idea.
Sign In or Register to comment.