US Cellular rejected iPhone over upfront expense

Posted:
in iPhone edited January 2014
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.
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Comments

  • Reply 1 of 46
    If C-Spire sees significant growth because of the iPhone, I think US Cellular will make a deal..
  • Reply 2 of 46
    solipsismsolipsism Posts: 25,726member
    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.
  • Reply 3 of 46
    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?
  • Reply 4 of 46
    am8449am8449 Posts: 343member
    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.
  • Reply 5 of 46
    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.
  • Reply 6 of 46
    bstringbstring Posts: 104member
    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?
  • Reply 7 of 46
    cash907cash907 Posts: 893member
    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.
  • Reply 8 of 46
    solipsismsolipsism Posts: 25,726member
    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.
  • Reply 9 of 46
    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!
  • Reply 10 of 46
    thomprthompr Posts: 1,511member
    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
  • Reply 11 of 46
    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?
  • Reply 12 of 46
    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.
  • Reply 13 of 46
    aaronjaaronj Posts: 1,595member
    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.
  • Reply 14 of 46
    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.
  • Reply 15 of 46
    US Cellular: "Sorry customers, you just aren't worth it."
  • Reply 16 of 46
    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....)
  • Reply 17 of 46
    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
  • Reply 18 of 46
    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?
  • Reply 19 of 46
    Another also-ran. So long, U.S. Cellular.
  • Reply 20 of 46
    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.
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