Report: Apple and AT&T extend exclusive U.S. iPhone deal until 2010

“‘The $199 price point is where demand leaps,’ AT&T CEO Randall Stephenson says [of Apple iPhone’s base model subsidized price]. ‘This is going to bring in a whole new demographic,'” Leslie Cauley reports for USA Today.

“That ‘demographic’ isn’t actually a demographic; it’s mainstream America. So long as the iPhone had a hefty price tag, Stephenson says, he and Jobs feared it would never become a mass-market item. With a price of less than $200, however, they thought the iPhone could finally jump into the mainstream. ‘It seemed like an opportunity to change the game,’ he says,” Cauley reports.

“AT&T also gets some serious lift. As with the original iPhone, 3G customers must sign a two-year wireless contract. Existing AT&T customers have to re-up for two years,” Cauley reports. “Those who want to surf the mobile Web — and why else buy an iPhone? — also must buy a data plan. Total cost: around $100 a month. That’s almost double the $55 generated by the average AT&T wireless customer. ‘You just don’t find many opportunities like that,’ Stephenson says.”

“The U.S. cellphone market is rapidly approaching ‘saturation’ — meaning everybody who wants a cellphone already has one. To add subscribers, Charles Golvin, a senior wireless analyst at Forrester, says carriers basically have to steal them from each other. That’s where the iPhone could come in handy, he says,” Cauley reports.

“In exchange for its payout, AT&T got a year extension, into 2010, on its exclusive distribution deal with Apple, people familiar with the matter say. Sources asked to not be named because the terms are confidential,” Cauley reports.

Full article here.

[Thanks to MacDailyNews Readers “MacVicta” and “GizmoDan” for the heads up.]

MacDailyNews Note: AT&T stated in a July 1, 2008 press release, “In the future, AT&T will offer a no-contract-required option for $599 (8GB) or $699 (16GB).”

23 Comments

  1. Aw, fercryinoutloud. ATT, Verizon, T-Mobile, Sprint… Look, they all suck. They just suck in different places. If it works at your home and office, then ATT is no suckier than any of the other crappy cellcos.

    Cell service is a commodity. After a month or two, you learn what parts of town drop calls with that particular provider, and you just stop making calls there. iPhone being tied to ATT is not the end of the world.

  2. iPhone is the greatest cel phone ever produced married to the worst cel phone service in the Phoenix area (5th largest city in the USA). I have never met another iPhone user who disagreed with me. AT&T;may have picked up a lot of new subscribers due to iPhone, but once the other carriers are able to sell iPhone, AT&T;will lose many of them again due to suck ass service. I drop more calls now than I did when cel phones first became main stream.

  3. @ Susans

    I’m guessing 1997 is supposed to be 2007. The exact terms of the contract were never disclosed. “Experts” guessed it was between a 2-5 year contract. No one knows for certain what the terms are.

  4. What I find concerning is that the article says so when AT&T;says that their per-customer revenues roughly double (from $55 to $100 per month). But hey – this is technology: its supposed to get CHEAPER over time…and that includes services.

    Case in point: using the Consumer Price Index, $20 for Dial-up in 1988 is equal to $35/month in today’s dollars, which easily pays for DSL.

    If AT&T;really starts to make some in-roads, the way that Verizon (et al) will need to fight back (because what other choice to they have?) is through better value … ie, lower service prices.

    Time will tell.

    -hh

  5. There is not necessarily a contradiction. It is possible that there was a 2 year exclusive contract but that AT&T;could carry the phone for a total of 5 years. Now the exclusive portion has been extended to 3 years.

    What this suggests is that if/when other carriers are allowed to carry the iPhone a significant number of iPhone users may still be locked into AT&T;2 year contracts.

    It will be interesting to see how many carriers pick up the iPhone when the exclusive contract with AT&T;expires. And at what terms. It will also be interesting to see how the availability (or not) of new carriers will effect the cost of AT&T;data plans.

  6. I’m fairly certain Verizon will never carry the iPhone. They use a different type of network than the rest of the world, so a different iPhone would have to be manufactured just for them. I don’t see this being high on Apple’s priority list.

    Also, Verizon are control freaks. And not in a good way like Apple… the stuff Verizon forces on their customers (especially software) is crap. Seeing the phones they’re coming out with now (Voyager & Dare), they clearly don’t get it.

    I’m a Verizon customer, by the way, so I would love to have an iPhone with them because they really do have the best coverage. It’s just not going to happen.

  7. @ Susans and @Susans,
    There were conflicting reports about whether the initial deal was for 3 years or 5 years. I thought that I remembered someone from Apple, at the time the iPhone was announced, saying it was a 5 year deal with AT&T;. Anyway, moot point now.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.