“Leap Wireless International Inc. will be the first U.S. provider of prepaid mobile services to sell the Apple Inc. iPhone, potentially putting pressure on its much bigger rivals to provide cheaper phone or service prices,” Sinead Carew reports for Reuters.
“The regional operator, which caters to cost-conscious customers who pay phone bills in advance, is joining its much bigger national rivals Verizon Wireless, AT&T Inc. and Sprint Nextel Cor. in selling the popular device,” Carew reports. “While Leap’s iPhone price will be two and a half times higher than its bigger rivals, which give discounts to customers who sign two-year contracts, Leap customers will pay smaller monthly service fees and will not need to sign contracts… Leap said it will sell the 16-gigabyte iPhone 4S for $499.99, compared with its rivals’ $199.99 price tag. Leap will also sell the older 8-gigabyte iPhone 4 model for $399.99.”
Carew reports, “If Leap’s customers can get over the high device price, the hope is that they will stick with its service for longer and the offering may even make bigger rivals reconsider their efforts to pull back on phone discounts, also helping Apple, analysts said. ‘The math is reasonably compelling for a customer,’ said Bernstein analyst Craig Moffett who estimated that after about six months the higher purchase price will have paid for itself because of Leap’s cheaper $55 a month service fee. In comparison, Verizon Wireless’ lowest monthly fee for iPhone would be $70 while AT&T’s would be $60 and both plans allow less mobile data usage than Leap.”
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