It's always exciting when someone stands up to a bully—unless that results in jacking up of the price of the hottest phone even higher than it already is. That is very unexciting, actually. In fact, it sucks. And that is exactly what's happening in this subsidy war between Apple and its wireless carriers, as these companies stand up to Apple's subsidies, which it turns out, is good for them, but bad for you.
Using its ample leverage, Apple has forced Verizon, AT&T, and Sprint into subsidizing the iPhone at around $400 per phone. Apple sells its device to wireless carriers for $600, of which carriers subsidize $400 to bring the price tag of the phone to a more accessible, less-scary $200-$400 range, depending on the device. Sick of writing that $400 check for each phone, these companies have started standing up to Apple, according to The Wall Street Journal's Anton Troianovski. This has investors all excited: "The carriers' latest signs of resistance are drawing applause from investors and analysts. They say the carriers could benefit more from the smartphone boom if they succeed in raising prices for service plans and slowing the rate at which customers buy new phones," Troianovski writes. But all that excitement comes from the potential to make more money off of you.
The overall idea, for carriers, is to entice users away from upgrading to the new iPhone, since each upgrade costs them money. Here are all the extra things you can expect to pay now, on behalf of the wireless company.
- Verizon charges a $30 upgrade fee; AT&T and Sprint have doubled their upgrade fees to $36 over the last few months
- Monthly data plans have also gone up, with AT&T charging $5 more per month for some data plans and Sprint raising data by $10/month last year.
- In Europe, Vodafone and Telefonica have stopped subsidies for new customers, charging $800 for a new device.
Tallied, that means instead of a $200 iPhone 4S with a $55-$170/month data plan, depending on amount and carrier, users can look forward to a $230-$236 device plus more expensive data plans. And, if Vodafone and Telefonica have any success putting that very expensive burden on the customer, we bet our stateside carriers will notice and follow suit.
Like we said, all of this is to discourage people from upgrading their devices. Wireless carriers want to stop shelling out those subsidy checks to Apple and start making money off of data, voice, and text plans. But iPhone fans like their new phones. As we saw with the 4S, which saw bonanza sales-- despite being pretty similar to its predecessor -- the masses want it. We can expect that same lust when Apple comes out with the 5, which the rumormongers say will look very different than the 4 series. The real question is, how much will wireless providers subsidize it?