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From $199 to much more, Apple & AT&T expect premium prices for iPhone addicts.
High demand for a product often carries a premium price to acquire and use it. The Apple iPhone, one of those few mobile products that can generate lines extending out the door of a retailer, is one such product. AT&T Mobility, which still holds an exclusive contract with Apple for iPhones in the United States, has made it clear it will not be making any price changes to its wireless data plans with the introduction of the Apple 3G S on June 19. Speculation about lower pricing started with AT&T Mobility CEO Ralph de le Vega, who spoke at a conference last month indicating he was amenable to “limited data plans for lower fees.” That message was soon modified into a more generic ‘price cut’ as the story traveled.
“We’ve been very happy with our pricing,” AT&T spokesman Mark Siegel told Dow Jones Newswires.
AT&T already charges a pretty penny for iPhone users on their network. Customers signing up for service face a minimum voice plan of 450 minutes for $39.99. An “unlimited” data plan, required for the iPhone, adds $30 per month. AT&T claims the average iPhone customer spends about $90 per month for voice and data. The company also reserves the right to crack down on excessive data usage and limits some applications.
Should de le Vega’s tolerance of limited data plans become reality, plans with more specific usage limits may be forthcoming, at a moderately discounted price.
AT&T has had a bad week in the public relations arena, as current iPhone owners continue to object to the full-price upgrade price they may have to pay if they are in a two year contract. Thousands have signed a Twitter petition and have filled AT&T’s online support forums with complaints about AT&T “price gouging” loyal customers.
AT&T has enjoyed significant revenue from their exclusive arrangement with Apple. But iPhone users are dedicated to their combination phone and data device, and try to get their money’s worth. That has put pressure on AT&T’s network, and despite the company’s revenue from its premium priced plans, has been criticized for not keeping up with that demand.
Verizon Wireless, AT&T’s biggest competitor, trashed AT&T’s proposed upgrades as inadequate:
Verizon Wireless CEO Lowell McAdam characterized AT&T’s promises as “too little too late”. He said that AT&T’s “ceiling for their network will be the floor for our network.” McAdam called AT&T’s announcement on its network upgrade old news—about a year old. He also noted AT&T’s promises to upgrade speed are spin.
“We’re happy you have to mortgage your house to pay for your iPhone bill”-AT&T
Phil – you may wish to correct this line:
“AT&T has enjoyed significant revenue from their exclusive arrangement with AT&T.”
Feel free to delete my comment after doing so.
That’s what happens when you write articles at 2:00 in the morning and your internal proofread just breezes right on by.
I should get a volunteer editing corps who can automagically fix my occasional lapses in grammar/wording.
Sure it sucks, but AT&T is not being “evil” for not reducing their prices. It’s not like they have a monopoly over the smartphone market.
In fact, in many ways they do. iPhone users use five times as much data as typical smartphone users. Because the iPhone is tied to one cell phone provider, unlike all over Europe and Asia, people can’t choose from competing pricing plans if they want the iPhone. Whatever AT&T gives them is what they get.
Keep in mind that although iPhone users may use 5x more data than the typical smartphone user, I would say that around 60-70% of the time that data is coming over a WiFi network and not the AT&T Edge or 3G network. I would posit that the typical iPhone user doesn’t use much more on-network data than any other smartphone user
That’s pure speculation. Until actual data is released we can’t know that for sure, although it’s entire possible considering the data plans have pathetically low 5GB data caps (especially when compared to other countries). Either way it doesn’t change AT&T’s monopoly over what is considered the premiere smartphone by a longshot.
I would be surprised if they released the raw data at all. Companies usually hold tight with this kind of information, unless they are using it to justify something they want to do.
Personally, I wouldn’t even consider an iPhone because of the price of the service plan that goes with it right now. That is the thing that guarantees I will stay out of the market.
I think this whole thing is another case of “exclusive” access = “exclusively high pricing.”
I’m also a Verizon customer, and see no compelling reason to switch to AT&T. When the iPhone becomes available on Verizon’s network, my interest in it will be driven by one factor – the price of the service plan and its limitations. If it’s priced to capture every nickle out of someone for the vanity of being seen with an iPhone, I won’t be interested. If it’s priced to compete with other smartphones on the same types of plans, I might be. I’m willing to pay slightly more to obtain the phone itself, but not interested in paying a higher price for the service plan to go with it.
I have no reason to be “seen” wearing one. I keep cell phones and players in my pocket anyway.
You are correct…..that IS pure speculation on my part. I have no concrete data to back up this claim, only the the average use cases of myself and about 5 or so friends.
All of the friends I hang out with have WiFi at their houses, so whenever we’re hanging out at a house, all the iPhone traffic is over the house WiFi network. My 60-70% figure is a rough estimate of the amount of time my iPhone is used for data while either my own or a friend’s house, or at work. In actuality that figure is probably more like 70-80% of the time for me personally. I’m still on the old 2G Edge network, so for time efficiency, I save most of my data-intensive usage (app downloads/updates) for when I’m on a WiFi network.
This type of usage also points out yet another problem with Internet caps. It’s possible to throw a party and invite all your fiends over just to have them all blow away your 60 GB/mo cap with their WiFi-enabled smartphones.
I might of got an iPhone if the data plan wasn’t so outrageous. However, AT&T, isn’t the only cell phone provider that sticks it to ya with these smart phones. Most of them offer the phones but you must sign a 2 year contract and get the minimum data plan or higher, which is usually a small fortune itself. Then they make it where you can’t buy the phone right out by saying it costs $400+ over the 2 year lock in and data rate. They purposely overprice these phones so you go with what looks like a value. I would go as far as saying it is a type of bait-n-switch. Walked in just the other day looking for a new phone and even simple phones they were tacking on an extra $250-300 bucks to buy right out. I know for damn sure that that phone doesn’t cost that much to make. Another thing that drives me bonkers, sorry venting right now, is the proprietary connections on these phones, yet another scam. Don’t get me started on the ring tones….
My question to the masses is, why do you fall for this crap? Yes it is nice to have a phone with bells and whistles but really, how long are you going to take them fleecing you of every cent you have?
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