The iPhone Is a Nightmare For Carriers

New submitter HungryMonkey writes "According to the latest EBITDA numbers from AT&T, Sprint, and Verizon, the subsidies they have to pay Apple in order to carry the iPhone are drastically reducing their profits. From the Article: '"A logical conclusion is that the iPhone is not good for wireless carriers," says Mike McCormack, an analyst at Nomura Securities. "When we look at the direct and indirect economics that Apple has managed to extract from the carriers, the carrier-level value destruction is quite evident."' So one money sucking leech has attached itself to another money sucking leech?"

Re:Then why...

[Kenja]

They (the carriers) dont lose money on each transaction, they just make less. So in that case, less profit per unit by more units is a sustainable business model.

leeches and centipedes

[jduhls]

So one money sucking leech has attached itself to another money sucking leech?

It's more like a "Human Centipede" relationship.

Re:"Money sucking leech"?

[bonch]

Is there a way to block stories by editor?

Yep! Check your account options in the upper right. People used to take advantage of this feature to block the infamous "personalities" JonKatz and michael.

Apples Warranty

[Pirow]

I work for one of the UK network operators which had made me develop a new level of hatred for iPhones.

One of the way the iPhone is hurting carriers is that Apple only offer a 12 month warranty as standard, sure you can extend it with Apple Care, but no one bothers even if they take out the iPhone as part of a 24 month contract.

A customer will phone up over 12 months into an 18 or 24 month contract to say their iPhone is faulty, all we can offer is a chargeable repair as the phone's out of warranty, naturally they're not very happy ("I got it from you, not from apple!") and they'll either want to cancel their contract without any sort of termination fee or get a working phone, 99% of the time if they complain enough they'll get a free of charge replacement iPhone just to keep them happy in the hopes that they'll upgrade at the end of their term (and it works out cheaper than having the call escalate further). This is happening hundreds if not thousands of times a day where I work, sure it happens with other brands too, but to a lesser extent and normally with lower price handsets.

I'm shocked that so many people are willing to accept a 12 month warranty on a product that markets its self as the best in the market.

Re:Perspective

[Anonymous Coward]

T-mobile USA? Ever heard of them? They've offered non-contract monthly plans (with data, same options for the same price as the contract plans, but one payment up-front and no ETF if/when you leave) since forever, and they recently (a year or two back) added contract plans that are cheaper if you bring your own phone.

As a bonus, since T-mobile uses SIMs and aren't evil (or at least aren't the class of evil one expects from US mobile providers), if you got on a cheap ($35/mo, a few hundred minutes + unlimited data) monthly plan plan that was offered only for non-smartphones to tether your N800, you can swap the sim to your N900 when you upgrade, then cut it down and swap it to your N9, still pay the same -- I speak from experience.

On the conventional refill-type prepay, I think T-mobile does have some data options for those (not sure) but I know some of the MVNOs have prepaid data options.

Re:Perspective

[Fnord666]

Sure, you have to front the $600 for the phone, but your monthly bill is now $20 instead of $80. After 10 months you're breaking even, and after the two years of the contract your're about $700 ahead, enough to pay for a "free" phone upgrade, and then it's gravy from there on out.

Except that in the US, you would pay $600 up front and still end up paying the $80 each month. US carriers do not offer any sort of discount if you bring your own phone with you.

Re:Perspective

[jackbird]

USA -> USA rates:

$0.17/minute voice
$0.12/text
$0.17/MB data

Holy crap. Nearly $300/month for medium usage (500 minutes + 200 texts + 1 GB data). This is an improvement?

Re:Perspective

[Kozar_The_Malignant]

You can't do that with AT&T as a new subscriber any way that I can find. All their data plans require a 2 year commitment (i.e. contract) regardless of whether you get a phone subsidy or not. Presumably, once you come out the other end of that, you can bring your own iPhone to the party. I've done that with T-Mobile and my string of Blackberries. Another problem with AT&T here in the SF area is that there are so many iPhones that the network is saturated and just crawls.

Losses one time, revenue forever...

[SuperKendall]

Sprint announced a large upswing in new customers last quarter -- all because of the iPhone. However, their losses increased, too -- all because of the iPhone.

The losses are a single quarter. The revenue the new customers bring lasts for two years.

And after that there's a great chance Sprint gets to keep them as customers (if they manage things well).

So it can make a LOT of sense to take some loss now for quite a lot of potential future gain (and a lot of the gain is not just potential, but pretty much assured).

Re:Perspective

[quarterbuck]

T-Mobile still won't do 3G/4G on an iPhone which is what I think the GP was asking about. Not their fault, but iPhone just happens to use a frequency that is used by AT&T in US.
If you really had to use iPhone on prepaid in US (with data), you have to either buy international version of iPhone and take it to t-Mobile for their $35 - $50 plan or get a Sprint version of iPhone and use it on Virgin Mobile /Boost (Sprint's pre-paid branch) and hope it works.

Re:Perspective

[Bill Hayden]

Except in the US, you pay minutes for received calls too. Many people from Europe don't realize this.