The company will be raising its ETF (the fee you pay when you break your service contract) from $175 to $325 beginning in June, which is right around the time the iPhone 4G/HD is expected to be released. The raised fee will apply to new contracts only and the ETF on feature phones will actually drop to $150. Re-upping your contract for a new iPhone will put you in this new ETF territory, though.
This is obviously a pain in the behind but I kind of understand where AT&T is coming from. The iPhone 4G/HD will probably have an entry point of $199 even thought AT&T is paying roughly $500 to $600 per unit. When you multiply that out by how many people are going to buy it, that’s a lot of cheddar in subsidies. Sure, they should earn it back eventually with the mobile data services of these users but this can put a pinch on its immediate bottom line. It’s a bigger pain for AT&T because many iPhone owners upgrade to the latest version every year and they get upset when they can’t get that standard, introductory price.
The move comes a few months after Verizon jacked up its ETF to $350 for “advanced devices” for similar reasons. The added spice to the story is that the iPhone-to-Verizon rumors have been heating up lately and the raised ETF could be another deterrent for current AT&T customers to switch if Apple goes with Big Red this year.
Could this be a sign that AT&T’s exclusivity with the iPhone is running out? AT&T doesn’t seem too worried about the possibility and I would still put down money that we won’t see Big Red getting the iPhone until at least 2011.
[Via The Wall Street Journal (subscription required)]
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