AT&T wants lower phone subsidies

ralphceo

AT&T is looking to pick up smartphones that will require it to provide lower subsidies, according to comments from AT&T Mobility CEO Ralph de la Vega.

Speaking at a conference, de la Vega said that subsides are eating into margins. This is one of the reasons that Sprint will not be turning a profit on the iPhone until 2015. To address these issues, AT&T will be looking at devices that it can offer with lower subsidies but still be attractive to users.

“We have to watch subsidies and make sure that we bring devices to market that customers love and will keep and have low subsidies,” de la Vega said, according to Fierce Wireless.

He mentioned the Lumia 900 and HTC One X as devices which fit into this category. Nokia is desperate to get back in the United States and the Lumia was made with relatively cheaper materials, so it was able to land in the United States at the $99 price tag and AT&T didn’t have to shell out too much. HTC has always been very carrier-friendly too, so it seems reasonable that its subsidies are low.

The CEOs can say what they want but the rubber will really meet the road when we see the next iPhone. It’s been reported that Apple’s devices get about $400 or so per iPhone in subsidies and it will be interesting to see if any carrier won’t provide that with the fifth version this Fall.

The $199 entry-price point for an iPhone is pretty much standard now and those not willing to provide that may suffer. Think about it: if you’re a cell phone free agent and want an iPhone, would you want an AT&T iPhone 5 for $299 or would you prefer to pay $100 less for that same model on Sprint or Verizon?

The carriers can throw its weight around on subsidies with nearly every manufacturer besides Apple but it will be interesting to see what happens with the Galaxy S III. We expect most – if not all – of the major carries to pick it up and I think the pricing will be telling about what we can expect in subsidies moving forward.

[Via Fierce Wireless]

  • MVZ

    it’s a catch 22 situation if the carriers reduce the subsides making the hardware more expensive to own they will migrate to the competitors but if they all get together and refuse to subsidize the device the manufacturers of the hardware will accused them of collusion or of trying to manipulate the market. Of course Apple, Samsung and other 1st tier manufacturers have a healthier Financial SHeets then any of the Telcos so how can they justified paying those enormous subsidies. they are going to do that via Clean Sheet Studies  

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