Cost of iPhone service?

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wubagel

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May 22, 2007
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#1
Does anyone have any clue or speculation as to how much service for the iPhone will be? I don't want to be paying an obscene amount every month after I bankrupt myself to buy it.
 

wjp09

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Feb 25, 2007
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#2
Seeing as there has been a prepaid rumor, I assume that it will run just as any other phone would. Then ontop of that if you wanted *optional* you could add unlimited Data just like you could add a text messege package to your current phone plan. I would say a safe bet would be 20-40 for unlimited internet. Other phone companies that have unlimited start at 20 such as the sidekick with tmobile. Verizon has an unlimited also.
 

archer6

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May 15, 2007
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#3
As an AT&T customer I would say that since this is a joint venture between Apple and AT&T, it's very hard to estimate what the data plan or plans may be priced at.

If it were AT&T alone the phone would be subsidized to reduce the price to the consumer, just as they do with every other smart phone they sell.

However Steve Jobs dictated that the iPhone not be subsidized, thereforee everyone will be paying full price for the phone, even if they are entitled to an upgrade price on every other phone in the AT&T inventory.

So, if we apply that same line of thinking, then it's entirely possible that Steve dictated the data plan to be priced higher than the others. This would be in line with his thinking about the "superiority of the iPhone" and thus one must pay a premium price.

Time will tell.
 

wot_fan

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#4
So, if we apply that same line of thinking, then it's entirely possible that Steve dictated the data plan to be priced higher than the others. This would be in line with his thinking about the "superiority of the iPhone" and thus one must pay a premium price.

Time will tell.
I think you have it backwards. I think it is much more likely that Steve would push to have a lower priced data plan. Apple is trying to introduce an internet capable phone to many customers that have not owned one before. Many of these customers are going to have sticker shock at the $20/month data price. I don't think Steve is willing to risk sales because the data plan is too expensive. For me, that is the only thing that could keep me from getting the iPhone.

Let's also not forget that the iPhone has wifi and EDGE. Both of these should minimize the amount of AT&T's bandwidth each iPhone uses. This along with the fact that AT&T does not have to subsidize the iPhone should make a lower priced plan more acceptable to AT&T.

Of course, this is just my opinion and maybe even wishful thinking ;).
 

archer6

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May 15, 2007
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#8
I think you have it backwards.
Of course, this is just my opinion and maybe even wishful thinking ;).
I wish I did have it backwards. I just read (sorry forgot to capture the link) where it was Steve that forced AT&T to sell the iPhone at full price.

An example is, I'm currently using a new BlackBerry that retails for $499.00, AT&T discounts it to $199.00 so that's all I had to pay.

AT&T wanted to do the same with the iPhone so they could sell more and give a better deal to their customers but Steve said the customers would be happy to pay the higher price.

Nice eh?

However as a long time Apple customer, I used to being overcharged. No sense in complaining, just sharing with other people here on the forum so they know what to expect.

I just bought a new MacBook Pro for my personal use, and a New Lenovo ThinkPad for work. Both of these are configured the same. Same processor, same ram, same graphics card, same hard drive, both with 3 year warranties.

I paid $711 dollars more for the MacBook Pro, than I did for the ThinkPad. While I love the Mac, I cannot see $711 dollars difference. $200 more perhaps but not $711.00

Oh well.... the price of admission to AppleWorld

Cheers....;)
 

archer6

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May 15, 2007
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#9
I think $20 for unlimited is the most they can charge without risking losing potential customers. They may charge more, but I doubt it will be above the $40 price that AT&T currently charges for PDA phones.
I pay AT&T $29.99 per month for an unlimited data plan (no video) for my BlackBerry.

I pay AT&T $39.99 per month for an unlimited data plan (with video) for my 3G Motorola RAZR V3xx.

So that will give you an idea of where the pricing is currently for two different types of phones.

Cheers....:)
 

wot_fan

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Mar 7, 2007
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#10
Do you really think that AT&T is giving you a discount on a BlackBerry out of the goodness of their hearts? Their making that discount up in the service plans that you are buying with it.

I understand that Steve/Apple didn't want the iPhone subsidized. My hope is that instead of discounting the phone, AT&T will offer the data plan at a cheaper rate since they don't have to make up for a discount on the phone. I can't see any other reason for Apple not to want the phone subsidized since they make the same amount of money regardless of how much AT&T charges for the phone.

All this assumes that the iPhone will only be sold at the announced pricing with a mandatory 2 year contract. The recent rumors, if true, regarding the option to buy an iPhone without a contract change everything. If the iPhone costs the same with or without contract, there is no reason to sign a contract. If these rumors are true, I expect there to be a discount when purchased with a contract. There have been rumors to this affect, but I disregarded them up until now.

It will be interesting to see how this all plays out.

P.S. Thanks for the info on the data pricing. I currently have Cingular's smartphone unlimited plan (I think it is called medianet) which runs $19.99 for unlimited.
 

archer6

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May 15, 2007
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#11
Do you really think that AT&T is giving you a discount on a BlackBerry out of the goodness of their hearts?
Where did it say that the discount is out of the goodness of their hearts?

What the post read is the discounted price was because the phone was "subsidized".

This is a common practice amongst ALL US carriers, Sprint, Verizon, T-Mobile, AT&T, Alltel, etc.

So it applies to every brand and every type of phone sold period. The BlackBerry was just an example because it's an expensive smart phone in the general price range of the iPhone.

How do you think the carriers are able to give away "Free Phones" ? Simple.... it's called subsidized.

Regarding your theory of them making up the difference in the fees for the data and voice plans. That too is incorrect. As every carrier charges extra for those services as well. They are all very close in data plan and voice plan pricing because of the the competition.

The reason you have a MediaNet plan for $19.99 per month is because if only offers "limited" access to the internet, even though you get unlimited data usage. It's not the full gateway to the net.

When one selects an unlimited smart phone, or BlackBerry, PDA plan it's full internet access, and unlimited data usage.

Hope this clears things up.

Cheers....:)

And I agree with you 100%, this is going to be one of the best Apple Movies of the year. Success?.....Or?

I'm rooting for Apple, but also being realistic. I am first and foremost Pro-Consumer. I have a hard time when a Corporation like Apple engages in price gouging. Look at Apples current stock price. Many people are obviously eager to fork over their money as they believe the Apple Hype Machine.

After all, why do you think Apple always has so much cash? They don't grow it.

They take it from their customers and laugh all the way to the bank....:p
 

Spin This!

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May 4, 2007
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#12
My hope is that instead of discounting the phone, AT&T will offer the data plan at a cheaper rate since they don't have to make up for a discount on the phone.
That would mean AT&T would be sharing profits on the phone with Apple... which is not how I think the agreement works. Apple provides the phone (and thus the profit); AT&T provides the service. I hardly doubt AT&T is going to offer any less expensive plans but that remains to be seen.
 

archer6

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May 15, 2007
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#13
That would mean AT&T would be sharing profits on the phone with Apple... which is not how I think the agreement works. Apple provides the phone (and thus the profit); AT&T provides the service. I hardly doubt AT&T is going to offer any less expensive plans but that remains to be seen.
I'm with you, and I believe you have it correctly.

First of all this concept of "making it up by charging more for whatever" is incorrect. This is coming from people who do not understand what a subsidy is. (see the dictionary).

There is nothing to have to "make up for" no matter what price the phone is sold for, or who get's what share of the profits from the phone. We are talking about two different categories of income. One from the hardware (phone) and one from the service (carrier).

It's as basic as your car, and the gasoline for your car. Two different considerations altogether.

AT&T is a massive company, that's been around far longer than Apple. Also unlike Apple, AT&T is Not going to price gouge their customers because their businesss is too competitive. If the data plan pricing is left up to AT&T it will be in line with everyone else's data plan pricing.

So, if it ends up that the data plan for an iPhone is More Expensive than any other data plan, Do Not Forget To Thank Apple For Dictating The High Price.
 

wot_fan

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#14
Where did it say that the discount is out of the goodness of their hearts?

What the post read is the discounted price was because the phone was "subsidized".

This is a common practice amongst ALL US carriers, Sprint, Verizon, T-Mobile, AT&T, Alltel, etc.

So it applies to every brand and every type of phone sold period. The BlackBerry was just an example because it's an expensive smart phone in the general price range of the iPhone.

How do you think the carriers are able to give away "Free Phones" ? Simple.... it's called subsidized.

Regarding your theory of them making up the difference in the fees for the data and voice plans. That too is incorrect. As every carrier charges extra for those services as well. They are all very close in data plan and voice plan pricing because of the the competition.
The voice and data plans are priced in such a way so the company makes money. For this to happen they have to be priced high enough for them to make a profit after recouping the costs of all of their expenses including the cost of subsidizing phones. You must sign a contract to get a subsidized phone so they are guaranteed that you will use their service for long enough for them to recoup their subsidy. Competition from other providers only forces them to reduce their profit margins, not eliminate them.

For Cingular to recoup the $300 dollars they discount the BlackBerry they need to make $12.50 every month more (assuming a 2 year contract) than if they had not subsidized the phone. I realize this number is a little exagerated since Cingular didn't pay $499 so they really only need to make up the difference between what the pay for the phone and what they charged you, but you get the idea.

As I said, since theoretically the iPhone is not getting subsidized, AT&T should be able to charge less for their data plans since they don't have to recoup a subsidy.

The reason you have a MediaNet plan for $19.99 per month is because if only offers "limited" access to the internet, even though you get unlimited data usage. It's not the full gateway to the net.

When one selects an unlimited smart phone, or BlackBerry, PDA plan it's full internet access, and unlimited data usage.
I am not sure this is true. I have not found any web pages that I am unable to visit with my current plan. I was under the impression that the difference between my plan and the PDA plan had to do with the efficiency of the server and thereforee bandwidth. It doesn't really matter to me though since the browser on my WM5 phone is too painful to use for long :(.

First of all this concept of "making it up by charging more for whatever" is incorrect. This is coming from people who do not understand what a subsidy is. (see the dictionary).

There is nothing to have to "make up for" no matter what price the phone is sold for, or who get's what share of the profits from the phone. We are talking about two different categories of income. One from the hardware (phone) and one from the service (carrier).
I don't think you understand what a subsidy is. AT&T is paying a portion/all of the cost of the phone for you. For them to turn a profit they need to make more on the service they sell you than if they had not payed a portion of the cost of your phone.

I don't understand how you can say "There is nothing to have to "make up for"". Who do you think incurs the cost of the the phone when AT&T gives a free phone to a customer for signing a 2 year contract. AT&T pays for the phone instead of the customer. As I said above, the contract assures AT&T that you will be with them long enough for them to recoup that expense.
 

archer6

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May 15, 2007
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#15
I don't understand how you can say "There is nothing to have to "make up for"".
Actually it's quite simple, basic businesss 101 if you will. First of all I will keep it simple and easy to understand.

Let's say we are talking about a phone that retails for $399.00. There is a lot of profit in that phone. The manufacturer shares some of that with the carrier. They have a strategic relationship, as the only way for the mfg to sell the phone is through the carriers. It's the mfgs way to entice the carrier to buy a lot of their phones.

If the subsidized price to the customer is $199.00 then that amount more than pays for the phone as the actual cost of the phone is approx. $65.00

Therefore the mfg gets paid for the phone plus a small profit and the carrier breaks even on the phone. More importantly for the carrier is they either just signed up a new customer, or they extended the contract of an existing customer. Either way they make a massive profit. Their money comes from selling the service, not from selling the phone, at any price for that matter.

The manufacturer makes money on volume and the carrier makes a lot of profit off the customer each month, as they are selling airtime and data usage that costs them very little. They already have the network, they have been profiting from services for years. So they have a huge profit margin already. Then because they know that most people will pay the price, they use the same mentality that you are believing, which is that they have to "get their money by locking you into a 2 year contract". Nothing could be further from the truth.

The reason they make customers sign on to a 2 year contract is "customer retention" and guaranteed income for them. This simply guarantees them that you are not going anywhere for 2 years. Much like a lease on a car, you are locked in. If you terminate the contract, you pay the ETF = Early Termination Fee. So they get you coming and going.

Here's another example:
Let's say that you have a regular cell phone and you only make phone calls, thereforee your only expense is airtime. You have a plan which gives you 1400 minutes per month for $79.99.

Now you don't really believe that it costs your carrier $69.99 to provide that service do you? And that they only make $10 per month profit?

The reality is that the carriers cost to provide that service for you is pennies on the dollar, thereforee they reap a huge profit from every customer, every month.

Plain and simple........:)

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joe

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May 5, 2007
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#16
I just bought a new MacBook Pro for my personal use, and a New Lenovo ThinkPad for work. Both of these are configured the same. Same processor, same ram, same graphics card, same hard drive, both with 3 year warranties.

I paid $711 dollars more for the MacBook Pro, than I did for the ThinkPad. While I love the Mac, I cannot see $711 dollars difference. $200 more perhaps but not $711.00

Oh well.... the price of admission to AppleWorld
Not doubting, but I'm having a hard time finding a Thinkpad that has similar specs to a MBP. Can you point me to the model and specs you are comparing? For what Apple offers in the MBP the price is not bad at all. I think this applies to the argument that the iPhone might be high-priced just because it has an Apple on it; an outdated argument.
 

wubagel

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May 22, 2007
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#19
So all the subsidization talk aside, does the data plan include everything I would want/need with my phone...including minutes, texts, etc. Or is the data plan an add-on. In other words, if it is, what will the total service run me per month?
 

archer6

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May 15, 2007
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#20
So all the subsidization talk aside, does the data plan include everything I would want/need with my phone...including minutes, texts, etc. Or is the data plan an add-on. In other words, if it is, what will the total service run me per month?
As a long time Cingular / AT&T customer, having many phones and a few plans currently, here is how the rate plans typically are setup.

1) You choose a rate plan for Voice, like 1400 minutes for example (or whatever works for you)
2) Then you choose your data plan which in the case of owning a smart phone, BlackBerry or iPhone you best bet is to choose the plan with unlimited data usage.
3) The third and final component is the text plan. Here again you have a few choices of packages. I don't do a lot of texting so I get the 200 message plan for $4.99 mo.

These are all plans setup by AT&T. However in the case of the iPhone Apple has setup the contract between them and AT&T so that Apple has a lot of control. Therefore I would not be surprised to find the monthly cost to operate an iPhone to be dictated more by Apple than AT&T.

The only way we are going to know is once it's announced.