For years – since the dawn of the American mobile industry – carriers have sold subsidized phones in exchange for multiyear contracts. Instead of paying $500 for a phone, you pay $100 or $200, and commit to staying on their network 2 years.
Now, out comes Randall Stephenson, ATT CEO, and whines, “we cannot afford to subsidize those phones anymore!” Is it possible? Could ATT be losing money (or at least potential profit) by subsidizing phones? Let’s take a look.
The latest 16GB iPhone 5S costs $649 to buy outright from Apple, but only $200 upfront from ATT with a 2-year contract. ATT is subsidizing the phone to the tune of $449. In exchange, the customer commits to two years of paying at least $60/month for the base plan, which includes unlimited nationwide talk and text and 300MB of monthly data. If you bring your own device ATT will shave $15 off