As we move further into 2012, the next major smartphone release will without a doubt be the iPhone 5. Expected to launch on Verizon, Sprint and AT&T simultaneously, it may end up being the last iPhone consumers will be able to get their hands on at a sub-$200 price point.
WSJ: Carriers could be ending expensive phone subsidies
The Wall Street Journal reports that carriers are now taking their “first steps to change the terms of smartphone deals that have mostly benefited phone makers like Apple Inc., in a push that could leave consumers paying more for devices like the iPhone.”
WSJ hints that we may very soon see the end of subsidized pricing which is hitting carrier profits hard. While all major smartphones are currently being offered at lower “on contract” prices, the iPhone has been highlighted the most due to the “extra strain” it causes on US carriers like Verizon, Sprint and AT&T due to its high price tag and the agreements they have with Apple. As WSJ points out, Apple “shares are down 12% from their April 10 record of $644, partly because of investor concerns that carriers may be looking to ratchet back the big subsidies that have allowed so many people to own an iPhone.” Apple CEO Tim Cook has tried to downplay the concerns but with carriers posting just “how much” the iPhone is costing their network, it is difficult to overlook it.
We’ve already seen carriers trying to add new fees in order to discourage users from upgrading their devices too quick. Verizon for one added a $30 upgrade fee for some customers just last month, while AT&T and Sprint doubled their upgrade fees to $36 a couple of months ago. While US carriers attempt to make their money back via the expensive calling and data plans they impose on consumers, it may not be enough to cover the quickening rate at which customers are upgrading their new phones these days.
iPhone 5 may be last subsidized iPhone model in the US
Given that the iPhone 5 will more than likely retain its usual $200 base price tag on contract and $750 off-contract, would having to always opt for the latter slow down the rate at which you consider upgrading your smartphone? Furthermore, would you consider it a fair trade-off if carriers like Verizon Wireless began to stop subsidizing smartphone prices but in return lower the monthly costs of their mobile plans? Sound off in the comments below.
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