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Home / Technology / Price wars on the iPhone are back when operators compete for 5G customers

Price wars on the iPhone are back when operators compete for 5G customers



Apple iPhone 12 Pro Max is presented at the launch of the virtual product.

Daniel Acker | Bloomberg | Getty Images

The price Americans will pay for the iPhone 12 depends on which cellular service they plan to use it with. The three US operators are actively competing for subscribers, lowering the cost of the new iPhone, which will go on sale next week, hoping for years to block customers on their wireless service.

It starts with a $ 30 discount. For people using AT&T, T-Mobile or Verizon, the iPhone 1

2 costs $ 799 without taxes or other charges. If you want to unlock one without activating it on the media, it’s $ 829.

Customers can get even bigger discounts on new devices if they are willing to take monthly payments for the next few years, if they receive an unlimited number of tariff plans and sell an old phone. For example, AT&T customers can earn as much as $ 800 on the iPhone 12, covering almost the entire cost of the device.

“This is the largest promotion we’ve ever seen on the day the iPhone was launched, topping $ 650 from all operators in 2016 and exceeding $ 700 offered by Verizon to new subscribers last year,” LightShed analysts Walter Piecic and Joe Gallon wrote. week, saying it signaled the return of a “fat subsidy.”

Verizon and T-Mobile also offer competing promotions.

For Apple, the wave of shares of operators may increase iPhone sales in the United States, reducing the cost of the new phone. They can also help shorten the upgrade cycle of Apple’s smartphones by encouraging users to switch to a new phone faster. Apple claims that the typical life cycle of the iPhone today is three years, and the company accordingly timed its new releases, carrying out a serious redesign every three years, mixed with minor updates.

For carriers, iPhone promotions provide an opportunity to strengthen existing subscribers and potentially earn new ones, hoping to cover the cost of devices for long-term payment schedules.

The new iPhones also support 5G networks, which are still being built in the United States. Blocking customers for up to 30 months means that some users will not be able to switch if one operator’s network suddenly looks better than the other two.

“We think Verizon seems to see this as a way to move customers to higher rates, as well as a way to make sure the expanded mmWave range is used,” Goldman Sachs analyst Rod Hall wrote this week. “We have long expected US carriers to help increase sales of the Apple 5G, although we believe that the economic attractiveness outside the US is less obvious given the lack of mmWave deployment.”

Minor differences

All the shares of carriers in the United States have two things in common: customers have to sell an old device with a certain value – a phone that has not crashed in the last few years – and they have to pay monthly.

But they differ in how they target new customers and how transaction mechanics work. The best offer for any user depends on his current operator.

Here’s how they break:

  • The AT&T promotion applies to both new and existing customers. To get a free iPhone 12, AT&T requires an exchange, and the customer must activate it under an unlimited plan that costs at least $ 65 per month for an individual. The AT&T installment plan lasts 30 months. Piecyk estimates that AT&T subsidizes new and existing customers by about $ 800.
  • T-Mobile offers up to $ 850 credit on iPhone 12 models spread over 30 payments. Users must register for the T-Mobile service and trade on the old device, and the amount of the discount is directly related to the value of the exchange. It also offers deals for customers who buy multiple iPhones at once. The best offers are reserved for new subscribers, but with smaller discounts for existing Sprint or T-Mobile subscribers.
  • Verizon offers a free iPhone 12 for new customers, but they must trade the old phone, sign up for an unlimited rate plan that costs at least $ 80 a month for an individual, and stick to it for 24 months. Existing customers can buy an iPhone 12 for $ 15 a month with an exchange. Piecyk estimates that Verizon is actually offering a $ 800 subsidy for new customers.

Let’s go back to the good old days

The wave of competing discounts from the three US carriers is actually a return to carrier subsidies, which was a major factor in the US smartphone market in the early years.

Ten years ago, the price of a new iPhone was often listed at $ 199, because that’s how much the device cost when users bought it from a carrier on a two-year contract, usually with a hefty early cancellation fee. These contracts also hindered consumers during the two-year smartphone upgrade cycle.

Carriers began phasing out smartphone contracts in 2013, revealing to many consumers that the preliminary price for a premium smartphone is $ 700 or more, and allowing them to cancel without incurring large costs.

Over the years, operators have actually recreated the same customer lock using device payment plans – customers don’t have to pay hundreds of dollars for a new iPhone or Samsung Galaxy, but they do agree to pay between $ 30 and $ 50. per month for at least two years with a lump sum payment if they cancel early.

Carriers have found ways to attract new customers through promotions related to device upgrade plans, often by inflating the price of the device being traded. But over the past two years, aggressive stocks have become less frequent, and competing carriers have often not responded.

Now that 5G is being promoted as a major growth cycle for the telecommunications industry, three operators are working to steal customers from their rivals or block them for the next two years using the iPhone 5G.

Meanwhile, Apple has raised its own plans to install the device in several different ways, although it does not offer subsidies as operators. People with an Apple Goldman Sachs card can buy an iPhone and pay for more than 24 months without paying interest.

Apple also has an upgrade program that combines the iPhone, which is paid monthly with an extended warranty, does not tie users to a single operator and allows them to upgrade the iPhone to the latest in a year.

“One of the things we do is try to make people simpler and simpler ways to finance each month,” said Apple CEO Tim Cook last December.


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