Big wireless carriers in the U.S. — Verizon (NYSE:VZ), AT&T (NYSE:T), Sprint (NYSE:S), and Deutsche Telekom’s (PINK:DTEGY) T-Mobile — subsidize the smartphones they sell as a way to attract customers, who agree to two-year service contracts in return for the discount.
But small, regional carriers do this too. When five regional wireless carriers announced this week that they would begin selling Apple’s (NASDAQ:AAPL) iPhone on April 20, it was assumed they would structure their phone-sale and subscriber-contract agreements accordingly. But as the Associated Press points out, at least some of these regional carriers will be offering steeper discounts on the iPhone, whose wholesale price is $600, than the big companies do.
The companies said they will charge $150 for the basic iPhone 4S model, or $49 less than what AT&T, Verizon, and Sprint charge (T-Mobile does not yet carry the iPhone). Customers must also agree to a two-year service contract, which, an official at one company said, will begin yielding a profit in 2014. At the big carriers, the 4S is priced from $199 to $399.
The five new iPhone sellers will be nTelos, which serves portions of the mid-Atlantic region, as well as Kentucky and Ohio; Alaska Communications and GCI, both operating in Alaska; Appalachian Wireless, in Kentucky; and Cellcom, which operates in parts of Michigan and Wisconsin.