AT&T Considering $10 Drop in iPhone Monthly Plan Rates?
TheStreet.com reports on comments from analyst Michael Cote suggesting that AT&T is considering reducing the basic monthly iPhone plan from $69 to $59 alongside an announcement of the next-generation iPhone at next month's Worldwide Developers Conference.
Context & Ripple Effects
The $69 unlimited voice-and-data structure under discussion traces straight back to the service plans AT&T and Apple announced for the original iPhone in June 2007, so any cut would be Apple's exclusive partner repricing the founding deal rather than tweaking around the edges. It follows a February report that Apple and AT&T were also mulling tiered data plans for the next iPhone, suggesting the whole plan architecture is on the table ahead of next month's Worldwide Developers Conference.
The timing reads defensively as much as proactively: AT&T has spent April arming store staff with anti-Pre talking points and seminars ahead of Palm's launch, and it already pushed the hardware floor down with the $99 iPhone through AT&T. A $10 monthly cut would extend that squeeze from the upfront price to the recurring bill.
First-order effects
- If analyst Michael Cote's figure proves out, new and upgrading iPhone buyers would pay $59 instead of $69 monthly just as the rumored next-generation iPhone debuts at WWDC — lowering the total cost of entry without touching the subsidized hardware price.
- Palm enters its Pre launch facing a cheaper incumbent bundle on the nation's exclusive iPhone carrier, compounding AT&T's already-documented anti-Pre sales push.
Second-order effects
- Sprint and Verizon would face pressure to counter on monthly pricing or bundled minutes/data rather than hardware alone, since the iPhone's price umbrella over competing smartphones is what the cut attacks.
- AT&T trades roughly $120 per contract year of service revenue per subscriber for volume and retention — economics it can justify only because the iPhone has already drawn millions of new customers and revitalized its brand, per its own claims in April.
Third-order effects
- A pattern of carrier-side price cuts timed to each iPhone generation would shift competition among US carriers from device exclusivity alone to the recurring-plan structure itself, eroding the premium flat-rate model set in 2007.
- Combined with the separate tiered-data exploration, the episode points toward carriers segmenting smartphone plans by price and usage tiers rather than one-size-fits-all bundles — though both moves rest on a single analyst's sourcing and remain unconfirmed.
The trend: US carrier iPhone pricing is drifting from the 2007-era premium flat plan toward segmented, competitively priced bundles as smartphone rivals reach market.