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AT&T gets the iPhone through 2010

August 5, 2008 by  

USA Today is reporting that the iPhone will be exclusive to AT&T through 2010, one year later than Apple’s original commitment to the company.

The iPhone’s price tag dropped for the 3G version thanks to the work of AT&T chairman Randall Stephenson. Stephenson was behind AT&T’s subsidy of the 3G iPhone. Where as the first generation iPhone was paid for completely by the consumer, the 3G version is subsidized by AT&T. For each iPhone sold AT&T is shelling out the remainder of the cost of the device to Apple, most analysts estimate around $300 a pop.

So why would AT&T offer to pick up part of the bill?

iPhone customers who have their phone plan thought AT&T are currently paying rates much higher than the average AT&T customer. While a new customer may cost AT&T an additional $300 or so up front, over time they’re going to be bringing in much more than that from that customer in monthly service fees.

The bonus in all this of course is that the iPhone is now a reasonably affordable handset. By taking away that initial $600 price tag the subsidy is making it much easier for the average person to get one. It’s also not likely however that AT&T is going to give up their exclusivity in the US without a pretty good fight, which is a definite downside for consumers who want to be able to use their iPhone on other cell phone carriers like T-Mobile and don’t want to hack their phones to do it.

Things are also likely to get interesting later with Android later on this year.

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