Carrier subsidies are back!
For wireless carriers, the new iPhone is bringing back the dreaded days of subsidies — or halfway back, at least.
For every iPhone sold under their aggressive, new renewal plans, dueling carriers Sprint and TMobile are spending between $200 and $250, according to an initial estimate by New Street Research.
That’s about half the average subsidy of around $450 a few years ago that desperate carriers were funding for new iPhones, which retail for $650 and up, noted Jonathan Chaplin, an analyst at the firm.
While TMobile had weaned itself off subsidizing the iPhone entirely last year, this week’s $5amonth “Jump On Demand” lease plan for the iPhone 6s was triggered by Apple’s own offer of a $32amonth yearly renewal plan earlier this month.
TMobile, which has been growing rapidly as it pitches beefedup service at lower rates, won’t see a big dent to its cash flow, Chaplin predicts.
Sprint, on the other hand, which has foundered since Japan’s SoftBank acquired it two years ago, could face a bigger impact as it hawks a $1amonth lease for the iPhone 6s.
“This isn’t a huge event on its own — it’s just another step in the wrong direction,” Chaplin says. “Competitive intensity is going up, and the cost of subscribers is going up.”
Late Thursday, Verizon entered the fray with a yearly iPhone upgrade program. Despite higher monthly payments, Verizon tweeted that its plan was on “the best network.”