The iPhone arrived at two more regional
wireless operators yesterday, shortly after nTelos announced it would carry the sought-after
Wisconsin-based Cellcom and Alaska’s
General Communication Inc. (GCI) said in separate releases they would begin
selling the iPhone 4S on April 20 at a $50 discount from their top-tier
“The demand for iPhone is
incredible, and our customers have been asking us for this amazing
device,” Cellcom CEO Patrick Riordan said in a statement. “We are thrilled to be able to deliver
iPhone 4S to our customers.”
The iPhone could help the smaller
companies retain customers who may have been otherwise lured away to larger
providers that carry the device, but the strategy comes at a risk, says ABI research
analyst Mike Morgan.
“The iPhone is proven, it can draw
people to a network,” he says. “And yes, it comes at a price.”
That price includes expensive,
profit-margin-eroding subsidizes, potentially onerous volume commitments and a
surge in data traffic generated by the bandwidth-hungry device.
“It’s no mystery that Apple demands
a lot of the operator if they’re going to be carrying the handset,” Morgan
says. Sprint, for example, is paying $15.5 billion to carry the device.
“That can usually be considered a pretty big risk.”
But the benefits of the iPhone –
customer loyalty, satisfaction and revenue from pricier service plans – could
be critical to regional providers straining to defend their businesses against
competitors several times larger than themselves.
Financial terms of the agreements
between Apple, GCI, nTelos and Cellcom were not announced.
The regional providers are apparently
out to undercut larger operators with competitive pricing $50 cheaper than
AT&T, Verizon Wireless and Sprint.
The iPhone 4S retails for $150 for the
16 GB model at all three providers, with the 32 GB model offered at $250 and
the 64 GB going for $350. They are also selling the iPhone 4 for $50. Customers
must sign a two-year agreement and data plan.
C Spire Wireless, the first regional
provider to sell the iPhone, also offers the iPhone 4S for $50 less than the
top-tier operators but offers a less substantial discount on the iPhone 4.
GCI said it will offer the iPhone 3GS
for free with the requisite two-year contract and data plan. It is so far the
only regional provider to offer the older model of the device.
Breaking larger operators’ exclusive hold
on the iPhone has been a top agenda item for the Rural Cellular Association
Steve Berry, president and CEO of the
RCA, said in a written response the “iPhone’s success clearly defines the
importance of devices and smartphones for carriers to be competitive in a 4G