Rural carriers are increasingly lining up to offer Apple’s iPhone device as this morning Ntelos Wireless Cellcom Alaska-based General Communication said they would begin offering versions of the iconic smartphone on April 20. All three operators are also undercutting price points of larger rivals.
Ntelos, which has a roaming and network agreement with Sprint Nextel (S), said it would offer the previous generation iPhone 4 for $50, the iPhone 4S 16GB for $150, the iPhone 4S 32GB for $250 and the iPhone 4S 64GB for $350 after all rebates and with a two-year agreement. Cellcom is using the same pricing scheme for those models. Those price points are $50 less than what nationwide operators Verizon Wireless, AT&T Mobility and Sprint Nextel charge for similar models and are the lowest prices yet seen for those devices.
Ntelos President Jim Hyde noted that the carrier has been angling to offer the iPhone for some time, adding that Apple has been “very disciplined” in its distribution strategy for its device.
“We have invested heavily in our retail business over the past 12 to 18 months, remodeling stores and relocating others into prime locations,” Hyde explained. “We have also invested a lot into our network in order to handle the expected increase.”
Ntelos said customers can sign up for individual rate plans beginning at $80 per month that include 600 anytime calling minutes with unlimited messaging, or move up to unlimited calling minutes and messaging for $100 per month. Both plans also come with unhindered 3G data access up to 5 gigabytes, after which speeds will be throttled. Family plans are also available.
As for its pricing edge, Hyde said Ntelos wanted to maintain its value proposition in the market and that he did not expect the potential for extra subsidies to have a significant impact on the carrier’s bottom line.
“This will be accretive for us,” Hyde said, adding that the carrier was also moving towards increasing its monthly smartphone rate plans across the board by $20 later this month, which should help alleviate financial concerns. Hyde noted that 78% of Ntelos’ current customers that are off contract are using feature phones, which if they move to an iPhone with a two-year agreement could produce an additional $40 to $50 per month in average revenue per user.
Cellcom’s rate plans are initially limited to individual lines beginning at $70 per month for 200 anytime calling minutes, 500 night and weekend calling minutes, unlimited messaging and 2 GB of data throughput. Customers can move up to the carrier’s US America Unlimited plan that runs $110 per month and includes unlimited calling, messaging and 2 GB of data. The carrier said it will continue with its current policy of charging customers $10 per gigabyte for overage.
Cellcom CEO Patrick Riordan noted in a statement that its customers have been “asking us for this amazing device.”
General Communications is following a slightly different tact as it will also offer the GSM/W-CDMA-only iPhone 3GS for free with a two-year contract. That pricing follows AT&T Mobility’s offer for the iPhone 3GS model.
General’s plans begin at $60 per month for 1,200 voice minutes, unlimited messaging and 3 GB of data transmission. The carrier’s unlimited calling plan includes the same messaging and data allotment and is priced at $90 per month.
Fellow rural provider C Spire was the first smaller operator to offer the iPhone when it launched the device late last year. C Spire has also followed its fellow rural operators in cutting the price of the iPhone models it carriers by $50.
AT&T Mobility held the exclusive domestic rights to the iPhone through the first three-and-a-half years of its existence, which was broken last February when Verizon Wireless began offering a CDMA version of the iPhone 4. Sprint Nextel joined the fray late last year when the latest iPhone 4S model launched.
Wireless carriers have had a love/hate relationship with Apple’s iPhone. Consumer demand for the device has shown that carriers not carrying the phone have had trouble retaining customers that often seek out other operators offering the device. However, analysts have noted that to meet the industry-standard price points for the iPhone, carriers have had to provide several hundred dollars more in subsidies compared with other smartphones. This has impacted the bottom line of operators, especially for those initially offering the device as they have also yet to reap the financial windfall associated with having customers sign new two-year agreements and pay required higher data fees.
Rural carriers could also see a network impact from offering Apple’s device, though a recent report suggests that impact could be muted compared with other smartphones. Sprint Nextel appeared to have suffered some network congestion issues following its launch of the iPhone last year, though reports suggest that was due mostly to the carrier continuing to offer unlimited data access.
Cellcom recently noted that it was set to rollout LTE services as part of its agreement with Verizon Wireless through the LTE in Rural America program. Many analysts expect the next version of the iPhone to contain support for LTE.
Ntelos last year wrapped up LTE network trials as well as signed an agreement with Alcatel-Lucent to upgrade its CDMA network with Revision A technology.
Ntelos’ Hyde said the carrier’s LTE plans were still on track and that timing would be driven by competing offers in its markets as well as the rollout plans of network partner Sprint Nextel. Ntelos said it has sufficient spectrum assets to launch LTE services using its own licenses, but added that the carrier was also looking at other potential spectrum ideas. Sprint Nextel recently announced a deal with rural network partner Shenandoah Telecommunications that will allow Shentel to use Sprint Nextel’s G-Band 1.9 GHz spectrum and 800 MHz spectrum to supplement its own LTE network plans.
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