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How Prepaid iPhones Will Remake the Mobile Market – Eventually

June 11th, 2012 06:30 admin View Comments

Apple has lots of big iPhone news today, but last week’s announcement that Sprint Nextel and Leap Wireless will begin offering iPhones without a contract could actually be just as significant – starting a massive change in how Americans buy and use mobile phones.

Up till now, if you wanted an iPhone, you signed a two-year service contract with a carrier like AT&T, Verizon Wireless or Sprint, and got a big discount on the price of the phone. But under this new model you would buy the phone at full price, but pay less for service and avoid getting locked into a contract. Over two years, the prepaid model comes out to be significantly cheaper.

The new approach won’t change everything overnight. The upfront price of the iPhone 4 and iPhone 4s in the carriers’ pay-as-you-go plans will be too high to have an immediate impact. Sprint’s Virgin Mobile USA will sell the Apple smartphones for $549 and $649 respectively, with a no-contract plan that costs as little as $35 a month. Leap’s Cricket Wireless will sell the phones for $399 and $499 respectively, and provide a voice and data plan for $55 a month.

Verizon Wireless and AT&T, meanwhile, sell the latest iPhone for just $200 – albeit with a two-year contract that carries significantly higher monthly costs. These types of plans are what people are used to in the U.S. (though not in most of the rest of the world), and sticker shock for unsubsidized phones will likely keep most people from switching – at least right away. “There will be some impact, but it’s not going to be large-scale or widespread,” said Weston Henderek, an analyst for Current Analysis.

Psychological Barriers Remain

Given the total price difference over the course of a two-year contract, though, the reluctance to switch is partly psychological. But there is a practical reason, too. Prepaid plans offered by smaller carriers typically come with less nationwide coverage than what’s provided by the tier-one carriers.

The first carrier expected to feel some pain would be T-Mobile, which doesn’t sell the iPhone but encourages people with unlocked phones to come to them for a cheaper service plan. That strategy may no longer be as attractive, now that Virgin and Cricket are also offering relatively inexpensive plans, along with device warranties.

The real disruption will take longer. If Apple continues to drastically reduce the price of older iPhones every time it releases a new model, it’s likely to create a robust market of slightly out-of-date iPhones used on second-tier carriers. For example, when the current iPhone 4S was released, the price of the iPhone 4 fell low enough for carriers to sell it for $100 with a two-year contract. The iPhone 3GS cost nothing with a similar plan.

If carriers selling prepaid plans can get the price of older iPhones closer to the $200 mark, many people may find those deals attractive enough to switch from the contract plans offered by Verizon and AT&T. The shift will happen gradually, as current two-year contracts run out and consumers start looking for options. “It’s going to be a gradual trickle, rather than people just all of a sudden dumping their carrier and going over,” Henderek predicted.

As that option becomes more mainstream, it’s likely to put price pressure on AT&T and Verizon for both service and the devices.

What About Android?

Android phone manufacturers won’t be spared from changes caused by the prepaid iPhone. The impact will be felt in the high end of the Android market where phones cost anywhere from roughly $250 to $350. To compete with the iPhone, carriers will likely boost the number of high-end Android phones sold with prepaid plans. “You’re going to have a much wider range of devices available,” Henderek said. At the same time, older prepaid iPhones will put price pressure on the mid-range of the Android market.

Impact on AT&T, Verizon Wireless

How these changes will affect the market for the latest iPhones is more complicated.

It’s no secret that AT&T and Verizon would like to reduce the size of the average iPhone subsidy – now running $400 to $450, some $100 to $150 more than for a high-end Android smartphone.

If Americans suddenly decided they’d rather pay full price for an iPhone with no contract, then the carriers would be off the hook. However, they might also have to deal with a higher churn rate, since customers without contracts could switch to a competitor whenever they wanted. To hold onto customers, carriers would have to compete on the price of services, which could have an even greater impact on the bottom line than current iPhone subsidies.

To get a sense of the market impact of prepaid phones, U.S. carriers and wireless analysts are looking to the Iberian Peninsula, where Telefónica Spain and Vodafone Spain ended subsidies for all phones earlier this year. Orange, the third major carrier in Spain, is continuing to subsidize phones.

“It is too early to determine what affect the elimination of subsidies will have on the net add dynamics of the Spanish wireless industry, though if Orange gains meaningful share, it could pressure the decision of the other two,” William Power, wireless analyst for R.W. Baird, said in a note to clients, according to Barron’s.

It will take time for all of these effects to play out, but if Telefónica and Vodafone are successful in Spain, expect carriers around the world to take a long, hard look at paying smartphone subsidies.

Finally, if and when we get to a market where upgrading your smartphone costs $500 instead of $200 (or $200 instead of free), many people may suddenly be willing to hold onto their current devices another year or two. As the U.S. smartphone market becomes increasingly saturated, there may not be enough new smartphone customers to maintain growth rates.

Source: How Prepaid iPhones Will Remake the Mobile Market – Eventually

SEC Decides Telcos Must Give Shareholders a Vote On Net Neutrality

February 15th, 2012 02:31 admin View Comments

The Internet

suraj.sun writes with a link about a SEC decision that telecommunications companies must give shareholders an annual vote on wireless net-neutrality resolutions. “The U.S. Securities and Exchange Commission has told AT&T and other telecommunications companies they must include a resolution supporting wireless net-neutrality in annual shareholder votes. In a letter posted on the SEC website, the agency asserted that net neutrality — the idea that Internet service providers must treat traffic equally — has become a significant policy consideration and can no longer be excluded from shareholder ballots. AT&T, Verizon and Sprint Nextel must now grant shareholder requests for votes this year on resolutions that would support net neutrality. In view of the sustained public debate over the last several years concerning net neutrality and the Internet and the increasing recognition that the issue raises significant policy considerations, we do not believe that AT&T may omit the proposal from its proxy materials, the SEC said in the Feb. 10 letter.”

Source: SEC Decides Telcos Must Give Shareholders a Vote On Net Neutrality

Mobile Industry Rolls Out Game Rating System

November 30th, 2011 11:23 admin View Comments

Portables (Games)

alphadogg writes “Mobile telecom trade group CTIA and the Entertainment Software Rating Board will roll out a rating system for mobile applications similar to ratings on other electronic games, the groups announced Tuesday. Six mobile application storefronts will support the rating system and will roll out the ratings in the coming months, CTIA said. AT&T, Microsoft, Sprint Nextel, T-Mobile USA, U.S. Cellular and Verizon Wireless are the founding members of the rating system.” An opinion piece at Gamasutra points out that this initiative falls a bit flat without Apple or Google on board, since iOS and Android are so vital to the current mobile gaming industry. “In the long run, the ESRB/CTIA announcement could be another sign of shifting power in the gaming industry. Normally, the ESRB gets what it wants. But it has no leverage against Apple and Google.”

Source: Mobile Industry Rolls Out Game Rating System

Sprint To Launch 4G LTE Network By Middle Of 2012

October 9th, 2011 10:45 admin View Comments

Sprint iPhone 4S

If you’re wondering why iPhone 4S doesn’t support 4G LTE networks, then this news should give you one of the reasons.

Sprint – Apple’s new iPhone carrier partner in the US announced earlier in the week that it plans to accelerate the transition from WiMAX to 4G LTE, which is becoming a de facto standard for 4G. It plans to launch the 4G LTE network by the middle of 2012 and expects to complete the LTE network rollout by the end of 2013.

Sprint made the following announcement:

Sprint Nextel Corp plans to upgrade its network in time to launch high-speed wireless services by the middle of 2012 and expects to complete its upgrade by the end of 2013, a top executive for the company said on Friday. 

Engadget reports that Sprint aims to offer 4G LTE services to 125 million Americans by the end of 2012, and to more than 250 million Americans by the time the network build out is complete at the end of 2013.

AT&T had also revealed plans to accelerate the deployment of its 4G LTE network, which started this year and expected to be completed by 2013. Meanwhile, Verizon, which has the head start among the three iPhone carriers, when it comes to rollout of 4G LTE network, started rolling out its 4G LTE network in 2010 and also expects to complete the nationwide rollout only by the end of 2013.

Users have been critical of Apple for not introducing a 4G LTE iPhone at the Let’s Talk iPhone event, but as you can see the real problem is the lack of coverage.

We’re hearing that the earliest Apple can launch the 4G LTE iPhone is in the third quarter of 2012, which is a year from now, by which time 4G coverage should also be a lot better.

[Sprint via Engadget]

Source: Sprint To Launch 4G LTE Network By Middle Of 2012

Sprint Bets Big On the iPhone

October 3rd, 2011 10:33 admin View Comments

Businesses

hazytodd was one of several readers to tip news of Sprint Nextel’s plan to grab a piece of the iPhone action in order to halt the company’s downward slide. According to a Wall Street Journal report, Sprint has committed to buying 30.5 million iPhones over the next five years (summary of paywalled WSJ story), which at retail rates works out to roughly $20 billion. “To sell that many iPhones, Sprint would have to double its rolls of contract customers, convert all of them to the Apple device or a combination of the two.” A separate rumor at Boy Genius Report suggests the iPhone 5 may be a Sprint exclusive until sometime next year, with Verizon and AT&T getting the upgraded iPhone 4S until then. Apple is holding an event to unveil the new phone tomorrow.

Source: Sprint Bets Big On the iPhone

Sprint To Offer iPhone 5 With Unlimited Data Plan

September 9th, 2011 09:10 admin View Comments

Sprint iPhone

Sprint is widely speculated to also offer Apple’s iPhone 5 when it is launched in the next few weeks, along with AT&T and Verizon.

Bloomberg has just reported that Sprint will indeed be offering Apple’s iPhone 5 next month and will be offering iPhone customers an unlimited data plan to compete with AT&T and Verizon who have moved to tiered data plans.

Bloomberg reports:

Sprint Nextel Corp. (S) will offer Apple Inc. (AAPL)’s iPhone next month with unlimited data service plans to distinguish itself from rivals AT&T Inc. (T) and Verizon Wireless, according to people familiar with the matter. 

Sprint, the third-largest U.S. wireless carrier, plans to begin selling the device in mid-October under a deal with Apple for the next model, the iPhone 5, said the people, who wouldn’t be identified because the plans aren’t public. Becoming the country’s only operator to offer the device with unlimited data service for a flat fee may help Sprint draw customers from AT&T and Verizon Wireless, which already carry the phone, they said.

In the last few weeks, we’ve heard several rumors that Sprint might offer Apple’s iPhone 5 on it’s network. Sprint even had to send an internal memo to its employees telling them: “Do not Speculate about Sprint Getting the iPhone.â€, which was counter productive as it was perceived by some as a positive indication that Sprint is finally getting the iPhone.

Couple of days back a report also claimed that Sprint has started installing signal repeaters in Apple’s Retail stores, suggesting that it was gearing up for iPhone 5 launch. Bloomberg also reports that Sprint has postponed the launch of a new rival 4G phone to prepare for the iPhone 5 launch.

We expect Sprint to offer the $99 unlimited data and voice plans that it currently offers to smartphone users, also to iPhone customers. When Verizon first started offering Apple’s iPhone 4 earlier in the year, it had used the unlimited data plans as one of the reasons to switch to their network, but has since then moved to a tiered data plans. We hope that Sprint does not follow in Verizon and AT&T’s footsteps and continues to offer the unlimited data and voice plans.

Will you switch to Sprint if it offers iPhone 5 with the $99 unlimited data and voice plan? Let us know in the comments section below.

Source: Sprint To Offer iPhone 5 With Unlimited Data Plan

iPhone 5 Also Coming To T-Mobile USA?

August 24th, 2011 08:30 admin View Comments

Samsung Versus Apple

Yesterday, WSJ claimed that according to their sources, Sprint will offer Apple’s iPhone 5 when it is launched later this year, along with AT&T and Verizon.

MacTrast has just reported that one of their sources has tipped them that even T-Mobile USA – the fourth largest carrier in the U.S will also be offering Apple’s iPhone 5.

This means that with the iPhone 5 launch, Apple will offer iPhone on all four major carriers. AT&T was the exclusive iPhone carrier in the U.S until earlier this year, but lost its exclusivity when Apple launched the CDMA iPhone 4 for Verizon’s CDMA work.

MacTrast reports:

Sprint Nextel Corp. will begin selling the iPhone 5 in mid-October, people familiar with the matter said, closing a huge hole in the No. 3 U.S. carrier’s lineup and giving Apple Inc. another channel for selling its popular phone. 

The timing, however, indicates Apple’s new iPhone will hit the market later than expected and too late to contribute to sales in the company’s fiscal fourth quarter, which ends in September. Most observers had expected the device to arrive next month.

Ever since AT&T acquired T-Mobile USA, it has been widely speculated that it will get Apple’s iPhone 5 this year. Some reports have also claimed that Apple has been testing iPhone on T-Mobile USA’s network.

Couple of months back, T-Mobile had revealed that it already has over one million iPhone users on its network, even though iPhone 4, iPhone 3GS etc. work only on T-Mobile’s slow EDGE network as it is not compatible with 3G network. But if Apple does end up launching iPhone 5 on T-Mobile USA, it is quite likely that it will be compatible with its 3G network.

Will you switch to T-Mobile USA or Sprint from AT&T or Verizon if they really end up getting iPhone 5? Let us know in the comments.

[via MacTrast]

Source: iPhone 5 Also Coming To T-Mobile USA?

iPhone 5 Coming To Sprint This October?

August 23rd, 2011 08:54 admin View Comments

iPhone 5 Sprint

Wall Street Journal reports that Sprint, the third largest carrier in the U.S. will offer Apple’s iPhone 5 when it is launched later this year.

Wall Street Journal claims that according to their sources, Apple will launch iPhone 5 in mid-October and not early October as some reports had indicated.

WSJ reports:

Sprint Nextel Corp. will begin selling the iPhone 5 in mid-October, people familiar with the matter said, closing a huge hole in the No. 3 U.S. carrier’s lineup and giving Apple Inc. another channel for selling its popular phone.

The timing, however, indicates Apple’s new iPhone will hit the market later than expected and too late to contribute to sales in the company’s fiscal fourth quarter, which ends in September. Most observers had expected the device to arrive next month.

Earlier today, we had reported that app usage logs had revealed that Apple was testing a dual-mode iPhone 5 running iOS 5, this had raised questions whether it would also support Sprint’s CDMA network.

WSJ reports that Sprint will also offer iPhone 4, which we’re assuming will be the cheaper entry-level 8GB iPhone 4 that will be introduced along with the iPhone 5 launch.

Anyone waiting to switch to Spring from AT&T or Verizon? Let us know in the comments.

[via WSJ]

Source: iPhone 5 Coming To Sprint This October?

Sound-Based System Promises Chipless Phone Payment

June 20th, 2011 06:03 admin View Comments

Cellphones

CWmike writes “While near-field communication gradually emerges to turn mobile phones into payment devices, startup Naratte is introducing a system it claims can do roughly the same thing without adding a chip to the handset. On Monday, Naratte introduced Zoosh, a technology that lets phones exchange transaction information via inaudible sound waves. As with NFC, the phone user would just put the phone near to a point-of-sale terminal to redeem a coupon or make a purchase. NFC provides short-range radio communication between phones and point-of-sale devices so users can just tap or point their phones at the device to make a purchase. NFC uses specialized chips, which are already built into a few phones such as the Google Nexus S sold by Sprint Nextel, and are expected in more handsets in the future. Zoosh involves software that utilizes the speaker and microphone in a handset to send and receive audio signals with another device, similar to the way early modems exchange data by sending tones through the handsets of desk phones cradled in coupler devices. The company has posted a video that shows how it works. Between this and barcodes (which Starbucks says is working well already, thank you very much), is NFC already irrelevant?”

Source: Sound-Based System Promises Chipless Phone Payment

First Silicon Valley Internet Company Joins The Wall Street Single Letter Club

June 14th, 2011 06:48 admin View Comments

As we reported earlier, Pandora will start trading tomorrow on the New York Stock Exchange under the single letter symbol “P”. By doing so, it becomes the first Silicon Valley consumer internet company to join exclusive one-letter stock ticker symbol club.

That club was once reserved for the big blue-chip industrial companies: Chrysler (C), Ford (F), Sears (S), U.S. Steel (X), and Woolworth (Z). Of that list, only Ford and U.S. Steel remain. Chrysler was acquired by Daimler and lost the C to Citibank. Sears lost the S to Sprint Nextel. Woolworth went out of business.

Of course, there are already several tech companies in the single letter club. Agilent Technologies (A), Sprint Nextel (S), AT&T (T). But none are pure consumer-based internet companies.

Zillow, the real-estate website, applied for the NASDAQ ticker symbol Z in a filing last month. But, it hasn’t started trading yet. Pandora has beaten them in the race.

In the past, the NYSE has said it was holding M for Microsoft (MSFT) and I for Intel (INTC). M is Macy’s but I is open. There are no signs Microsoft or Intel are planning a change.

There was also talk at one time that Yahoo (YHOO) might take the Y spot, which is now at Alleghany Corporate. Go figure. Perhaps because it ends in Y.

What about possible stock symbols for Facebook, Twitter, or Groupon. F is already Ford, T is AT&T, and G is Genpact. In Groupon’s filing, they wrote they expect to apply for the symbol GRPN. Symbols don’t usually change unless there is an acquisition, or the company goes bust, so those companies would need to pick something else.

At one time, stock symbols were printed on the ticker tape and handwritten on transaction slips. So, shorter was faster. But, today stock symbols have less importance, but the single letter companies can still say they are part of a very exclusive club.

My grandfather used to try to fool people with a joke saying of the thousands and thousands of companies traded on the stock market, how many have a single letter as a ticker symbol? He always enjoyed when someone not thinking clearly might say 50 or 100. He would proudly tell them there can only be 26. With Pandora getting adding tomorrow, there will only be 20.

Source: First Silicon Valley Internet Company Joins The Wall Street Single Letter Club

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