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U.S. Cellular: iPhone buy-in price too steep

According to U.S. Cellular’s CEO Mary Dillon, Apple’s iPhone could have been available on five carriers this fall instead of just four. Fierce Wireless first reported that Dillon exposed during the carrier’s quarterly earnings call that her company rebuffed the iPhone because Apple’s “terms were unacceptable form a risk and profitability standpoint”.

Apple’s demands from its carrier partners is not a surprise. When the information about Sprint getting the iPhone aboard the latest hardware refresh came out, it also spread out that the investment vows that Apple required of Sprint would be very considerable. Sprint said, in its recent earnings call that its investment was worth “every penny”. The total cost of that investment would be $7 billion, because the carrier would be paying 40 percent more than the industry average to finance each device sold to customers, says Reuters. Sprint had to perpetrate to a large minimum order of iPhone devices, either it could sell those onto consumers or not, and likely won’t reap the credits of the deal until 2015.

Earlier this week,  Telefonica, one of the Apple’s Czech carrier partners, took the decision to drop the 4S and including all iPhone models because of Apple’s terms. It is apparent that it is not a price of just, despite the fact that Apple continues to break records for device sales. U.S. Cellular positions the sixth place and exists as the sixth largest network operator in the U.S. It serves around 6.1 million customers, particularly this covers people in the Pacific Northwest, Midwest and New England. It utilizes CDMA technology for its network. This technology is something the latest models iPhones support since the introduction of the Verizon iPhone 4 early this year.

C Spire consists of customers which covers the U.S south and has approximately 900,000 subscribers. In spite of getting more customers than C Spire, U.S. Cellular seems to be not interested in making the same investment in Apple that the smaller carrier announced in October. C Spire starts the sale of the iPhone on Nov. 11.

Apple has a track record that allows it to make demands of carrier partners that many of its competitors could not, and even though it’s losing some potential subscribers by not being flexible enough to satisfy everyone, it has the luxury of being able to do so. Apple was capable of making an estimated 52 percent of the mobile phone industry’s profits, though it has only 4.2 percent market share. With these numbers, it can render to leave some deals on the table. Also, U.S. Cellular could come back to that table too. According to Dillon, the company remains open to carrying the iPhone if the deal makes more sense in the future.

Source: gigaom

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