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Apple iPhone 3G revenue sharing dropped by AT&T

AT&T is to stop sharing monthly revenue from Apple iPhone customers with Apple. Instead AT&T will simply purchase Apple iPhone handsets from Apple, and then sell them on to their customers at a low cost. This move from monthly revenue sharing will initially cost AT&T, however the company has stated it will be beneficial to them in the long run due to increased subscribers.

Issuing a press release, AT&T state they expect to reduce earnings by ten to twelve cents a share in each of the next two years, and said this will add to profits in 2010. Last year AT&T struck an exclusive deal with Apple to be the exclusive carrier in the States, and as an unusual move for the industry the revenue sharing deal was included.

However as of now, that exclusivity is gone, AT&T is now free to subsidise the Apple iPhone 3G and potentially appear to prospective new customers who want a new smartphone by were shying away because of price.

On a two year contract with AT&T an 8GB iPhone 3G will cost $199.00 while the 16GB iPhone 3G will cost $299.00, when taken in comparison with late year’s iPhone prices of 4GB debuted at $499.00 and 8GB at $599.00 both on a two year contract, we can see the new Apple iPhone 3G is being offered at a greatly reduced price.

To plan for the release of the new Apple iPhone 3G AT&T upgraded its own 3G network along with announcing a price increase for unlimited data for iPhone users, whereby customers will pay $30.00 per month rather than the original iPhone plan of $20.00, while business users will pay $45.00 per month.

This new iPhone strategy brings a new string to the bow for AT&T as competition within the mobile arena ever becomes more difficult. And although AT&T is still the largest wireless carrier within the US once Verizon acquire Alltel, AT&T will drop to second largest. As for that competition, on the same day Apple announced the iPhone 3G, Samsung officially unveiled their Omnia touch-navigated smartphone.

Source — informationweek