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A Prepaid iPhone in the Works?

Posted by: Olga Kharif on January 30, 2007

We’ve all heard this rumor in the past few weeks: That Apple’s iPhone would come with a two-year wireless service contract from Cingular, recently rebranded as AT&T. Now, my contacts at AT&T deny any such goings-on with the company’s post-paid plans. What I am wondering about is whether or not AT&T and Apple might be working on a prepaid iPhone.

Here’s my idea: I believe that the iPhone, which will retail for $499 or $599, depending on how much memory you want, could prove instrumental in expanding the prepaid option’s use.

Here’s why: Think of your typical iPod fan. Much of the iPod user base is young — in fact, it fits into the prepaid demographics to the dot. Surveys show that teens are super-excited about the iPhone. But the fact is, while some parents may be willing to buy their kid a cool new music or a video player for Christmas, very few, I suspect, would splurge on a $50 monthly calling plan as well. So offering an iPhone prepaid option for this demographics would make perfect sense.

In addition, some of the iPhone’s first adopters will likely prove to be iPod fans who view the new device as a music and video player, first and foremost. For them, its calling capabilities will be secondary. This group of people might not be interested in paying high wireless bills, either.

What do you think, would a prepaid iPhone make sense?

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Reader Comments


January 31, 2007 03:50 AM

But aren't the $499 and $599 prices so widely quoted in the media actually the subsidized prices based on subscribers taking a postpaid contract?

If so, the price of the device on a prepaid subscription would likely be much higher since operators don't have the guaranteed revenue stream enabling an operator to at least be able to claw back its device subsidy.


January 31, 2007 10:23 AM

Makes perfect sense. Especially if prepaid units can be purchased at iTunes.


January 31, 2007 10:28 AM

it's only 499/599 because it comes with a long contract to suck your money(24x50$ is 1200$'s worth of service you sign up for).

guesses by people in touch with mobile business have put the non-subsidized cost somewhere around 1000$+.

so, no, it would not make sense to sell it for 499 without latching on a contract.


January 31, 2007 11:57 AM

It does make sense, so it makes me a little doubtful that it will happen. Some mac sites, however, have referred to a rumour/theory that ATT will deeply discount the service plans *because* Apple won't let them subsidize the handset. If this is true, then the prepaid option fits in well -- ATT will be able to charge a premium for these prepaid minutes/kbytes/messages above and beyond what they charge under other prepaid options, just because it's cool.

I just don't have much enthusiasm for prepaid in the US in general. We've had it soooo easy with the big buckets of free minutes (ask any European about this) that the economics of prepaid just don't hang together as well as in other countries. If I can get thousands of free minutes (yeah, I'm including free nights and weekends here) a month, with a good chunk of them at peak hours, for say $50/month, paying $0.10 to $0.50 per call only makes sense for someone who doesn't use the phone!

Thomas Ponte

February 2, 2007 01:03 PM

I think a prepaid plan would be awesome. Tmobile has a gold plan on Prepay after you spend 100 dollars any minutes you put on it after that don't expire for a year. I would stay with tmobile for that reason alone. I can get any phone I want as long as I pay for it. I really like the new apple iphone though I was thinking of gettting a ipod 30gb but I would wait if there is going to be a prepay plan for the iphone. If anything, young users will be seen with it out and would inspire people to buy them even to use as an mp3 player.

Tony Tiburcio

March 13, 2007 03:23 PM

Tmobile would be stupid not to jump on this idea.. tho.. this might kill the sidekick 3 for them.

Mark Denchy

March 21, 2007 03:53 PM

Remember, Apple is famous for shaking up the industry with innovation...I think they might just surprise everyone and re-define how we buy phone service. I'm betting on a pre-paid option with a premium offering similar to a standard "term" contract.


April 16, 2007 03:47 PM

i totally agree that the iPhone should be on a prepaid plan. I mean alot of people hate the people HATE but I mean hate the contract. So that's why I think it would be very unfair not to be available in prepaid.


May 15, 2007 05:50 PM

I completely agree that the iPhone should be on a prepaid plan. I mean come on, who wants to pay for two whole years? That's over 700 days of spending money!

Sure the iPhone is cool and awesome, but is it really worth paying more for you paid the when you first bought it?
Think about it, because I'm planning on getting one myself, but not if it's on a contract.


July 1, 2007 11:05 PM

I have a tracfone right now. I'd gladly switch to an iPhone if it was offered for $10.00 per month.


October 3, 2007 07:30 AM

Actually, it's a really good idea. The actual practice, though, is only to offer it if the credit check doesn't pan out. It's a shame, really, because I would choose that as my first option. I don't like being stuck in a contract AT ALL, and doing it that way is so last century. I really wonder why this is the only country that regulates mobile phone usage into the ground like this...


October 28, 2007 02:12 PM

I think apple will make a furtune with the prepaid plan,90% of the people that owns a phone use prepaid plans such as myself,

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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