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US Cellular turned down iPhone over financial risk

updated 02:40 pm EDT, Fri November 4, 2011

Carrier might still pick up iPhone in future

US Cellular was offered a chance to sell the iPhone, but decided to turn it down, according to CEO Mary Dillon. The executive revealed the information during a third-quarter results call. She elaborated that Apple's terms were "unacceptable from a risk and profitability standpoint," and claimed that network capacity was not an issue. US Cellular is open to selling the iPhone in the future, Dillon added.

Apple is infamous for imposing strict terms on iPhone carrier partners. Most recently Sprint disclosed that it's paying about 40 percent more than usual for iPhone customers, and that its deal with Apple will last for four years, only turning a profit in 2014. The agreement may already be proving beneficial though, as it has allegedly reversed a tide of subscriber loss to AT&T and Verizon.

Had it agreed to a contract, US Cellular would've only become the country's second regional iPhone carrier. The first was C Spire, which announced plans somewhat unexpectedly. There are now four US iPhone carriers in all, up from just one as little as a year ago.



By Electronista Staff
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  1. msuper69

    Professional Poster

    Joined: Jan 2000

    +12

    Risk?

    Good God man where have these idiots been these past few years? The iPhone is a runaway success and all the other carriers are happy as clams offering the iPhone.

  1. AlenShapiro

    Fresh-Faced Recruit

    Joined: Apr 2000

    +6

    Just like the nursery rhyme...

    Mary Mary, quite contrary,
    How does you business grow?
    With iPhones here not iPhones there
    The Carriers all in a row.

  1. aduffbrew

    Fresh-Faced Recruit

    Joined: Sep 2009

    -8

    IPhone: a longterm investment

    While carriers aren't hurt by iPhone's success, you might be surprised to learn their profit margins. Sprint's on the hook for $20 billion not to turn a profit for 3 years?! Apple's "revenue sharing" and other restrictive deals go beyond anything before seen in the industry. It had driven up the cost of the handset and the service that goes along with it. I love my iPhone but Apple knows it's peddling tech's version of crack.

  1. vasic

    Fresh-Faced Recruit

    Joined: May 2005

    +9

    But one that pays off big time

    If you only isolate the iPhone and what it can do for revenues and profits, that is surely the case. But the more important thing is, what Sprint is already seeing, that iPhone reverses subscriber losses. Instead of losing customers, your numbers are growing, and the ones you're signing up are premium ones, with a very, very healthy loyalty. A carrier is a dumb pipe. Differentiation was (before iPhone) mostly on price and phones, and their features. With iPhone that field is level. If the dumb pipe is good enough and competitively priced, iPhone customer will remain loyal for decades.

    Good luck to US Cellular without the iPhone, but if any of their regional competitors also jump onto the iPhone bandwagon, they may not have enough subscribers to sustain their business by the time they're ready to think about the iPhone again.

  1. ElectroTech

    Fresh-Faced Recruit

    Joined: Nov 2008

    +3

    US cellular ???

    Has anyone heard of them before? I guess that they are one of the numerous upstart companies trying to live on the margin.

  1. bjojade

    Fresh-Faced Recruit

    Joined: Jun 2007

    +5

    The deal wasn't good enough yet...

    Note that they are still open to get the iPhone. This is a gambling maneuver they are using to get a better deal from Apple. It's true that Apple takes a bigger chunk of the profits from every customer versus other phones. Carriers would much rather people select Android phones as they make much more profit. Resellers also make a ton more selling an Android phone.

    But, customers WANT the iPhone. As other carriers in their markets can start offering iPhones, they will see mass deflections that direction. I know in this area, the local carrier has far superior coverage and customer service, but no iPhone. The number of people that switched to AT&T JUST for the iPhone is staggering. And AT&T costs more and has extremely spotty coverage in the area. To say NO to the iPhone will cost you customers as a carrier, no questions asked.

    The iPhone is so totally different than any other phone. It was rare before that people would switch carriers because one offered a specific phone. The last time I remember anything even remotely close was when the RAZR first came out. People wanted that phone, and a few may have switched to the carrier that first got it, but in reality, people stuck with who they had. Not so with the iPhone. Not so.

  1. slapppy

    Fresh-Faced Recruit

    Joined: Mar 2008

    +2

    Get paid

    Maye they want the "we'll pay you to sell our c***" deal that certain Apple competitors are experts on.

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