Friday, November 04, 2011, 01:18 pm PT (04:18 pm ET)
US Cellular rejected iPhone over upfront expenseUS Cellular, the sixth largest mobile carrier in the country, told analysts it opted against carrying Apple's iPhone because of its upfront expense, describing the investment as "unacceptable from a risk and profitability standpoint."
According to a report by FierceWireless US Cellular chief executive Marry Dillon explained during the company's quarterly earnings call that its decision not to carry the iPhone was not related to any concerns that its network couldn't stand up to the data demand of the smartphone, and added that the company remains open to carrying the iPhone in the future.
This year, Apple has added two major US carriers, Verizon Wireless (102 million subscribers) in February and Sprint (51 million subscribers) last month with the release of iPhone 4S, which join AT&T's 97 million subscribers. It also added its first smaller, regional carrier in the US, C Spire (700,000 subscribers), which will begin carrying iPhone 4 and 4S next Friday.
Other significant carriers who don't carry the iPhone in the US include T-Mobile (34 million subscribers) and fourth place MetroPCS (9 million subscribers). Next largest US Cellular and Cricket Wireless both have around 6 million subscribers.
Tough terms for iPhone
Apple has leveraged the unique features of its iPhone, and the resulting demand from consumers for the product, to push carriers to support exclusive features (such as Visual Voicemail) and higher subsidies, an expense that makes iPhones more affordable to users and therefore more attractive.
Apple has also required its carrier partners to stop loading phones with junkware apps and prevents them from adding layers of software that would delay the release of iOS updates, two issues that have plagued the users of alternative mobile platforms.
The company also maintains exclusive control over app, music and video sales on the iPhone via iTunes, cutting into the revenues carriers formerly sought to own through monthly charges for rented games, ringtones, video clips and other added service fees.
Coming around to iPhone
Apple partnered with the fledgling AT&T in 2007 to release iPhone in the US, helping to launch the new brand of what was formerly Cingular. The new phone dramatically increased AT&T's subscriber numbers and reduced churn at a time when the company's GSM/EDGE network was several steps behind Verizon Wireless in terms of modern 3G coverage.
Verizon publicly announced that it had initially rejected Apple as a launch partner, citing its iPhone terms as unacceptable. In late 2009, Verizon bet heavily on Android models as its RIM BlackBerry smartphones began to lose their luster at the failed launch of RIM's iPhone-like Storm at the end of 2008.
Verizon mocked the iPhone in 2009 with an iDon't ad campaign and continued to assail iPhone 4 through the middle of 2010 in ads that promoted Motorola Droid X.
However, Android as a platform couldn't match the iPhone in attracting valuable customers to Verizon's network. As a result, Verizon embraced the iPad at the end of 2010 and added a CDMA version of iPhone 4 at the beginning of 2011. As a result, the company announced its largest launch ever.
Third and fourth place US carriers Sprint and T-Mobile have similarly noted to investors that their inability to carry the iPhone were their top reasons for losing customers to rival carriers. After Sprint joined Apple as a carrier, it too announced its most successful smartphone launch ever.
T-Mobile is unable to carry iPhone 4S because it uses non-standard AWS-band UMTS service, due to limited bandwidth in the US to split among every carrier. The carrier has since announced a series of Android models it hopes will help it to reach new subscribers over the holiday season, the first ever for Apple on multiple US carriers.
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