ATandT Extends iPhone Exclusivity Deal
In return for a $300 subsidy it is paying to Apple for each iPhone sold, ATandT has extended its exclusive carrier deal with Apple until 2010. According to the report it was set to expire in 2009, although rumors and reports at the time of the iPhone launch speculated the Apple/ATandT deal was for as long as five years.
The money it's losing through subsidizing the iPhone is worth it for ATandT, CEO Randall Stephenson told the newspaper, as the iPhone becomes central to the transformation of the company into a 21st century wireless force to be reckoned with, with global reach and loyal customers.
"The iPhone has repositioned ATandT as the premier wireless brand in the world," Stephenson told the newspaper. "We're all about wireless."
USA Today reports: "In exchange for its payout, ATandT got a year extension, into 2010, on its exclusive distribution deal with Apple, people familiar with the matter say. Sources asked to not be named because the terms are confidential. Under the original iPhone contract, Apple had the right to offer the device to other carriers beginning in 2009. If Apple exercised that clause, ATandT would have lost one of its biggest points of leverage with customersand#8212;exclusive access to the iPhone."
The subsidy is meant to bring the price down to one that the mainstream consumer can affordand#8212;$199. ATandT has said it will eventually begin selling unsubsidized iPhones without the current two-year contract required on iPhone purchases, but details have not been released.