AT&T Wants to Keep iPhone Exclusivity Until 2011

From PC World: AT&T wants to remain the exclusive U.S. iPhone provider until 2011 and is pressuring Apple to extend their business arrangement that is set to expire in 2010, according to reports. Apple is tight-lipped about the talks and only will comment it has "a great relationship with AT&T," according to the source of the story The Wall Street Journal.

It's not hard to understand why AT&T wants to hold onto the iPhone. Apple says it has sold 17 million devices since introducing the iPhone in 2007, and the popularity of Apple's iPhone doesn't show any signs of slowing. In the second half of 2008, AT&T says it nabbed 4.3 million iPhone subscribers, 40 percent of whom were new to AT&T. With the iPhone OS 3.0 launching this summer, and rumors swirling about new iPhone models, AT&T may see another influx of new customers before the fall.

However, those strong sales numbers have come at a price. We've discussed before how AT&T may be paying Apple as much as $425 for every device sold to keep the iPhone's price within the reach of most customers. In its report, the WSJ is reporting that AT&T has shelled out $1.3 billion to discount the iPhone for new customers. Talk about an Apple Tax.

But from AT&T's point of view, the privilege to sell the iPhone is worth it. The big telecoms are moving away from landline service and looking to wireless as the industry's future. The WSJ says that AT&T has already spent $18.8 billion in purchasing wireless spectrum and smaller wireless companies as it prepares for the coming years. AT&T may also cut out the requirement that you be an AT&T landline customer to qualify for discounts on TV or broadband service.

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