U.S. Cellular said no to the iPhone due to economic risk

Fri, Nov 4, 2011


C Spire Wireless turned quite a few heads when it recently announced that it would become the fourth carrier to sell the iPhone in the US, joining AT&T, Verizon and of course Sprint. Apple’s partnership with C Spire Wireless was surprising to the extent that the carrier only boasts about 800,000 carriers, yet made sense given that getting the iPhone up and running on their CDMA network requires no significant hardware changes from what they use on Sprint and Verizon.

The deal underlies Apple’s interest in getting the iPhone out into as many markets as possible. And while Sprint is willing to make a “bet the company” type of deal to carry the iPhone, not every carrier wants the iPhone that badly.

FierceWireless is reporting that Apple made overtures to the Chicago-based US Cellular to strike an iPhone deal only to have the carrier refuse on account of non-favorable business terms from Apple.

U.S. Cellular turned down Apple’s iPhone because it did not make sense for the company economically, CEO Mary Dillon said on the company’s third-quarter earnings conference call.

Dillon said that the carrier had the opportunity to sell the iPhone but that Apple’s “terms were unacceptable from a risk and profitability standpoint.” Dillon added that the potential strain on the company’s network was not a factor in the decision, and that U.S. Cellular remains open to carrying the iPhone in the future.

With over 6 million subscribers, U.S. Cellular is the 6th largest mobile carrier in the country. Baseball fans might recognize the name on account of it being the stadium where the Chicago White Sox play, though it’s still famously known as Comiskey Park.

US Celluar CEO Mary Dillion didn’t expand on why the company refused Apple’s iPhone terms, but Sprint CEO Dan Hesse recently stated that the subsidy they pay to Apple for the iPhone is $200 more than what it pays for Android devices. Further, Hesse has said that Sprint won’t recoup its investment in the iPhone until 2014. Consequently, it stands to reason that US Cellular simply wasn’t willing to make the type of sacrifice/gamble Sprint was arguably forced into on account of its need to compete with AT&T and Verizon.

And US Cellular isn’t the only carrier not entranced by the iPhone. Earlier this week Telefonica, a Czech based carrier, said it wouldn’t be carrying the iPhone 4S after failing to reach a mutually acceptable deal with Apple.

It’s interesting to see how various carriers see the iPhone. Whereas some will jump through hoops to carry the device (i.e Sprint promising to purchase 30.5 million units) others aren’t willing to pay the high subsidies Apple charges.


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