Small Market Phone Companies to Sell Discounted iPhones

A small group of regional cell phone companies plan to sell the iPhone to their respective customers for less than the bigger, nationwide carriers like AT&T and Verizon. The group of regional carriers planning to sell the iPhone includes NTelos, Appalachian Wireless, Alaska Communications, Matanuska Telephone Association and CGI.

The group announced the move to the Associated Press on Wednesday and stated they plan to start selling the iPhones on April 20. The selling price for the basic iPhone 4S would start at $150 with a two-year agreement included. That’s about $49 less than AT&T, Sprint and Verizon.

C Spire Wireless, a Mississippi-based regional phone company, began selling discounted iPhones last year. However, not all companies think it’s a smart move to sell the iPhone at such a discounted rate. U.S. Cellular, another regional carrier, doesn’t carry the iPhone because it’s too expensive.

The AP reports the iPhone carries a wholesale sticker price of about $600. So, these regional cell phone carriers shoulder quite a large upfront cost when selling the devices for $150. However, these regional companies hope the minimum two-years of service from the customer pays off the upfront cost of the iPhone in the long run. Stebbins Chandor, CFO of Ntelos, said a discounted iPhone purchased during the initial launch would begin paying itself off by 2014.

Regional carriers like Ntelos have a need for a powerhouse device like the iPhone in their smartphone lineup. James Hyde, CEO of Ntelos, said the iPhone filled a gap in the company’s smartphone lineup to help them compete with larger carriers. Ntelos lost 5,000 subscribers to its contract-based cell phone plans in the first quarter alone, and the company feels discounted iPhones will help build upon its current base of 421,000 subscribers located in and around Virginia.