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How much will the Verizon iPhone switch cost? For Apple? For consumers?

So let’s assume that after all of this time, Apple is indeed going to end its US exclusivity and put the iPhone on Verizon.

OK! $199 Verizon iPhone 4!  Sign me up!

Not so fast.  That exclusivity comes at a price.  AT&T is subsidizing more of the iPhone 4, than it is, say for a Samsung Captivate Android device. 

Why?  Exclusivity.  

What is AT&T’s part in this whole game?  They get exclusive rights to the iPhone and in return, they subsidize more of it than they would otherwise.  More than they do for any other phone running any other OS or any other hardware manufacturer.  But having a monopoly on the iPhone in the US is worth it.  They get smartphone customers that would (will?) go elsewhere if the iPhone is carried on other networks.

When the monopoly ends, so does that special AT&T subsidy.  Is it $50/phone?  $100?  In France, a totally open iPhone 4 costs $800 vs. $600 in the US, but Apple charges Europeans more (taxes, etc).  

So, when the monopoly breaks, either consumers pay more for the iPhone (to make up for the lost AT&T subsidy) or Apple gets less money for every iPhone sold in the US.  Will Verizon charge $250 for an iPhone?  $300?

It wouldn’t be hard to see Apple dropping its carrier price on the iPhone 4 to make up for the special subsidy, knowing they are going to be selling ooodles more when Verizon signs up.  More.

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Avatar for Seth Weintraub Seth Weintraub

Publisher and Editorial Director of the 9to5/Electrek sites.

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