ATT to Offer Half-Priced iPhone

Rumor has it that AT&T will underwrite $200 of the handset's cost
By Katherine Thompson,  Newser Staff
Posted Apr 30, 2008 11:43 AM CDT
The new version of the iPhone, the 3G, will be a few millimeters slimmer than the previous generation, and carry a GPS chip.   (AP Photo/Paul Sakuma, File)
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(Newser) – The new iPhone will have not only a GPS chip and a slimmer silhouette, but a much lower price tag than its predecessor, Fortune reports. AT&T will subsidize as much as half the cost of each phone bought along with a 2-year contract, a source tells Fortune, bringing the price to an industry-competitive $199. The new phones would be locked to prevent customers from using them with rival carriers.

AT&T would quickly recoup the $200 it fronts for each handset, as iPhone users on average run up $100 monthly bills—twice what other customers generally pay. But that's not free and clear profit: unlike other phone makers, Apple charges AT&T a percentage of its earnings from iPhone contracts. The new model is expected around June 27.