Rumor: Cingular To Give Away 18 Months of Service With Purchase Of iPhone

We’re not really buying this one, but apparently Jim Cramer, former hedge fund manager, director of TheStreet.com and host of CNBC’s “Mad Money,” is telling people that Cingular will give away 18 months of service with purchase of an iPhone.

Cramer said “AT&T is one of the most interesting stories coming out of the tech period. In its call, the company made it very clear that it’s going to use Apple’s iPhone to get customers from Verizon Wireless by giving away its service for a year and a half to those customers who buy the phone.”

Pardon us for being skeptics, but generally that’s not how cell phone companies work. Typically, as you well know, cell phone companies use discounts or rebates on phones to encourage customers to sign contracts at a specific rate plan level. For example: Sign at $39.99 for 2 years and you’ll qualify for whatever phone, etc. It doesn’t make any sense for AT&T to give away cell service outright to Verizon customers or anyone else. Then again, if AT&T has gone psychotic, perhaps this is a way to lure people away from Verizon. “Get an iPhone now, don’t pay for service until your Verizon contract is up.” That sounds insane to us.

So what did this guy really mean? We’re not sure, but we think it’s likely that AT&T will be introducing new bundles and discounts to go with the iPhone. Maybe they’ll bundle wired service and internet with the iPhone, or perhaps there will be deep discounts in service rather than the iPhone itself, but we doubt they’ll just give service away. Then again, we did not manage a hedge fund and we are not host of anything on CNBC. And AT&T is insane.—MEGHANN MARCO

The Street.com TV Recap [TheStreet]

Comments

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  1. humphrmi says:

    I can see what could happen: and you started to go there with your comment “or perhaps there will be deep discounts in service rather than the iPhone itself”

    The iPhone is going to come with a bunch of nifty tie-in services that AT&T has to provide. AT&T can give away the base service, which allows your phone to connect to the network, and then charge for the add-on services. These add-on services, like text messaging (per-use or packages) that they offer today, will become “must haves” for iPhone users and generate enough revenue to offset the free base service. Then in 18 months it all becomes a huge cash cow.

  2. AlteredBeast (blaming the OP one article at a time.) says:

    If they do have add-on services, they could pull the same thing they did with that text message hike.

    “You have a contract for the basic plan…which is just phone calls. All these other features, we can raise the price whenever we want. Of course, all these features are the only reason why you bought an iPhone! PWND!”

  3. AlteredBeast (blaming the OP one article at a time.) says:

    Okay…perhaps the customer service rep won’t say “pwnd”…

  4. methane says:

    Did anyone listen to Cingular’s call?

  5. MeOhMy says:

    You either get 18 months of super-basic phone service for free, or you get the first 18 months of your 72-month contract for free. Plus a $5000 ETF.

  6. Johnie says:

    The reason you can’t go with the standard business model for the iPhone is that Apple refuses to let service providers give discounts or rebates for the iPhone. They don’t want to commoditize their products and make it look cheap. This was something that Apple stated before the iPhone came out.

    Cingular can only give discounts on their service.

  7. wenhaver says:

    This would be about the only way I’d buy an iPhone/switch to Cingular. Sure, the phone is shiny. Cingular, however, I have serious doubts about (I’m with Verizon.. it’s the devil you know, you know?).

    But then again, I’m one of those weird people who mainly wants their phone to just make phone calls.

  8. Charles Duffy says:

    @wenhaver

    Verizon aren’t the greatest folks in the world either. I ditched them after they refused to provide a letter documenting the payment history of any customer with no late payments on their record.

    That’s right — Verizon will tell someone what your payment history with them is, if and only if that history is flawed. I spent two $%@#^ days on the phone with them trying to get what I needed to establish some credit history. (I was trying to buy a house, but had almost never borrowed money in my life; not much fun).

  9. varco says:

    I bet they’re just going to give away a free $10-20 per month data plan. Nobody’s going to want to use this without that feature. A $500 phone plus a 2-year $60-70/month contract will be a big turn-off to a lot of casual users. A data plan included in the $40/month contract, however, is a lot more palatable.

  10. wenhaver says:

    @ Charles Duffy – Oh, I hear you. Verizon is by no means a company that I’d shout from the rooftops about. But I’ve had them since they were PrimeCo, and haven’t seen a really compelling reason to switch. From what I’ve seen and heard, most companies are just as bad as they are.

    That said, my husband wants to try US Cellular next year when our contracts are up. If he wants to arse with switching us over, I’m cool with it.

  11. thethrizzle says:

    I agree with wenhaver, but here is the issue I have about switching, and this is case specific for me, I live in the woods and Verizon is the only that can reach out to us. iPhone or not, sorry Cingular.