Telephonemania, Day 2

Your interesting 3G iPhone tidbit of the day: Eric Zeman thinks the rumors that AT&T will subsidize it like a normal cell phone are wrong.

Roger Entner, analyst with Nielsen, disagrees.

He told RCR News, "There's no need to upgrade the device's capabilities and lower its cost at the same time. AT&T Mobility first will have to see the effect that a 3G iPhone will have on its HSDPA network. Right now, that HSDPA service is robust, with only a few million laptops riding on it. Add a few million iPhone users, who are heavy users of the Internet, and it could be like shaking a skyscraper. AT&T Mobility is not just selling a device, it's selling a service. AT&T Mobility doesn't want complaints about its service. That would spell out no abrupt price subsidy for the device." In other words, AT&T will keep the price high to prevent too many people from signing up.

But this raises another issue. Remember last week's rumors that there may be limited supplies of the iPhone at launch? If AT&T is indeed worried about the veracity of its 3G network, Entner's comments make perfect sense. AT&T boosted the capabilities of its 2.5G EDGE network mere weeks before the iPhone's launch on June 29, 2007. It is doing about the same thing this year, completing a necessary upgrade to its 3G network just ahead of the supposed launch of the 3G iPhone. The timing (two years in a row) is awfully curious.

Even if AT&T isn't worried about its network, it's hard for me to see why they should subsidize it, at least initially. The iPhone has already upped its subscriber base, and you can expect a lot more people to turn over this summer. How many customers want to pay close to $100 for a phone and data plan, but will refuse to pony up for a coveted phone?