If the keynote left you hungry, and the hands-on feedback just made you want even more, perhaps the latest batch of AT&T information will go some way to fill the spot. On the one hand there’s AT&T’s official press release, which confirms the new, higher $30/month 3G data charge. On the other, there’s a leaked internal memo fresh from carrier management, detailing the conditions of which existing customers can upgrade and confirming that there’ll be no pre-pay or SIM-free iPhone 3G.
Most obvious is that the new, low price points have been a result of Apple agreeing to allow the carriers to subsidise the iPhone, something it refused to allow with the first-generation model. AT&T make their money back by insisting on the contract - it’s going to be harder to get an unregistered iPhone now, as the activation is done in-store not when you get home - and increasing their line rental.
In fact, the extra $10 a month fee for unlimited data access works out to $240 over the course of the two-year contract. Which adds up, basically, to the original iPhone cost. Full press release and memo below.
AT&T Press Release:
AT&T to Offer Next-Generation iPhone on Its High-Performance 3G Network
Broadband Speed and New Capabilities Enhance Iconic mobile Device
$199 Starting Price Significantly Expands Mass Market Appeal
New Corporate E-Mail and Web Applications Move iPhone Further Into Business Market
San Antonio, Texas, June 9, 2008
AT&T Inc. (NYSE:T) today announced it will be the exclusive U.S. provider of the new iPhone 3G, details of which were outlined earlier today at Apple’s Worldwide Developer’s Conference in San Francisco.
Under the terms of a new agreement with Apple, AT&T remains the exclusive U.S. carrier of the
iPhone 3G, which will be available beginning July 11 at a starting price of $199 with a two-year contract. The iPhone 3G boasts several significant enhancements, including:
- 3G broadband wireless connectivity, which gives customers a home broadband-like speed experience when surfing the Internet, sharing files and using media-rich Web applications.
- Business-class capabilities, including e-mail, viewed on a large, touch-screen device and designed to meet the needs of companies of all sizes.
- The ability for developers, including AT&T, to create customized consumer and business applications using the Apple software developer’s kit (SDK).
Customers can get more information on the iPhone 3G at www.att.com/iphone.
AT&T expects that the iPhone 3G’s attractive pricing and rich set of features including business e-mail and other applications, combined with the broadband speeds of AT&T’s 3G network, will spur significant subscriber and revenue growth — particularly in wireless data — and strengthen AT&T’s wireless leadership and long-term growth profile.
“The iPhone 3G will take mobile communications and computing to a whole new level by combining a terrific user interface with a great experience accessing the Internet and subscribers’ favorite applications on our 3G wireless network at unsurpassed speeds,” said Ralph de la Vega, president and chief executive officer of AT&T Mobility. “Combine our high-performance 3G broadband wireless network, the new iPhone’s business-class capabilities and a starting price of $199, and I expect that we will continue to increase revenue per user and attract customers who spend the most on wireless. The device is built, and priced, to sell.”
AT&T will sell iPhone 3G in more than 2,200 company-owned retail stores and kiosks, as well as through its direct business sales teams.
New Agreement With Apple Reflects Significant Growth Opportunity
The new agreement between Apple and AT&T eliminates the revenue-sharing model under which AT&T shared a portion of monthly service revenue with Apple. Under the revised agreement, which is consistent with traditional equipment manufacturer-carrier arrangements, there is no revenue sharing and both
iPhone 3G models will be offered at attractive prices to broaden the market potential and accelerate subscriber volumes. The phones will be offered with a two-year contract and attractive data plans that are similar to those offered for other smartphones and PDAs. AT&T anticipates that these offers will drive increased sales volumes and revenues among high-quality, data-centric customers. Currently, less than 20 percent of AT&T’s postpaid subscribers have integrated devices capable of voice, Web and data applications. Based on the company’s experience, average monthly revenues per iPhone subscriber are nearly double the average of the company’s overall subscriber base.
- With a two-year contract, the price of an 8GB iPhone 3G will be $199; the 16GB model will be priced at $299.
- Unlimited iPhone 3G data plans for consumers will be available for $30 a month, in addition to voice plans starting at $39.99 a month.
- Unlimited 3G data plans for business users will be available for $45 a month, in addition to a voice plan.
In the near term, AT&T anticipates that the new agreement will likely result in some pressure on margins and earnings, reflecting the costs of subsidized device pricing, which, in turn, is expected to drive increased subscriber volumes. The company anticipates potential dilution to earnings per share (EPS) from this initiative in the $0.10 to $0.12 range this year and next, with a 2008 adjusted consolidated operating income margin of approximately 24 percent and a full-year 2008 wireless OIBDA margin in the 39-40 percent range. As recurring revenue streams build without any further revenue sharing required, AT&T expects the initiative to turn accretive in 2010.
AT&T’s 3G Wireless Network
The iPhone 3G harnesses the power of AT&T’s broad and powerful 3G mobile broadband network, which offers 3G mobile phones download speeds of up to 1.4 Mbps. AT&T’s 3G network is currently available in 280 leading U.S. metropolitan areas; by year-end, the company plans to offer 3G service in nearly 350 metro areas. Following the recent turndown of its TDMA network, the company is further enhancing its 3G network, with improved coverage quality made available through reallocated 850 MHz spectrum.AT&T’s 3G network is the best positioned among American carriers to grow in line with customer demand, evolving to next-generation speeds incrementally during the next few years. Between 2005 and the end of 2008, AT&T will have invested more than $20 billion in wireless network improvements and upgrades.
AT&T has the best global coverage of any provider, with voice-roaming available in more than 200 countries and data-roaming in more than 145 countries, including more 3G roaming than any other carrier.
In addition, the new iPhone 3G will operate in Wi-Fi mode through wireless modems in homes and offices, as well as public hot spots.
Marketing the iPhone to Businesses
iPhone 3G includes new business capabilities, including access to corporate e-mail and intranets, as well as the ability to certify mobile business applications to suit the needs of an array of industries, ranging from health care and real estate to higher education and financial services. Starting July 11, AT&T will begin marketing to its business customers, which includes all of the Fortune 1000. To prepare for the rollout, AT&T will be conducting extensive training among its thousands of enterprise and small business sales force and customer-support employees. AT&T is the world’s leading provider of corporate wireless e-mail solutions.“We’re anticipating significant demand from companies of all sizes based on the feedback we’ve received from the many corporate customers who have already purchased the first-generation iPhone, as well as from companies waiting for the new iPhone’s business applications,” said Ron Spears, group president, AT&T Global Business Services. “Businesses will benefit from all of the iPhone’s new features, as well as the ability to maximize productivity by using the combination of 3G broadband connectivity and customized applications.”
Through its work over the years with the developer community, AT&T has developed a robust catalog of hundreds of enterprise applications (www.att.com/choice). AT&T will work with Apple, using the SDK process, to enable many of these applications, which today operate on other AT&T-powered wireless devices, to also work on the iPhone. The growth of mobile applications represents a huge opportunity for companies to improve productivity through reduced overhead expenses, access to real-time information and higher levels of speed and efficiency.
Unleashing Innovative Applications With the SDK
AT&T is working closely with Apple to roll out several new and innovative applications that take advantage of the iPhone’s advanced capabilities. For example, AT&T is finalizing YELLOWPAGES.COM mobile for the iPhone, an innovative location-based application that combines local search with social networking capabilities, giving users the ability to search for information, share reviews and plan activities with friends, neighbors and co-workers. In addition, the company will work to certify many of its existing mobile applications for businesses, created in conjunction with third-party developers, for use on the iPhone.
AT&T Internal Memo:
AT&T and Apple today announced that the iPhone 3G will be available in the U.S on July 11. iPhone 3G combines three products into one small, lightweight device: a revolutionary mobile phone, a widescreen iPod, and it puts the Internet in your pocket with the best e-mail, web browsing, search and maps applications ever on a mobile phone.
The new version of the iPhone harnesses the power of AT&T’s broad and powerful 3G mobile broadband network, which offers 3G mobile phones download speeds of up to 1.4 Mbps.
Key Device Features:
Operates on Wi-Fi, EDGE, and 3G networks
New enterprise e-mail capability with support for Microsoft Exchange ActiveSync
New iPhone software development kit (SDK) to support new innovative applications
Note: 2G iPhone customers will be able to download the iPhone 2.0 software from iTunes which enables new features such as access to corporate e-mail via Microsoft ActiveSync.New Activation Process and BRE:
The iPhone 3G will be activated at point of sale when the device is purchased, in store. The BRE period will change from 14 days to 30 days and will require the device to be returned to place of purchase before service is cancelled.Pricing and Plans
Device Pricing:
$199 8GB and $299 16GB for new activations and qualified upgrades with 2-year agreement.Data Plans and Pricing:
The iPhone 3G will be activated on existing AT&T voice rate plans, but new data plans have been created for the 3G device.All iPhone 3G customers are required to have one of the new data plans and qualifying voice plan.
Customers intending to use the iPhone 3G for access to corporate e-mail, business applications, or access to corporate intranet are required to activate with Enterprise Data Plan for iPhone.
The 2G data rate plans will remain available for 2G devices until further notice.
IRU service discounts for both voice and data pans will apply to iPhone 3G, but not 2G iPhone.
CRU service discounts for voice and data will apply to both 2G and 3G, when on a qualifying data plan.
IRUs will not get a discount on device purchase for 2G or iPhone 3Gs.
Data Pricing will be as follows:
Consumer Data Plan (must be added to qualified voice plan):
$30 - Unlimited Data (E-mail/Web), includes Visual VoicemailEnterprise Data Plan (must be added to qualified voice plan):
$45 – Unlimited Data with personal and corporate e-mail, web, includes Visual VoicemailUpgrade Eligibility and Qualified Upgrade Pricing
Upgrade eligibility will be determined based on standard upgrade eligibility rules. Customers must be upgrade eligible to receive the qualified upgrade pricing. However, not all customers will be qualified upgrades. AT&T has not determined the price of the 3G device for non-qualified upgrades.All customers will be required to sign a 2-year agreement. There will not be a “no commitment” price for the iPhone 3G.
Note: When the 3G device launches, all active postpaid customers in good standing with a 2G iPhone will be eligible to receive the qualified upgrade pricing for a 3G device regardless of service tenure. (Customers that would not otherwise be eligible due to tenure will be made eligible at launch).
Activation Process
The new 3G device will be activated in store in both AT&T and Apple stores. Customers must accept AT&T and Apple Ts & Cs, sign a 2-year agreement, and select the data plan for the iPhone 3G before leaving the store. The current iTunes activation process will no longer be required for iPhone 3Gs, however a short tether process to unbrick the 3G device will be performed in all AT&T stores (tether cords will be provided). Apple stores will also perform this tether process, however in the event that a customer’s device is not tethered in the Apple store, their device will be inoperable until they get home and tether through iTunes. Prepaid and Pick Your Plan will not be allowed on the 3G device.The SSK has been modified to allow customers interested in the iPhone 3G to enter their information, select rate plans and data plans, and print a document that will allow COR reps to quickly access the customer’s information in OPUS and save time for data entry in the activation process.
Note: In the interim, 2G iPhones will continue to be activated via iTunes - BAU. This is also true for existing AT&T customers who receive a 2G device as a gift, hand-me-down, etc. and wish to activate the device. Existing AT&T customers who switch to the 2G iPhone must tether through the iTunes process to begin using the device.
Compensation
Because the 3G device will be activated in store, compensation for the 3G device will be BAU. COR reps will receive compensation for upgrades and new activations with a 2-year agreement.Purchase Limit
The device purchase limit will remain three (3) per customer for iPhone 3G in AT&T stores.Allocations
If allocations are required at launch, supply chain will allocate based on January-April sales rates applied on a store-by-store basis.Direct Fulfillment
The DF tool will be available at launch in COR for iPhone 3Gs. Customers will be required to pay for the device when the order is placed and the phone will be shipped to the store in the customer’s name.Existing Stock of 2G Devices
We will continue to sell 2G devices until stock is depleted.Return Policy
2G Devices
Customers who recently purchased a 2G iPhone may want to return their device once they hear about the 3G model and price point, but the new device will not be available immediately. Since the announcement and launch will be about 30 days apart, we could lose some customers who are within their BRE period and want to return their device before their 14 days expires and wait for the new 3G device. We must acknowledge and address their desire to get the best device for them.Here’s how AT&T will handle 2G iPhone returns:
If a customer purchased before 5/27, we will follow BAU processes – no device returns. However, all postpaid 2G iPhone customers in good standing are upgrade eligible, so these customers will qualify to upgrade to a 3G iPhone when it is available.
If a customer purchased on or after 5/27 (within the 14-day BRE period before the product announcement on 6/9), we will let them exchange their 2G iPhone for an iPhone 3G before August 1. This means that after we launch the 3G model they can return their 2G iPhone, pay the 10% restocking fee, and purchase a new iPhone 3G before August 1.
Note: This modified return policy applies only to customers who purchase from AT&T stores.3G Devices
The return policy for 3G is changing from 14 days to 30 days for both Apple and AT&T stores.To cancel service within the first 30 days, the customer must return their equipment to the place of purchase (no exceptions).
If the customer cancels service after 30 days, they will be charged the ETF. The customer is not required to return the device to cancel after 30 days.
Special Notes Regarding 2G DevicesAfter the iPhone 3G launches, activations of 2G iPhones for new AT&T customers can be performed in COR stores or in the existing iTunes tether process. COR reps will receive compensation for activations of new AT&T customers done in store.
2G upgrades will continue to be activated via the existing iTunes tether process.
Existing 2G data plans will remain available for 2G devices until further notice.
Note: 2G iPhones are out of stock in the DCs, and the Direct Fulfillment tool for 2G is turned off. 2G iPhones have been removed from the “myRewards” incentive catalog.Merchandising/Marketing
Current 2G iPhones should remain on device fixtures in store. Do not remove 2G demo devices until further notice.
3G demos will be pulled from stock when they arrive following BAU process for display devices.
Video loop content will be pushed to stores when it is available.
New docks and retrofit kits will be provided for existing iPhone fixtures.
The following merchandising elements will be in stores for launch:Rate brochure and display rate card
22 x 28 poster
Window banner
Duratrans - will be available for markets to order
Coming Soon: Posters and banners are TBD
TrainingDevice training, including features and functionality, will be available via My CSP by 6/13.
OPUS training will begin no later than 6/20 and will be delivered via the Learning Edge.
Launch preparedness training, including last minute details, will be conducted the week of launch (if needed) via RSM or Centra sessions.
Communications/My CSP
All iPhone-related communications, inclusive of training announcements, will be posted to My CSP. Login and access are via the “Everything iPhone 3G” ad space. Or search on either keyword “iZone” or keyword “iPhone 3G” to locate.Launch Plans
Support logistics for launch day will mirror last year’s iPhone launch:Letters will be sent to all landlords under VP/GM signature for advance notice of store hours, crowds expected, possible parking issues, etc.
Security will be provided for locations requesting armed police or unarmed, uniformed guards.
Manager checklists will be provided to support RSMs to set expectations and help them be prepared to complete all required actions.
Documents will be posted on iZone to let RSMs know when to expect delivery of launch support materials.
Job descriptions for key launch day functions will be provided for: Back Office Manager/Inventory Runner, Crowd Manager, Greeter, Product Demonstrator, and Security Support.***Confidential AT&T Information. For Internal Distribution Only.***
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