Carriers Willing to Live With High iPhone Subsidies for Now

Much as U.S. wireless carriers would like to reduce the high subsidies they pay on Apple’s iPhone, there’s little chance that they’ll do so anytime soon. Why? They’re far too worried about what would happen to their customer-retention rates if they did so.

“We continue to believe carriers would lower iPhone subsidies if they collectively felt that competing devices would drive the same economics as iPhones,” says BMO Capital’s Keith Bachman. But right now, they don’t. And with no other hero handset to mitigate the risks of the spike in customer churn that might follow a reduction in iPhone subsidy, we’re unlikely to see one in the near term.