Old iPhones May Ring Bells at Carriers

Used iPhones may be telecom carriers' new best friends.

As the market for new Apple iPhones exploded last quarter, so too did the market for used iPhones on sites like eBay, Amazon.com, Craigslist and Gazelle. That is according to a consumer survey recently conducted by Consumer Intelligence Research Partners. It estimates that, since the iPhone 4S launched in October, used models of Apple's earlier handsets accounted for 11% of total iPhone activations at U.S. carriers. Why are used iPhones great for carriers? Because carriers don't pay Apple a roughly $400 subsidy, as they do when a new iPhone is purchased. Yet customers bringing their own used device generally pay an activation fee (about $35), are required to sign up for a data plan (minimum $20-$30 a month) and still typically sign a contract. In other words, carriers get the benefits of signing a new, high-margin smartphone customer without the primary cost associated with doing so.