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U.S. Cellular: Why We Turned Down iPhone

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US CELLULAR IPHONE
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NEW YORK -- U.S. Cellular Corp., the country's sixth-largest cellphone company, on Friday said it had the opportunity to carry the iPhone but turned it down because the phone is too expensive.

It's the first U.S. carrier to acknowledge turning down the phone.

Consumers pay $200 for the base model of the iPhone 4S, but Apple charges carriers about $600 for it. Carriers count on making their money back in service fees over the life of the contract.

U.S. Cellular CEO Mary Dillon told analysts on an earnings conference call Friday that "the terms were unacceptable from a risk and profitability standpoint." She didn't provide any details, but said the added load the iPhone could have placed on its data network was not a big consideration.

Chicago-based U.S. Cellular has 5.9 million subscribers, a number that has been shrinking slowly over the past two and a half years. Only a quarter of its subscribers on contract-based plans have smartphones, compared with half at AT&T Inc.

Carriers see the ability to sell the iPhone as a crucial competitive advantage, though its high price means it's not an easy path to profits. Sprint started selling the phone last month and has said it will take two years for it to pay off.

AT&T was the exclusive U.S. carrier for Apple Inc.'s phone for three and a half years, until Verizon Wireless got it in February. Now, tiny Mississippi-based carrier C Spire Wireless is set to add it too.

T-Mobile USA, the fourth-largest carrier, has a data network that isn't compatible with the iPhone.

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