General Communications Inc. (NASDAQ: GNCMA), a wireless carrier in Alaska, has added the iPhone from Apple Inc. (NASDAQ: AAPL) to its roster of available phones. The interesting thing about this is that the company is selling the 16-Gbyte version of the iPhone 4S for about $50 less than competitor AT&T Inc. (NYSE: T). Verizon Wireless, a joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone Group plc (NASDAQ: VOD), does not offer service in Alaska.
General Communications is also undercutting AT&T’s voice and data plan pricing. The company is offering 3-Gbytes of data and unlimited voice minutes plus unlimited texting for $70/month with a 2-year contract. The 16-Gbyte iPhone 4S costs $150. The similar AT&T plan for voice and texting costs $70/month plus $30/month for 3 Gbytes of data. AT&T’s price for the same iPhone is $200.
Another regional wireless carrier, nTelos Wireless (NASDAQ: NTLS), which provides wireless services in Virginia, West Virginia, and surrounding areas, also announced today similar deal, with identical pricing for the iPhone 4S, and an unlimited data plan for $70/month with 600 voice minutes or $100/month for unlimited voice minutes.
One of two things could be happening here. General Communications and nTelos could be following the Sprint Nextel Corp. (NYSE: S) model of heavily subsidizing the iPhone and pricing the data plan substantially lower than its competitor in order to lure subscribers. Or the wireless carriers have struck a breakthrough deal with Apple.
Both General Communications and nTelos are also offering an iPhone 4 for $50, again $50 less than the best price at AT&T. Could Apple be testing the market for a low-end iPhone? Or is the company just getting rid of excess inventory in advance of its expected launch of an iPhone 5?
The former seems like the best bet. Apple does not have competitor to low-cost Android phones and has shown no interest in developing one. But if it can sell older models for competitive prices, that’s a bonus for the company. Besides, it’s hard to believe that either General Communications or nTelos would be willing or able to eat the additional $50/phone for a sustained period of time.