Here’s why you’ll see free 3G iPhones, er these low prices (updated)

3giphone_2OK, this is my last iPhone post for the day. I’m listening live to the AT&T Investor Call that explains AT&T’s press release on the 3G iPhone. [You can too as it’s open to all via web streaming]. Bottom line: Apple and AT&T have restructured their revenue agreements with the iPhone platform.

Going forward from July 11th, Apple will receive income on the hardware and no longer receive any income from the AT&T customer plans. All voice and data revenues will go right to AT&T. Why do you care (unless you’re an investor in one or both of the companies… which I am not)? Because this is a very traditional model here in the U.S. and allows AT&T to subsidize the hardware. Typically, that subsidized amount is $200, which just happens to be the price of the new, entry-level 3G iPhone. Of course, AT&T will likely charge you an ETF or Early Termination Fee to recoup the subsidy if you bail on the contract… I’d guess that once demand for $199 and $299 iPhones wane, AT&T will use the subsidy method to spur demand… and revenues for data and voice.

Update: it’s clear that the record heat in the Northeast has fried my brain. These must be the subsidized prices, as several commenters pointed out. So AT&T is giving Apple some amount per phone and betting that they’ll make it up (and more) in voice and data services. I’m going to rest in a tub of ice now.

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