Comcast & Charter expecting to lose millions of dollars on MVNO service reselling cellphones through Verizon network.
As if being a mobile virtual network operator (MVNO), which purchases wholesale capacity from national wireless carriers in order to resell service under another brand, wasn't already hard enough, the last thing an MVNO wants to deal with is getting squeezed by Apple (NASDAQ:AAPL). At the same time, it's awfully hard to compete in the wireless market without carrying the iPhone.
The Cupertino tech giant is now leveraging the iPhone's popularity to extract some hefty concessions out of Comcast (NASDAQ:CMCSA) and Charter (NASDAQ:CHTR), which have been looking to expand their telecommunications businesses into the wireless market.
Welcome back, subsidies
CNBC reports that Comcast and Charter have agreed to sell a variety of Apple products in order to secure the iPhone for their MVNOs -- Xfinity Mobile and Spectrum Mobile, respectively -- which operate on Verizon's network.
Incredibly, Apple has gotten Comcast to commit to sell a quota of iPads while also subsidizing the cost, according to the report, even as the subsidy model has mostly died in the U.S. for smartphones. However, Comcast is absorbing the costs of those subsidies, a stark contrast to the old model, in which carriers would use service agreements to recoup the costs. Comcast offers four different iPad models on its site at varying discounts compared to Apple's retail prices...
