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Money Minute: Wireless firms need to unbundle phones [Video]

February 08, 2012|By David Lazarus

Sprint is the latest wireless service provider to report an earnings hit from subsidizing the iPhone.

The company had hoped to give the likes of AT&T and Verizon a run for the iPhone money when it cut a $15.5-billion deal with Apple to carry the white-hot handset. From October to December, Sprint activated about 1.8 million iPhones , compared with 7.6 million at AT&T and 4.3 million at Verizon Wireless.

But Sprint estimates that the phone launch widened its quarterly loss by $630 million, or $350 per phone activated. It buys the phones from Apple for about $600, then subsidizes them to sell them for $99 or $199.

Sprint's total loss for the quarter was $1.3 billion. That compares with a loss of $301 million a year earlier.

Maybe it's time for wireless companies to unbundle their service plans from the handsets they offer. This would allow consumers to shop around more freely for both hardware and cell service.

It would also give people a better sense of how much things actually cost in the wireless world. As it stands, no one really has any clue about the actual value of what they're paying for.

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