Why wireless carriers can give away the iPhone 14s for free

The three major US carriers have announced deals allowing eligible customers to get Apple’s latest smartphone for free, under certain conditions, which often include trading in an older model iPhone. AT&T and T-Mobile, for example, are both offering up to $1,000 in credits, after trade-in, for the purchase of the iPhone 14 or iPhone 14 Pro. Verizon is offering up to $800 post-trade-in credit for the iPhone 14 or iPhone 14 Pro, according to some of the deals rounded up and touted by Apple.

While Apple managed to keep the base price of the latest iPhone the same as the previous generation, the iPhone 14 still starts at $799 and $899 for the 14 Plus model. Meanwhile, the top-end 14 Pro model starts at $999 and the 14 Pro Max at $1,099. At a time when inflation is pinching consumers on all sides, carrier deals can help make the latest iPhone more affordable.

According to Tom Forte, senior research analyst at DA Davidson, wireless carriers that have built extensive 5G infrastructure can also offer these steep discounts when seeking customers to upgrade to 5G-enabled devices. “They’ve invested billions of dollars in their own 5G networks and they’re trying to get a return on their investment,” Forte told CNN Business.

The iPhone has been able to use 5G networks since the iPhone 12, released in 2020.

“The other reason, though, I think they’re able to do is that iPhones historically hold their values,” he added, noting that many offers include the exchange of a old model of iPhone to benefit from the discounts or freebies of the latest devices. Many of these carriers then sell used and refurbished iPhones.

The latest iPhone 14 lineup, at least in the US, has also ditched the sim card tray and fully eSIM. By doing this, Apple is “essentially making the service change easier for consumers,” Forte said. “This could be another reason why carriers are more aggressive, or at least as aggressive as they have been since the 12th, in getting consumers to sign up.”

Still, it’s important to read the fine print, as these agreements often come in the form of contracts, a common practice since cell phones became ubiquitous. Forte noted that if you were to take advantage of some of these iPhone 14 promotions but then try to cancel service after a month or two, you’ll likely be liable for “significantly more than the purchase price” of the new phone.

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According to Julie Ask, vice president and principal analyst at Forrester, Apple and carriers could also benefit from the growing popularity of buy-it-now, pay-later plans among consumers in recent years. So more people looking for options to pay for a new iPhone over time might be particularly drawn to carrier deals that end up including discounts on the device and cellular plans, even if they include a longer commitment.

“There has been a slight increase in consumer willingness and interest to pay over time,” she told CNN Business. Still, she said carriers often look to “lock people up for at least two years, so that’s the fine print I would be looking for.”

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