Cell Phone Carriers Will Get Whacked By The iPhone 5 - Spokane, North Idaho News & Weather KHQ.com

Cell Phone Carriers Will Get Whacked By The iPhone 5

NEW YORK (CNNMoney) -- After several quarters of record profit margins, it's time for carriers to face a grim reality: The iPhone 5 is expected to be the best-selling phone of all time, and its sky-high subsidies will devastate their bottom lines.

The price customers typically pay for a new iPhone is a heavily discounted rate cushioned by the carriers, who buy the devices from Apple (AAPL,Fortune 500) for close to their full retail price tags. (The 16 GB iPhone 4S that generally goes for $199 with a two-year contract has a list price of $649.) Carriers eat the difference and make it up by padding the monthly cost of their customers' phone contracts. click here to read more

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