I think the "extortion" you cite is massively overblown. Fronting $400 per iPhone hurts because they sold so many units, but how many months does it take to recoup? I'd argue about 12 months. Over the 2-year commitment, they benefit greatly from subsidizing any high-end smartphone. Smartphone plans generate healthy cash flow for VZ and ATT despite the initial hit to net income.
Isn't there a several hundred dollars subsidy for the Galaxy Nexus and other top smartphones?
the subsidy is less on the other phones. the other phones that all have LTE and use even more data and generate even higher overages.
if the iphone was worth so much money why are at&t and verizon losing money in the quarters they are selling the most iphones.
there was a czech phone company that actually dropped the iphone entirely because of it.
