"The average ARPU for smartphones on AT&T's network is 1.9 times that of the company’s non-smartphone devices." For an iPhone, the subsidy comes to less than $

"The average ARPU for smartphones on AT&T's network is 1.9 times that of the company’s non-smartphone devices." For an iPhone, the subsidy comes to less than $20/month in exchange for significantly more revenue per user. The carriers are making out like bandits and then claiming they are the victims. I dislike[1] the US carriers and their absurd data plans as much as the next guy, but the above logic has always baffled me. Everyone seems to confuse revenues and earnings when talking about smartphone subsidies. The subsidy of $20/mo (as quoted above) is paid out of carrier earnings, while the phone ARPU gets added to their revenues. Assuming a generous profit margin of 40%, unless the additional ARPU, compared to non-smartphone devices, is greater than $50/mo (2.5x the subsidy), the carriers are not exactly making out. This is the case more so for iPhones, where I understand the subsidies are higher than other smartphones, but the ARPUs are equivalent. [1] I'd prefer the model where the customer brings in an un-subsidized (smart)phone and pays lower on monthly plans.