A Prepaid iPhone in the Works?

Could a prepaid iPhone plan be in the works? I believe such a plan would make perfect sense -- and it could help significantly expand prepaid-calling user base.
Olga Kharif

We've all heard this rumor in the past few weeks: That Apple's iPhone would come with a two-year wireless service contract from Cingular, recently rebranded as AT&T. Now, my contacts at AT&T deny any such goings-on with the company's post-paid plans. What I am wondering about is whether or not AT&T and Apple might be working on a prepaid iPhone.

Here's my idea: I believe that the iPhone, which will retail for $499 or $599, depending on how much memory you want, could prove instrumental in expanding the prepaid option's use.

Here's why: Think of your typical iPod fan. Much of the iPod user base is young -- in fact, it fits into the prepaid demographics to the dot. Surveys show that teens are super-excited about the iPhone. But the fact is, while some parents may be willing to buy their kid a cool new music or a video player for Christmas, very few, I suspect, would splurge on a $50 monthly calling plan as well. So offering an iPhone prepaid option for this demographics would make perfect sense.

In addition, some of the iPhone's first adopters will likely prove to be iPod fans who view the new device as a music and video player, first and foremost. For them, its calling capabilities will be secondary. This group of people might not be interested in paying high wireless bills, either.

What do you think, would a prepaid iPhone make sense?

Before it's here, it's on the Bloomberg Terminal.