Apple (AAPL) Could Suffer as Carriers Move Away from Smartphone Subsidies

Apple (Nasdaq: AAPL) is lower early amid bearish commentary on the company with respect to lower subsidies.

The WSJ noted on Tuesday that more and more U.S. carriers are moving to a model which has consumers shouldering most of the cost to upgrade a device. That means, subsidies are evaporating.

Names like AT&T (NYSE: T) and Verizon (NYSE: VZ) are making the switch to a model which is similar to that of T-Mobile (NYSE: TMUS), which consumers take on the full cost of their phones. Those payments are typically spread out in installments, but its a far cry from carriers putting a couple hundred into the cost of the device with hopes of making it back on two-year contracts.

AT&T recently said about 15 percent of its smartphones sold in Q4 were done without a subsidy.

Apple's iPhone has been one of the biggest subsidized smartphones.

While it might seem like constant upgrades are a foregone conclusion, thre are still alternatives which consumers might find attractive. One plan, for instance, allows consumers to trade in a device after just a year for an upgrade.

It wasn't made clear what the new system would entail for most carriers. Many consumers would feel a little sticker shock given the already-high $80+-per-month subscription plans and additional $15 to $20 being added ontop of that to pay for a new smartphone (carriers generally put $200 to $400 toward the cost of a smartphone, with consumers chipping in the other $100 to $300 (depending on the model)).

With a lion's share of AT&T's smartphne base being the Apple iPhone, it's one shift investors are likely to keep on eye on in the coming months. Apple is down 0.5 percent on Tuesday.

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