CUPERTINO, Calif. – As the Friday launch of the Apple iPhone neared and anxious customers formed lines to grab one, AT&T Inc. (T) announced Tuesday that service plans for the hotly anticipated smart phone will start at $59.99 per month.
The two companies also said customers will be able to activate their wireless service, including transferring their existing cell numbers to the handset — from home, using Apple Inc.'s (AAPL) iTunes software.
That's a convenience no other cellular carrier offers and something UBS Securities analyst Benjamin Reitzes called a "game changer" for the industry.
Making the purchase and activation easy will lower selling costs and potentially further lift sales, Reitzes said Tuesday.
Three monthly plans with a minimum two-year service contract will be available: the $59.99 plan includes 450 minutes of voice time; a $79.99 plan includes 900 minutes; and a $99.99 plan includes 1,350 minutes.
All three offer 200 text messages, unlimited data services, minutes that roll over month-to-month and mobile-to-mobile calls. There also is a $36 activation fee.
Customers can pay extra for plans to get more talk time or text messages. Several family-style plans also are available, ranging from $80 a month for 700 shared minutes to $120 for 2,100 shared minutes.
The monthly rates for the iPhone are roughly $10 less than comparable service plans for other smart phones offered through AT&T, AT&T spokesman Michael Coe said.
The monthly fee will be on top of the iPhone's price — $499 for a model with 4 gigabytes of storage and $599 for one with 8 gigabytes.
The phone is slated to go on sale at 6 p.m. local time Friday at Apple and AT&T stores as well as Apple's Web site.
Apple claims the iPhone — which combines the functions of a cell phone, iPod media player and Web-surfing device — will be easier to use than other smart phones because of its unique touch-screen display and intuitive software that allows for easy access to voice mail messages, the Internet, and video and music libraries. AT&T is the gadget's exclusive carrier.
Anticipation for the handset has reached — or arguably even surpassed — levels usually reserved for new video game consoles.
Five people were in line by Tuesday afternoon outside Apple's Fifth Avenue store in New York City, three of them having been in line since Monday.
"Words can't express why I want an iPhone," said Jessica Rodriguez, 24, a college student. "The main reason is [Apple CEO] Steve Jobs is a genius. He's a great innovator. It's going to be the next big thing in cell phones."
Sitting in a red folding chair she brought, Rodriguez said she was planning to get a $599 iPhone as a belated birthday gift for her sister. If the store will let her buy two, she said, she'll get one for herself.
Apple isn't saying how many total iPhones it will have at launch and hasn't disclosed whether there will be any per-person purchase limits.
Coe said purchases at AT&T stores will be limited to one per customer.
Meanwhile, some people who are unable to queue up themselves have posted help-wanted pleas on community Web sites like Craigslist, offering to pay someone to stand in line for them.
The iPhone's price — which doesn't include any kind of carrier subsidy commonly offered for other cell phones — lands on the high-end of the smart phone market, but analysts say the service plans are very competitive.
Sprint Nextel Corp. (S), for instance, also charges $59.99 a month for 450 minutes of talk time, $79.99 for 900 minutes and $99.99 for 1,350 minutes along with unlimited data service. Its plans allow, however, up to 300 text messages and starts its unlimited evening calls at 7 p.m. instead of AT&T's 9 p.m. start time.
Verizon Wireless plans to launch new "premium" plans in July, starting at $79.99 for 450 minutes with unlimited calls on a Verizon network, unlimited nights and weekends, and unlimited messaging and data services, company spokeswoman Brenda Raney said. The most expensive plan will be $239.99 for 6,000 minutes of talk time, she said.
Skeptics question whether the iPhone can live up to its lofty expectations. Scrutiny of the product is so great that any small disappointment could send Apple's stock plunging, analysts say.
Apple shares dropped $2.69, or 2.2 percent, to $119.65 on Tuesday. Shares of AT&T fell 7 cents to close at $24.61.
Andy Hargreaves, a Pacific Crest Securities analyst, said Apple shareholders have run the stock up in anticipation of the iPhone's release, and they don't feel it will go much higher after the product is available, he said.
"I think expectations are very, very high and some people are taking some money off the table ahead of the launch," WR Hambrecht analyst Matthew Kather said.