Are cheaper iPhones without data plans on the way?

By Ian Bell May 19, 2009

Are cheaper iPhones without data plans on the way?

NEW YORK (Reuters) – Speaking at the Reuters Global Technology Summit in New York on Monday, on Monday Sanford C. Bernstein analyst Toni Sacconaghi said he expects Apple in coming weeks to unveil new iPhones that will appeal to more cost-conscious consumers.

"I feel very confident there will be a lower-cost alternative," Sacconaghi said, adding that a cheaper phone would appeal to customers who prefer to pay for calls in advance and not commit to a long-term contract.

Today, prepaid customers pay a lot more at retail for the device than those who sign up for a two-year contact with operators such as AT&T Inc, the exclusive U.S. iPhone carrier.

Customers who commit to pay a minimum $70 a month cellular service fee for two years currently get a significant retail discount for the device.

While the current iPhone is already available to prepaid customers in European countries such as Italy, it is prohibitively expensive there without the carrier discount that monthly bill paying customers enjoy.

Sacconaghi said he expects that in the next year or two, Apple may offer iPhones without requiring customers to sign up for a monthly cellular data plan, which currently costs a minimum of $30 a month for U.S. customers.

"There’s still a lot you can do without wireless data," he said.

The idea would be that customers would use the phone as a music player and a traditional phone, and when they want to surf the web and download applications, they would revert to using Wi-Fi, a short-range wireless technology already in existing iPhones.

Sacconaghi said that a cheaper version of iPhone could help Apple forge a carrier agreement to sell the phone in China, the world’s biggest cell phone market.

An Apple spokeswoman said the company does not comment on speculation about new products and services.

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