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Virgin Mobile Partners with Apple to Go iPhone-only with $1 Service

No-contract cellular carrier Virgin Mobile USA has big news: it has partnered with Apple to become the first iPhone-only carrier, and it’s offering a deal that seems almost too good to be true.

If you purchase an iPhone and sign up for Virgin Mobile’s Inner Circle service, you get 6 months of service for just $1. If you do that by 31 July 2017, you get a full 12 months of service for $1. There is one requirement: you have to transfer your phone number to Virgin Mobile. Existing Virgin Mobile customers who upgrade to an iPhone can also take advantage of the offer.

After the promotional period, service costs $50 per month if you sign up for AutoPay. That includes unlimited talk, text, and 4G LTE data, though you may be throttled after using 23 GB of data. However, Virgin Mobile states that video streams are “optimized” at up to 480p resolution, music at 500 Kbps, and “streaming cloud gaming” at up to 2 Mbps. After 2 years, the $50-per-month service fee will drop back down to $1 for 6 months if you buy a new iPhone. The company offers two international calling plans for $5 and $10 per month, neither of which seems to come with any data.

Virgin Mobile offers the full line of current iPhones, though you will have to pay full price up front. Unfortunately, Apple’s iPhone Upgrade Program isn’t compatible with Virgin Mobile — at least for now. However, if you’re looking for a cheap entry point to owning an iPhone, you can buy an iPhone SE from Virgin Mobile for just $279.99 ($120 off Apple’s price) or an iPhone 6 for $319.99 ($130 off Virgin Mobile’s list price; Apple no longer sells the iPhone 6). But Virgin is clear that you can also buy any current iPhone from Apple if you prefer.

Inner Circle customers who enroll by 30 September 2017 will also receive perks from Virgin’s other businesses:

What’s the catch? The big one is that since Sprint owns Virgin Mobile USA, you’re stuck with the notably mediocre Sprint network. Plus, you will pay a bit more than $1 for the year, due to government-mandated taxes and fees. And finally, Virgin Mobile USA’s international data story is opaque at best, or possibly even nonexistent. Otherwise, outside of the usual fine print, there don’t appear to be any major gotchas.

However, there is more to this deal than first appears, and it could be even bigger news than a year of cell service for a dollar.

Apple as a Carrier? — For years, the rumor mill has suggested that Apple will enter the carrier game. Steve Jobs famously wanted the iPhone to run on its own carrier.

As I dug through Virgin Mobile’s press release, I caught this quote from Virgin Group founder Richard Branson:

“Virgin Mobile worked with Apple to become the newest mobile carrier to sell its service in Apple stores and has always looked to shake things up and challenge the status quo in any sector we go into,” said Branson. “Mobile is no exception and with Virgin Mobile USA, we’ve now worked with Apple to create a compelling offer for our new Inner Circle plan.”

In short, Virgin worked with Apple to become an iPhone-only carrier. Apple Senior Vice President of Worldwide Marketing Phil Schiller also chimed in on the press release:

“We’re thrilled Virgin Mobile is becoming the first iPhone-only carrier, and we’re excited to be able to offer Virgin Mobile services directly to our customers in Apple stores.”

So, in addition to the big four carriers, Apple will now also be offering Virgin Mobile as an official option in its stores. That could eventually extend to the iPhone Upgrade Program, in which you lease an iPhone with AppleCare+ directly from Apple and are eligible for an upgrade every year. However, Virgin Mobile isn’t yet an option for iPhone Upgrade Program customers.

Pundits have long suspected that two roadblocks stood in the way of Apple becoming a carrier: the infrastructure is incredibly expensive, even if you lease it from the larger carriers, and Apple could limit the iPhone business if it were to compete with the major carriers.

But Apple has sidestepped those concerns by essentially taking over a carrier (actually a carrier-owned MVNO — Mobile Virtual Network Operator) without acquiring it. Apple may not own Virgin Mobile, but Virgin Mobile is now utterly dependent on Apple and will benefit through promotion in Apple Stores.

We shouldn’t read too much into this deal, but at the very least it’s unusual to see a company like Virgin Mobile going all-in on the iPhone. And it might point toward Apple dipping its toe into the MVNO business.

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