AT&T Seeing "Tremendous Demand" for Free iPhone 3GS

In a conference call with analysts this afternoon, Ralph de la Vega, President and CEO of AT&T Mobility discussed the impact of the recent price drop on older-generation iPhones, particularly the iPhone 3GS. That phone is the first iPhone be offered free with 2-year contract in the U.S.

We have another device that I think is going to dramatically change those people that are on smartphones and quick messaging devices, the [iPhone] 3GS, which is free with a 2-year contract. We've seen a tremendous, tremendous demand for that device even though it's a generation old. And actually, we're getting more new subscribers coming on the 3GS on the average than other devices. So we also have an inventory sold out on that device.

De la Vega also noted that AT&T, like Apple, had slightly slower numbers this quarter as a result of the next-generation iPhone launching in the fourth calendar quarter versus the third. He expects AT&T's numbers to surge in the holiday quarter with the launch of the iPhone 4S, saying the company was "very, very optimistic on what the fourth quarter is going to look like in terms of smartphone growth."