The price iPhonebois will pay for an early upgrade

The price iPhonebois will pay for an early upgrade

Summary: If you've bought an iPhone 3G and you signed up for a 2-year contract, then that contract still has at least a year to run. However, AT&T will give you access to an early upgrade ... for a price! A hefty price!

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If you've bought an iPhone 3G and you signed up for a 2-year contract, then that contract still has at least a year to run. However, AT&T will give you access to an early upgrade ... for a price!

[UPDATE: Apple revises upgrade policy.]

The iPhone 3G was released July 11th last year, and iPhonebois flocked to be the first to throw their cash at Apple in exchange for the new handset. In exchange for getting their hands on the new handset iCustomers had to sign up to a 2-year contract with AT&T. Two years seemed like nothing, so people signed up like mad.

Fast forward less than a year and Apple announced at the WWDC keynote that a new iPhone, called the 3G S, would be available from June 17th. What this means is that if you were one of the first to get your hands on an iPhone 3G, congratulations, you now own a fossil that less than a year old.

But wait! AT&T will allow those most loyal customers, folks who stood for hours in line to buy the iPhone on the day it was released, to upgrade. However, to reward their loyalty, AT&T will charge them for the upgrade, and charge them big style.

The new base price for the iPhone for new and qualifying customers (folks who have come to the end of their contracts) is as follows:

  • iPhone 3G S - $199 (16GB) and $299 (32GB)
  • iPhone 3G - $99 (8GB)
  • iPhone 3G - $149 (16GB) ... while supplies last

Sounds good. However, if you are currently mid-contract, the price quickly goes stratospheric.

First, you have to agree to a new 2-year contract. No getting away from that. You don't get your hands on a 3G S without reaffirming your allegiance to Apple and AT&T.

Then there's an $18 upgrade fee. Doesn't sound so bad, but even if you're OK with all that, you'll still pay a premium to get your hands on the new handset:

  • iPhone 3G S - $399 (16GB) and $499 (32GB)
  • iPhone 3G - $299 (8GB)

Put another way, you pay an extra $200 on the price of the handset. On top of that, and the upgrade fee, you also have to pay another $18 One-time AT&T Upgrade Fee.

Oh, and finally there the $30 a month charge for the data plan and extra for text messaging. MMS messaging, which is supposed to make an appearance later this summer, is bound to cost extra, as will Internet tethering if AT&T ever gets its act together.

That's the thanks that you get for being a valued AT&T customer.

I'm not sure how many people would be willing to pay such a hefty premium to get their hands on an iPhone that's a little faster, has more capacity, has a better camera and features a coating that resists fingerprints. I invite those who are interested to contact me for a game of "find the lady" (I'll prove to you that it's fair because there's a guy that keeps winning). Oh, I've also got some magic beans you might be interested in buying.

Seriously, this is no way to treat loyal customers. Back when $200 was slashed off the price of the iPhone, angering many, Steve Jobs wrote an open letter to customers promising to "do the right thing" for valued iPhone customers. I wonder whether Jobs will intervene again, especially given that the iPhone has been successful in pounding the competition into the dust and doesn't need customer goodwill to be a success.

Topics: Mobility, Hardware, iPhone, AT&T, Wi-Fi

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34 comments
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  • I understand

    That ATT wants to completely cover the costs of the original hardware which was amortized across two years. Still, this seems to be a bit extreme.

    These companies are always nicer to new customers then old ones. The first company that treats new and old customers equally will wipe everyone else out.
    mtgarden
    • Rules of Oligopoly

      Treating new customers better than old is not an unusual tactic for companies who are part of an oligopoly. They all treat customers badly, albeit in different ways. They know most folks will suck it up and stay for the abuse. The also know a small percent will get fed up and leave. But for every customer that gets fed up and leaves, they sign up a NEW customer who got fed up with some OTHER company in the oligopoly. So they never really compete on price or service, and they all reap handsome profits.

      Mobile phone service is soooooo much better in many parts of Europe and Asia because there's lots of competition. Nothing will ever improve here until people get fed up enough to force real change. Or to restate realistically, nothing will ever improve here....
      bmgoodman
      • Unfortunately thats a sin in this country.

        "Nothing will ever improve here until people get fed up enough to force real change. Or to restate realistically, nothing will ever improve here...."

        People aren't going to band together here and force anything on corporations. Thats a sin here. Everyone is just supposed to work hard on their own and never unite to get something done together.
        storm14k
  • RE: The price iPhonebois will pay for an early upgrade

    I've only had my iPhone since December but was interested in the new one until I saw the price(!!!) for existing customers. Talk about sticking it to us up the ***. It's the type of thing that could make me think twice when my contract is finally up. (Hello Verizon?)
    gromitwallace
    • If Verizon had the iPhone

      it would be the exact same situation. That's how subsidizing works.
      Every carrier does it.
      nova81426
      • Sprint does it too.

        You signed the contract to either live with
        what you got, until your time is up, and just
        thing all of the people getting the new model
        now will be in the same situation next year.

        My rule is. no early upgrade. I live out the
        term, and then when that is done, i start
        looking again. So say if I bought iPhone 3g
        last year, I would wait till the following year
        and upgrade to yet the next iteration of
        iPhone. or whatever may be hot at the time.

        If you choose to pay the tax for early upgrade,
        well then that is your perk. don't cry about
        it. if you need the latest and greatest be
        prepared to pay up.
        xXSpeedzXx
  • It's not AT&T's fault...

    ...some people are too stupid to understand what the word 'contract' means.
    Sleeper Service
    • OMG Sleeper!

      I am in <b>100% agreement!</b>

      Now boys and girls, if you want a company to cover part of the cost of
      your toy (subsidy) then <i>man up and live by what you agreed to in
      exchange!</i>

      Yes, I know you didn't have a choice, but for the first year of it's
      existence no one wanted to pay full price for an iPhone and there were
      outcries upon outcries for a subsidized version. subsidies come with
      time limits or no company would do it - they'd go broke.

      So we got what we asked for (not me, actually mine is a first gen) and
      now we have to live up to our end of the bargain! Cry me a river.
      use_what_works_4_U
  • RE: The price iPhonebois will pay for an early upgrade

    Adrian, I want to clarify some things about this situation
    that I don't think is fully explained in your post. For
    simplicity's sake, I'm going to use the iPhone 3GS 16GB in
    my examples.

    First, the actual cost of the iPhone is $399, not $199. It is
    $199 to you if you get a new 2-year contract and are
    eligible for upgrade. AT&T pays $200 on your behalf.
    That's subsidizing. If you buy a subsidized phone, and you
    want to break your contract (to start a new 2 year contract)
    then you are not eligible for another subsidizing. It's the
    terms of the contract.

    Second, it doesn't matter if you are upgrading from
    another iPhone or not. If I had a 2 year contract with a
    fully subsidized (free to me) crap phone and then tried to
    get an iPhone within the first 18 months of the contract, I
    would still have to pay the full price of $399.

    Third, this is not a new practice, this is how it always has
    been. Every carrier does this. It would be no different
    anywhere else.
    nova81426
    • Oh, I see...

      So it's ALWAYS been that way, and that's how it always SHOULD be?

      The whole concept of subsidization and contracts is absurd, plain and simple. I am OK with spending more on my high-function hardware and NOT having a contract.
      GoodThings2Life
      • Then do so. Pay the money for the phone

        own it out right, and then ask them for a regular
        plan that does not subsidize the phone.

        ATT is going to operate like many of the other
        carriers. Buy a phone on a subsidy, and terminate
        early to get the next best thing, be prepared to
        pay. If you don't like it, the buy the phone
        outright and ask for a plan that is not scaled to
        subsidize the phone.
        xXSpeedzXx
      • No

        It should not always be that way. I agree that it's a terrible way to treat
        customers, primarily because it's so confusing. But it's a system that's
        been in place for a long time, and now that the iPhone is involved,
        suddenly it's a big issue.
        nova81426
        • iPhone caused this!

          Yes, iPhone caused most of the "furor" over the bad treatment foisted on customers for years. As much as I'm NOT a fan of Apple, I knew from the start that the iPhone would be a game changer. There was FINALLY someone forcing cell phone makers to actually CARE about usability. For too long, these folks had confusing interfaces and stuffed menu options wherever they could. Since the iPhone, they suddenly discover they CAN do better. And now that customers are actually drooling over each new piece of hardware, they suddenly NOTICE ALL THE NEGATIVE ASPECTS OF THESE CONTRACTS. Maybe they'll eventually stop supporting such contracts by refusing to renew. Nah, never gonna happen....
          bmgoodman
  • RE: The price iPhonebois will pay for an early upgrade

    I think its crap i just bought 2 Iphone 3g's and because I'm week from the 30 day grace to bring your phone back I'm sc@#$#. From now on in the future Steve Jobs doesn't have to worry about me being a loyal customer if this is they way ATT and Apple do business. I can find other companies to get my service from if they are going to go this route.
    voodoochild
    • Think again

      Every for profit entity has such policies. It's called a for-profit entity for
      a reason.

      Welcome to the United States of America, home of Capitalism (sic) and
      corporations who exist to make a profit, NOT to cater to your whim.
      use_what_works_4_U
    • re: screwed

      [pre]I think its crap i just bought 2 Iphone 3g's and because I'm week
      from the 30 day grace to bring your phone back I'm sc@#$#[/pre]

      I don't understand how this is a suddenly bad thing? Are you happy
      with your 3G iphones? Did the announcement of the 3G S make your
      current phones less useful?

      If this announcement somehow affects you badly, why not wait instead
      of buying your 3G phones 30 days ago? On every semi-tech site,
      apple-related blog, news site, etc. they've been talking about the new
      version of the iphone getting an announcement at WWDC. This site
      alone had to have 20+ mentions of it over the past month.



      [pre]From now on in the future Steve Jobs doesn't have to worry about
      me being a loyal customer if this is they way ATT and Apple do
      business. I can find other companies to get my service from if they are
      going to go this route.[/pre]

      Which other companies? Almost carriers in the U.S. do this. When you
      buy a phone under subsidy, the service contract is what allows that
      subsidy. You get a free phone, or a phone that costs less than msrp,
      it's going to take you 12-18 months typically before you're allowed to
      do another subsidy. I agree it sucks, but this isn't exclusive to Apple
      and AT&T.

      Want to skip that entirely? Buy a phone out of contract. Metrocell
      seems a great option for that. Just expect a higher cost of entry you
      when you do that.
      JakAttak
  • RE: The price iPhonebois will pay for an early upgrade

    i agree...so you expect ATT to give u the new iphone for 200 bucks and let you get out of the earlier contract - really? so what will you do with your current iphone 3g? sell it on ebay for 350-400 bucks? lot of people out there still willing to pay that much on a jail broken iphone.
    on the other hand, keeping this contract thing in mind Apple didn't introduce a totally new iphone this year. just small modifications which won't really upset the current iphone users. I personally have no will to upgrade mine yet. So maybe next year when most of the current iphone 3g customers (over 2 millions) will be eligible to update their phone i can bet there is going to be a breakthrough upgrade in the iphone...
    pss005
  • wait a minute.

    people got a heavily subsidized $199 iphone 3g a year ago. the idea behind this is that their commitment to at&t covers the cost of the phone. they agreed to that contract.

    so what is there to complain about??? suck it up. you have a 2 year contract!

    i have a first gen iphone which was unsubsidized, so it doesn't affect me if i want an upgrade, but i will still have to sign a new 2 year contract, and when an upgrade comes out in another year i won't be whining about it.
    lostarchitect
    • SPOT ON!

      What is with these whining ZDNet editors?! Story after story after story ranting and raving because they cant get YET ANOTHER subsidized iPhone less than year after they ALREADY got one.

      If you HAVE to have EVERYTHING Apple releases the MINUTE its released then PAY THE BILL.

      Its idiotic already. What a sense of entitlement! No one said you are entitled to *subsidized* products the second they're released.

      If you're such an addict, pay the $500.
      mlambert890@...
  • Walk Away!!!!

    Everyone one is complaining about AT&T service and
    prices, including me. But when we renew our contracts or
    upgrade to the next iPhone we reinforce AT&T's greed and
    even strengthen their decisions to price gouge customers.

    Walk away... Listen, I love the iPhone as much as the next
    guy but when my two years are up I'm leaving AT&T and
    it's ridiculous pricing structure. When enough people talk
    with their wallets I guarantee you Apple and AT&T will take
    notice!

    But staying with AT&T and agreeing to pay their predatory
    pricing isn't going to change anything not matter how loud
    or often you complain.

    Sprint has the right idea.... $99 unlimited everything!
    Every carrier should offer this plan. No extras for texting,
    MMS, etc..... Verizon and AT&T are nickel and diming us to
    death!
    Masari.Jones