AT&T iPhone upgrading pricing upsets consumers

After WWDC by Apple, showcasing their latest addition to the iPhone family, the iPhone 3GS, AT&T announced it will be rolling out upgrading pricing for consumers who want to upgrade from the iPhone 3G to the iPhone 3GS.

New AT&T customers will be able to purchase the new iPhone 3GS for $199 for 16GB and $299 for 32GB model in either black or white, while current AT&T customers will need to pay double that just to upgrade from the 3G to 3GS. Pricing for the upgrade will cost $399 for the 16GB and $599 for the 32GB model. The reasoning behind his is that AT&T subsidized the pricing of the original iPhone, but not the iPhone 3G, which gave them the ability to sell the device at a lower price and lock users into a two-year contract. However, this change has sparked outrage in many AT&T customers, already creating petitions, spreading word through Facebook and Twitter.

The angry consumers have a good reason to be, after AT&T announced it won't be supporting MMS or tethering when iPhone 3GS releases and has said customers will simply need to wait for their infrastructure to support it, or pay an additional fee.

One outraged customer even wrote about stopping payment to AT&T until they agree to lower the upgrade pricing:
"For those loyal AT&T customers, remember to change your account setting to stop all automatic payments to AT&T before getting the new phone. It is your money, AT&T has no rights to steal from you unless you are satisfied with the service they promised to provide. This should be a fair business trade, not a robbery," Agent Provocative wrote.

While this practice is somewhat standard in US cell phone sales, this change from the previous iPhone upgrade program could backfire for new customers, if Apple releases a fourth generation iPhone next year, as they have been releasing a new iPhone every year for three years now.

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Honest opinion please

I have the iPhone Gen 1.. really not even bothered about the whole 3G thing. Is it worth getting this phone just cause of the faster speeds they boast about?

"The reasoning behind his is that AT&T subsidized the pricing of the original iPhone, but not the iPhone 3G, which gave them the ability to sell the device at a lower price and lock users into a two-year contract."

False.

It's the other way around. 3G was subsidized and the original one was not. This is why the original iPhone users were able to get the subsidized price for the 3G, because AT&T did not already give them $200...

Look at it this way... They are canceling your 2 year contract after only 1 year and not charging you a cancellation fee of 175 bucks. There, they just saved you money

Have you guys in America got insurance on your phones cus I had my iPhone a few months ago and I'm not worrying about the new one cus soon as I'm sure there replacing lost/stolen phones with the new phone my current phone will go "missing" and I'll get the new one for free. Will have wait a while probably but who cares

I live in the uk btw

In Belgium here the cheapest iPhone is €549 (completely unlocked though). People should stop complaining.

And actually Apple is really behind. My 3-year-old-very-low-budget Sony-Ericsson has always supported MMS and Tethering, just like basically any Sony-Ericsson.

Nokia, Sony Ericsson and all these companies started with making phones. Apple just entered the market with just the basics. I just don't get what the big deal is. Yes they made a phone. Yes it doesn't have many features like what sony and nokia put out.. SO? if you don't want it.. DONT BUY IT!.. gosh. a bunch of crybabies.. I really also wish they end it with the whole apple thing. Im sick of seeing so many headlines about the iPhone and then people complain and complain and complain. lol

I think the point there making and a lot of you seem to be missing is that with the upgrade, although before the two years, they are signing another two year contract. AT&T are effectively getting a renewed contract and the user should therefore get the reduced price.

Unfortunately this is the road many businesses seem to be taking, offer unbelievable deals to new customers, treat there existing/loyal customers like crap, when they lose an existing/loyal customer, offer them something unbelievable to come back. Its been going on for years, I would of thought people got used to it by now, clearly not.

TSO said,
I think the point there making and a lot of you seem to be missing is that with the upgrade, although before the two years, they are signing another two year contract. AT&T are effectively getting a renewed contract and the user should therefore get the reduced price.

Unfortunately this is the road many businesses seem to be taking, offer unbelievable deals to new customers, treat there existing/loyal customers like crap, when they lose an existing/loyal customer, offer them something unbelievable to come back. Its been going on for years, I would of thought people got used to it by now, clearly not.

There's always hope for a change right? I mean... come on... do I really need to pay $70+ for phone service when my house phone is only $99/yr. Something doesn't add up there.

Sure but isn't that a reset of the contract, IE you are now in a fresh two year contract? If so then the user can renew 12 months into one and get two phones over the course of three years which hardly seems as good for the telco.

TSO said,
I think the point there making and a lot of you seem to be missing is that with the upgrade, although before the two years, they are signing another two year contract. AT&T are effectively getting a renewed contract and the user should therefore get the reduced price.

Well yes but this is a common argument and many people who make it seem to think that the network is going to conveniently "forget" that their still ties in for a year (and paying money BACK for their original subsidy) the only way the network can actually make any money out of doing this is to add the original remaining contract length onto the new 2 year deal.

You start finding issues with locking in customers for 3 or 4 years particularity when the next shiny Jesus phone comes along and the issue starts again.

The other way is to charge the the line rental again 9 effectively doubling their line rental for a year ) then dropping back. People will have issues with this too as they all expect to get something for nothing.

TSO said,
I think the point there making and a lot of you seem to be missing is that with the upgrade, although before the two years, they are signing another two year contract. AT&T are effectively getting a renewed contract and the user should therefore get the reduced price.

Unfortunately this is the road many businesses seem to be taking, offer unbelievable deals to new customers, treat there existing/loyal customers like crap, when they lose an existing/loyal customer, offer them something unbelievable to come back. Its been going on for years, I would of thought people got used to it by now, clearly not.

That 2 year contract will now help pay back the subsidized loss on the 2nd iPhone. Not the first and second. This is the point that people AREN'T understanding. Each iPhone is subsidized so AT&T and Apple technically sell them at a loss. Through apps and contracts, they get their money back. What is so difficult to understand?

I don't understand the anger behind what AT&T is doing. We're getting these phones subsidized. If they don't get a minimum 2 years, they don't make back the cost of the phone. Don't like it? Then upgraded every 2 years and get the yearly software increment instead. That's what I plan on doing.

LOLOL AT&T made back THEIR cost on the phone in the first few months. They don't pay Apple MSRP, after all.

They don't make back their HUGE future planned PROFIT if you terminate before 24 months...

Which is, after all, why they did this horrendous bundling deal with Apple in the first place -- to fleece the golden sheep who have proved so woolly for Apple in the past.

I don't have a problem with the AT&T upgrade policy. It's better than when I had Verizon and their 'new every 2'. With them I would get no discount at all on a new phone if I wanted to upgrade mid-contract. AT&T, on the other hand is giving a discount after 1 year, which while less of a discount than new users get it's still better than full retail.
As far as MMS goes I've never needed it and have not missed its absence in the time I've had an iPhone. I really don't see what all the fuss is about with that one feature. If I want to send a picture with my message an email serves just fine. Like others have said, I signed a contract and knew what I was getting into. I have no beef with AT&T and wouldn't switch even if I did have a beef since they have the best coverage where I live.

Why is it everyone in this country thinks they entitled to be given everything for nothing. I am so sick and tired of this mentality that is being taught by people who are too damn stupid to actually work for a living so they teach bull****. The fact is, you signed a 2 year contract for a subsidized phone. If you don't like it, too damn bad. Get off your lazy ass and get a part time job to pay for the new iPhone if you want one, or ask the Gov't for some money. AT&T and Apple are businesses. They are in business to make money. If you don't like it. suck it.

One outraged customer even wrote about stopping payment to AT&T until they agree to lower the upgrade pricing:
"For those loyal AT&T customers, remember to change your account setting to stop all automatic payments to AT&T before getting the new phone. It is your money, AT&T has no rights to steal from you unless you are satisfied with the service they promised to provide. This should be a fair business trade, not a robbery," Agent Provocative wrote.

This statement confused me. Why does this guy feel that AT&T is required to give him a cheap upgrade deal? And why is he giving people super stupid advice? Telling them to stop paying for service they have contractually obligated themselves to pay for? Seems really stupid...

I think the author should add a minor note to let people know they face some severe penalties listening to that guy...

I don't know why everybody is blaming AT&T for this upgrade issue when it should be on Apple. Think about this. An iPhone 3G was sold for $199 - $299 but the full price was $699 - $799 actually (see http://www.quickonlinetips.com/archives/20...locked-iphone/). So AT&T is actually subsidizing $500 for each phone sold and is only netting less than $10 per month for the data plan ($30 x 24 - $500 / 24).

The problem is if iPhone 3G owners upgrade and trade-in their old 3G phones, there is no place AT&T can dump those old phones. It has enough of those phones from people returning within 30-day period and being resold as "refurbished". Apple isn't helping by taking those phones back either and so AT&T is just caught right in the middle. AT&T is just the poor guy with the mess while Apple is laughing all the way to the bank.

Well... what you say looks like it makes sense, but it doesn't.

For example, I'm with AT&T now. New customers get the phone for $199. I can get the phone for $299 as I'm a 'valued customer' and meet the year or so requirement.

If the original 3G cost $699 MSRP, then in a little over a year, they've made the $400 difference due to subsidizing ($500 original subsidized cost - $100 for the 'extra' upgrade fee I can pay).

So that means that the effective $400 subsidized price (which is really less as the MSRP is $699, that's not what AT&T is paying per phone) is made up within the first year to year-and-a-half of my contract.

AND this assumes that AT&T is only making money on my contract after a year into my contract. Now, they might not really make any money until 6 months into my contract, or maybe even 9 months... but there's no way I'm going to believe that after 9 months they aren't turning a profit on me.

So yeah, I blame AT&T for their crap service, their horrible prices, and their big F-YOU to its customers.

Well, the $299 price you quote is actually the upgrade price for the old 8GB model, which is just $99 for new customers.

For the new 3G S phones, you and I will upgrade for $399 (16GB) and $499 (32GB), which are just $199 and $299 for new customers.

So in all cases, the "extra" upgrade fee is $200. And this upgrade requires us to be at least 1 year into our existing contract, which means AT&T has already recovered half of the $500 it paid Apple.

I don't disagree with you on AT&T's service. It is just average. For better service, Verizon is the best but it is also the most expensive. So we get what we pay for.

In any case, as far as where that "upgrade" fee goes, it does go to Apple and not AT&T. That's how the math works. Wish Apple is more transparent in their pricing.

Oh. I have another idea. Since Apple doesn't offer any trade-in program to take our old phones back, why don't we sell them on eBay and use the money to pay for the "extra" upgrade fee? The old phones may not worth much to Apple but I am certain it will worth a lot to others ;->

justanotherguy said,
Well, the $299 price you quote is actually the upgrade price for the old 8GB model, which is just $99 for new customers.

For the new 3G S phones, you and I will upgrade for $399 (16GB) and $499 (32GB), which are just $199 and $299 for new customers.

So in all cases, the "extra" upgrade fee is $200. And this upgrade requires us to be at least 1 year into our existing contract, which means AT&T has already recovered half of the $500 it paid Apple.

I don't disagree with you on AT&T's service. It is just average. For better service, Verizon is the best but it is also the most expensive. So we get what we pay for.

In any case, as far as where that "upgrade" fee goes, it does go to Apple and not AT&T. That's how the math works. Wish Apple is more transparent in their pricing.

You're right... I read the 'valued customer' upgrade notification incorrectly. It is $399 and $499. Not really sure why the old model was given as something I can upgrade to as I have that phone...

But that just makes my point even stronger as it's only $300 they need to make up. I still think they are caring more about profits than customers.

Actually, since the iPhone is 99% overpriced status symbol, I wouldn't buy one used and I'm not sure many would.

After all, having the NEW features is part of the status symbol...

AT&T is nothing more than a corporate rapist and anyone stupid enough to do business with them has little room for complaint. AT&T has been f'ing over customers for years and people keep coming back for more. Why is beyond me.

The issue is that a lot of Apple owners like to have the latest and greatest. It's one of the things that makes for a healthy Apple. But when you refresh the iPhone every year, contracts that run for 18 or 24 months are gonna cause problems.

I can understand the anger over MMS but surely part of the problem has to lie with those users that signed up to a two year contract in the first place? If your not happy to stick to a device for that length of time you probably shouldn't be signing the contract. And that doesn't just apply to phones.

What astounds me is, that everyone is complaining about this policy, but its the SAME POLICY THAT EVERY CARRIER HAS

the phone does not cost 199. it costs 599. you get it for 199 with a two year subsidy. if you dont use the phone for two years, you have to pay more to upgrade. the thing is they are mad that they are paying 399 for the 16 gig phone, but thats what they should be paying to get it without a contract. All this stuff is propagated by people who are too dumb to know what they are signing. Or people that think they can get away with it.

The petition will not work. B/c At&t doesn't care b/c even if people stop paying At&t, they lose their service. And At&t will charge them all the money they owe, plus the early termination fee, so they end up paying the same price as they would for the new iPhone plus they have bad credit.

Good idea.

open_coder said,
What astounds me is, that everyone is complaining about this policy, but its the SAME POLICY THAT EVERY CARRIER HAS

the phone does not cost 199. it costs 599. you get it for 199 with a two year subsidy. if you dont use the phone for two years, you have to pay more to upgrade. the thing is they are mad that they are paying 399 for the 16 gig phone, but thats what they should be paying to get it without a contract. All this stuff is propagated by people who are too dumb to know what they are signing. Or people that think they can get away with it.

The petition will not work. B/c At&t doesn't care b/c even if people stop paying At&t, they lose their service. And At&t will charge them all the money they owe, plus the early termination fee, so they end up paying the same price as they would for the new iPhone plus they have bad credit.

Good idea.


+1

They are Mac users. They are used to being part of a clique. Unfortunately for them, and Apple (what a horrible bundling decision this remains), AT&T doesn't give one single solitary damn about the clique. They just want the money.

Can someone calculate for me the total price for an iPhone 3G, + 18 months Data Plan including the tax, for both the lowest plan and the most expensive plan?

Yet another reason why I stopped using AT&T over 5 years ago. You would figure that they would learn I kinda hope alot of customers leave and goto Verizon or T-Mobile or hell even sprint for that matter. AT&T has been shady for a few years now I'm surprised that people still deal with them.

Since people see the iPhone as God's gift to man it is safe to say they won't be switching carriers. AT&T can gouge them as much as they want as those people can only get it from AT&T.

acidic-e- said,
Yet another reason why I stopped using AT&T over 5 years ago. You would figure that they would learn I kinda hope alot of customers leave and goto Verizon or T-Mobile or hell even sprint for that matter. AT&T has been shady for a few years now I'm surprised that people still deal with them.

AT&T wireless has only been around for 2 years.. thats BS

dimithrak said,
AT&T wireless has only been around for 2 years.. thats BS

AT&T Wireless has been around for a long time. I've had them since the late 90s. There was a time when it was changed over to cingular for a year or two after the buy out, but the name was changed back AT&T.

eblkheart said,
AT&T Wireless has been around for a long time. I've had them since the late 90s. There was a time when it was changed over to cingular for a year or two after the buy out, but the name was changed back AT&T.

Oh.. did not know that.. I take back what i said then..

This sort of thing is just one of the reasons why so many people (myself included) boycotted AT&T wireless into bankruptcy the first time around.

Though supposedly the new AT&T Wireless is just a renamed Cingular, they sure do seem to be reincarnating the dark lord of cellular day by day these days. 8P