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Untangling AT&T’s iPhone 3G S Pricing

Apple announced at its World Wide Developer Conference that the iPhone 3G S, due out on June 19, will cost US$199 for the 16GB model and $299 for the 32GB model. While the pricing seems straight forward, some current iPhone owners have found that they will pay more than the listed price to upgrade to the new model, and in some cases will pay substantially more.

The $199 and $299 price tags Apple announced apply primarily to new AT&T subscribers. iPhone and iPhone 3G owners, however, will likely pay more if they are in a contract that hasn't hit the two-year mark yet -- which includes all iPhone 3G users.

AT&T representatives told iPhone subscribers with contracts that are less than six months old will pay full price for their new iPhone 3G S. That's a hefty $599 for the 16GB model, and $699 for the 32GB model.

For AT&T subscribers with contracts that are more than six months old, the news is a little better. The 16GB model will set these users back $399 or $499 for the 32GB model, which is still more than the price Apple touted during WWDC, but $200 less than full price.

AT&T's representatives said that to ensure current iPhone subscribers get their new iPhone 3G S at a discounted price they need to visit an AT&T store. In addition to paying less than full price for their new iPhone, they will ensure that one is waiting for them on June 19. Subscribers that take advantage of in-store reservation will be able to pick up their new iPhone between 7AM and 9AM on the 19th.

While some current AT&T iPhone subscribers have been able to take advantage of the discount when pre-ordering online, there are a few that have reported problems. Apple's online iPhone order page has been going down for maintenance off and on since the iPhone 3G S was announced, so for most people a visit to their local AT&T store may be the most reliable way to ensure their pre-order is processed, and that they get the lowest possible price, too.

Understanding how AT&T's iPhone price structure works, however, may not be enough to keep some subscribers from complaining about or questioning the cell carrier's pricing scheme.

7 comments from the community.

You can post your own below.

Mike McCoughy said:

I’m not sure why this information enraged some people.  This has been the industry standard for cell phone pricing for years.  The listed price almost always coincides with a 2 year service agreement.  AT&T lets us upgrade early (6 months before our contracts expire).  This really shouldn’t have caught anyone off guard, the same thing happend when the iPhone 3G came out…everyone who had the original iPhone and owned it less than a year had to either wait to upgrade or pay full price.  I remember when I payed $499 for my 8gb iPhone and still had to sign up for a two year agreement.


Lotharia said:

So I’m being kicked in the pants for being an Apple fan and early adopter.

I either pay $399 now, or $199 in five weeks.

STUPID.  That’s like Ford dropping their customer loyalty discount and instead adding a fine for buying another Ford.


brett_x said:

Is it me, or is AT&T not good at math?

Doesn’t this mean that if you bought an iPhone a month ago, you should be able to pay the cancellation fee of $175 (the cancellation fee is variable, so I used the highest point to illustrate the point) and then pick whatever iPhone you want with a new plan for less? In this scenario each iPhone would cost:

16 GB - 199 + 175= $374 (vs $599- Saving $225)
32 GB - 299 + 175= $474 (vs $699 -Saving $225)

You could even get a newer “old” model for $274.

In either case, you can sell your old “unlocked” iPhone and recover some (or all?) of your cost. Am I missing something here? Who would actually pay full price just because you already have a now outdated iPhone?


K. said:

Yeah I thought about that, but then you lose your phone number


Frank said:

While you have to pay the 175 dollar cancellation fee, you will also have to either return your current phone or pay for it.  Most phone outlets do not get credit ( and therefor MONEY ) for the sale unless you keep the contract for at least six months. 

While they get the money for the phone within 30 days it is taken back if you drop the contract before the specified time.  So they either have to get the phone back and try to resell it or bill you for the full retail price of the phone.

Plus as stated earlier, you lose your current number,



azarkon said:

It makes total sense for ATT to price phones this way, because the up-front discounts they offer reflect a portion of the monthly plan covering the rest of the hardware costs.  So a user who is trading up iPhones after 6 months costs ATT more than a user who’s getting a iPhone to replace a two year old phone.


iJack said:

@K - “Yeah I thought about that, but then you lose your phone number”

Um, cell numbers are completely portable - by law.  I think there is a limit to holding the number before you have to sign with a new carrier - 6 months or something.  Look into it.


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