AT&T Being Unfairly Hammered Over iPhone Upgrade Fees - InformationWeek

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Commentary
6/11/2009
10:39 AM
Eric Ogren
Eric Ogren
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AT&T Being Unfairly Hammered Over iPhone Upgrade Fees

iPhone 3G owners are in an uproar that they won't be able to enjoy the steep discounts being offered to new (or qualifying) AT&T customers when the iPhone 3GS goes on sale next week. Get over it. This is the way the cell phone industry works, and you signed a contract. Know what your responsibilities are before you sign, and then remember that you need to honor your legal responsibilities (and not cry about it).

iPhone 3G owners are in an uproar that they won't be able to enjoy the steep discounts being offered to new (or qualifying) AT&T customers when the iPhone 3GS goes on sale next week. Get over it. This is the way the cell phone industry works, and you signed a contract. Know what your responsibilities are before you sign, and then remember that you need to honor your legal responsibilities (and not cry about it).I've been sitting back the last few days while the blogosphere rages on and on about how "unfair" it is for current iPhone 3G customers to have to pay $200 more for the new iPhone 3GS than new customers would.

Like my colleague Mitch Wagner, I bought the original iPhone on June 29, 2007. Guess what? I paid the full $600 price tag for it. AT&T did not subsidize the cost of that device.

It is that reason alone that I was able to buy the iPhone 3G at the subsidized price -- $300 for the 16GB iPhone 3G -- when it went on sale on July 11, 2009. I also had to renew my contract.

The price of the iPhone 3G, which boasted better specs (3G, GPS, etc.) was $300 only because AT&T subsidized it. The full retail price was over $600. AT&T paid Apple for the device and then re-sold it to me. AT&T offered the $300 price point to the original iPhone adopters because their original phones weren't subsidized. If the original iPhone had been subsidized, those original iPhone owners would not have been offered the subsidized price in 2008.

This year, things are different. Anyone who bought an iPhone 3G received the $300 price because AT&T covered part of the cost on your behalf with the hopes that it would recoup that money over the course of your two-year contract. So far, iPhone 3G owners are only 11 months into their 24-month contracts.

Why, then, is there such outrage that they're not going to be offered subsidized devices? By rights, if an iPhone 3G owner wants to upgrade, AT&T should charge the full retail price of $700 for the iPhone 3GS 32GB. Instead, AT&T is offering a partial subsidy of $200 and charging $500 for it to current iPhone 3G customers rather than the full bill of $700.

Guess what? This is how EVERY wireless operator works when you buy a new, subsidized phone on contract. It's how the industry works. Anyone who wants a new phone in the middle of their contract has to pay the full retail price of the new phone.

If Apple had partnered with any other wireless network operator, the situation would likely be exactly the same as it is today.

Don't blame AT&T for high prices on the iPhone 3GS. It's not their fault Apple built a $700 phone. Cheap phones are not a "right". They are a privilege for those that live up to the contracts they sign.

Live up to yours.

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