iPhone 3GS Upgrade Price Depends on How Profitable You Are

There’s been a lot of discussion about the pricing of the new iPhone 3GS for existing iPhone 3G customers. A lot of iPhone 3G customers, including Warner Crocker, aren’t too happy that they’ll have to pay $499 if they want to upgrade early.

I can understand why AT&T doesn’t want to subsidize an iPhone 3GS for customers that are in the middle of their contracts, but I wish they the “rules” for existing customers were a little clearer and transparent.

On Monday I considered pre-ordering an iPhone 3GS 32GB, but saw that I’d have to pay $499 if I wanted it delivered on June 19. If I waited until July 30 (exactly one year after I was able to buy the iPhone 3G), I’d qualify for the full discount. I think I can ‘live’ with my iPhone 3G for an extra month for $200.

When I bought my first iPhone in June of 2007, she opted for a Samsung Blackjack (subsidized) when we switched from Palm Treos and Sprint. I bought her an iPhone in March 2008 (unsubsidized) and an iPhone 3G (subsidized) the same day I bought my iPhone 3G.

My wife is also interested in the iPhone 3GS, but Apple’s online store said she would have to wait until next March to get the fully subsidized price. To me, it seemed sensible that we would both qualify for the fully subsidize phone on the same date since I bought both iPhone 3G’s at the same time. But according to Apple.com, my wife’s line wasn’t eligible for the fully subsidized price until March, 2010.

I called AT&T to see why our eligibility dates were different and if there was some sort of mistake. Apparently, I was eligible for an early upgrade because my line of service is very profitable and AT&T wants to reward me with an early upgrade, just a year after fully subsidizing my iPhone 3G. My wife’s line isn’t as profitable, because she has the secondary line on our Family Talk plan.

The Family Talk plan includes 2,100 minutes per month and costs about $200/mo after you add in 3G service, SMS, taxes and fees. Her phone’s portion of the bill is $9.99 for phone service, and $29.99 for 3G service. Obviously, her line isn’t nearly as profitable as mine.

According to the rep I spoke with, AT&T evaluates each line of service to determine whether or not they can receive an early upgrade. He said that a lot of customers have called in and found that their more affordable phone is listed as the primary line, while the iPhone 3G(s) on their accounts are listed as secondary. He says in those cases, if the devices were flip-flopped, they would’ve been eligible for an early upgrade.

While I certainly appreciate AT&T offering me an early upgrade, I really wish the ‘rules’ were more cut and dry.

10 Comments

  1. Warner Crocker

    06/13/2009 at 7:42 pm

    The rules are a bit sketchy, and they vary depending on who you talk to and your negotiation skills. I talked to a local store rep and also a rep over the phone and got two different stories about the upgrade, pricing and availability. In the store the price was the unlocked price, over the phone the price was $499. Over the phone I was told that yes, pre-orders would be available in the store on the 19th. In the store they said, they doubted that would be the case. Of course now we are hearing that AT&T has ‘sold out’ of its pre-order allotment, but there will be some phones available for those who wait in line.

    Go figure.

    Reply

  2. John Gibson

    06/13/2009 at 9:53 pm

    Frustrating, but it makes sense… AT&T has to pay Apple and avg of $466 (based on 3g) for every iPhone sold + $18 a month. When you keep that exorbinant payout in mind the restrictions on subsidies for existing customers makes sense… On lines that bring in $40 a month it’s unreasonable to expect AT&T to eat ~$200+ on a yearly basis especially when Apple is getting a hefty chunk of that $40 a month.

    Reply

  3. Virtuous

    06/13/2009 at 11:25 pm

    AT&T’s upgrade prices and rules need to be spelled out more clearly. They seem to be doing everything they can to drive their customers away.

    Reply

  4. sfwrtr

    06/14/2009 at 12:09 am

    Take a deep breath…

    For $175 or less *additional* price, you too can upgrade your iPhone to a GS. Just take the early termination fee and sign up as a new customer.

    As a bonus, once you terminate your contract, you can ask for your unlock code for you old iPhone 3G and go eBay it.

    Cheers. Enjoy!

    Reply

  5. Travis

    06/14/2009 at 12:24 am

    No one “needs” a phone that costs $200 a month. What did people do before there were cell phones?

    Reply

  6. hasmukh

    06/14/2009 at 12:36 am

    too high price if tis less more sell

    you get same profit hasmukh thanks

    Reply

  7. Xavier Lanier

    06/14/2009 at 12:42 am

    I think it’d do everyone a lot of good if the upgrade rules were clearly spelled out at the beginning of a contract. Why not clearly tell customers that if you sign up for a premium plan, you get to upgrade once a year. Sign up for a lower plan, you get a new phone subsidy every two years.

    Reply

  8. Ron

    06/14/2009 at 6:51 am

    It’s interesting because I purchased the original iPhone on the day it became available then on July 11, 2008, I purchased the iPhone 3G (8GB). I got a family member to get into a family plan with me (switched from Verizon) and she also bought the 8GB version on the same day with me. I was interested when I would qualify for the upgrade amount and upon checking our upgrade dates, hers shows she is eligible in Dec 2008, whereas I would have to wait until March 2010. I am the primary line (as I had joined AT&T in 2007). The funny thing is that since I work for Apple (and get a discount) this has penalized me in regards to an earlier date (since AT&T doesn’t view me as “affordable” as the other person in the plan). I’m going to visit a store this week to see if they can change the date to match with the other person in my plan since I do work for the company supplying the phone in this partnership.

    Reply

  9. Ben

    06/14/2009 at 8:09 am

    Warner, with the order issues last year with the 3G, I’m not surprised at all at any delay this year.

    I think its funny reading this thread and Warner’s previous thread about everyone complaining about this. You signed the contract last year, you should have asked last year about any upgrade issues this year because you know apple will always come out with something better. If you don’t like it, simple, complete your contract and get a different phone. I mean, the network is horrible, right?

    Reply

  10. Rudy Armijo

    06/18/2009 at 6:39 pm

    We are a 2 iPhone household as well that share a FamilyTalk plan. My number *primary” is eligible for an upgrade on July 13, 2009. AT&T is telling me that my partner’s line is not eligible until March 13, 2010 because his line is less profitable to AT&T. I had some very choice words for the rep, floor supervisor and supervisor I spoke with about my dissatisfaction over this policy. We bought the original iPhone on the 1st day it was offered, we upgraded with no issues on the day the 3G was offered, now we are being screwed by a policy we were not made aware of. We pay $200+ each month for service, we paid top dollar for the 1st phone, we advocate and upsell AT&T & iPhone to everyone. When I asked that each phone be eligible for an upgrade now (after AT&T’s press release, offering existing 3G users the best pricing) the AT&T Supervisor, Kirsty Martin, quickly dumped all responsibility for that fact that she was not able to offer any assistance/discount/adjustment on any iPhone due to the contract with Apple. So it’s Apple’s fault that AT&T cannot make this right. I told her that I hoped another carrier gets the rights to carry the iPhone and before I could finish my sentence she blurted out that the situation would be the same no matter the carrier due to the requirements of the agreement of Apple. So the villain is not AT&T, it’s really Apple! Talk about integrity, customer satisfaction and professionalism. Make a bad, greed-focused policy, take a hit in the press, magnanimously “change your position”, still manage to alienate your long-time, loyal customers and then blame the supplier of the phone you offer your service on. Nice spin. AT&T has changed it’s position alright. I guess they got tired of giving it to me on my side so now they are giving it to me doggy-style. I didn’t even get a kiss…

    Reply

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