Blaming AT&T Is Easy, But Not Always Right

June 11, 2009 at 11:56 PM Leave a comment

I’m the first to call out a company that I think is defrauding, screwing over, or simply practicing douche tactics.  Complaining is my favorite.

But the recent online lynch mob going after AT&T over the inflated cost for existing iPhone 3G customers to upgrade to an iPhone 3G S are baseless.  Though it looks good on the surface to cry “unfair”, the complaint is ultimately unfounded.

The primary argument being offered up at Twitition is that “AT&T should give existing customers the same rate for the new iPhone 3Gs that they do for new customers. New customers or not, another 2-year contract is being made.

A cursory glance at the statement makes sense.  But unfortunately the math is, for lack of a better word, “fuzzy.”  If I got an iPhone 3G 11 months ago (which I did) and signed a 2-year contract, then I have only fulfilled 1 year of my 2-year agreement (with me so far?).  If AT&T gives me a new subsidized iPhone 3G S now and gives me a new 2-year contract (as the argument above states), then they just lost out on 1 year of trying to make up for subsidizing the cost of my previous iPhone 3G.  AT&T will NOT add 2 years onto your existing 2 years (that would result in a 4-year contract which is not allowed).

Basically, if you got a subsidized iPhone 3G, you did so in exchange for a 2-year service agreement so AT&T can actually turn a profit (to re-invest in such crazy things as building a bigger and faster network).  Another fun fact that seems to be getting overlooked, is there are 3 pricing options:

  1. New and Qualifying
  2. Early Upgrade (those who bought the iPhone 3G in the last year)
  3. No Contract/Commitment

So even if you’ve only fulfilled 1 year of your 2-year contract, you can still get the new iPhone 3G S for a slightly less subsidized (no contract) price.

Bottom line: This is what cell phone companies do to provide cheaper hardware.  All carriers, not just AT&T.  And all phones, not just the iPhone.  Otherwise everyone would still be paying the much higher, unsubsidized cost of the original iPhone.  I’m fine with keeping my iPhone 3G until next year when I will be eligible for the subsidized rate on an even better iPhone.  And if I change my mind and realize I desperately need video, voice control, etc; then at least I took the time to understand why I’m being asked to pay a premium to upgrade.


Entry filed under: Gadgets, Tech. Tags: , , .

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