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iPhone Users Bristle At AT&T Upgrade Policy

Confusing price structure has fans in revolt

By Mark Huffman
ConsumerAffairs.com

June 9, 2009

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For many iPhone users, AT&T's attitude toward them seems to be, "What have you done for me lately?"

Consumers posting comments on the AT&T support forum are calling for an iPhone users revolt, with the aim of persuading the carrier — for now the exclusive iPhone network — to change its upgrade policy.

What has current iPhone owners so ticked off?

It revolves around the fast-evolving iPhone. To get one, most consumers committed to a two year contract. But over that two year period, since its introduction in 2007, the iPhone has undergone technology enhancements and, like many electronic devices, the price has fallen.

This week Apple introduced its new souped-up iPhone 3GS, with a price of $199 for the 16G version and $299 for the 32G version. However, that's only for new AT&T subscribers. If you bought one of the earlier versions of the iPhone and want to upgrade before your contract is up, it will cost you an extra $200.

"If you are a loyal iPhone user like me, contact them through e-mail, phone, whatever — let your voice be heard," wrote one upset iPhone user on the AT&T forum. "Let them know you will not be quiet. Do whatever it takes."

Adding insult to injury, AT&T has dropped the price of the entry level iPhone to $99. Early adopters who bought the first iPhone model two years ago paid $400.

Of course, those who crave the latest technology want the iPhone 3GS, which has increased speed and many bells and whistles not found on earlier models, including a video camera. New AT&T customers will be able to get the 3GS for $199 for the 16G version and $299 for the 32G model.

iPhone users not at the end of their contracts can upgrade to the new phone, but not at the subsidized price. The upgrade price is $399 for the 16G version and $499 for the 32G model. Without a contract, consumers pay $599 and $699 respectively.

An AT&T spokesman said the company is trying to be fair, pointing out that prices U.S. consumers pay for their phones are already heavily subsidized. Wireless providers need contractual commitments, he said, to recoup that subsidy.

"If you want to change your device in midstream, we want to help you do that, but you have to look at the economic realities," said AT&T spokesman Mark Siegel.

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