iPhone 3G pricing: Who qualifies?

Posted by Andru Edwards Categories: Apple, Smartphones, Handhelds, Rumors

It seems that there is a bunch of confusion surrounding the price of the newly announced iPhone 3G. I spent a while on the phone the other day chatting with my pal Chris Aarons over at Buzz Corps, and we debated how pricing would work. At the end of the conversation, I realized how silly it was that, despite a price being announce on stage at WWDC 2008, that people still weren’t sure if they would be able to get the phone for the $199-299 that was quoted.

So, where does the confusion lie? Well, when dealing with cell phone companies in terms of subsidized phones (and the new iPhone 3G is a subsidized phone,) it all comes down to qualification. Don’t believe us? Head on over to AT&T’s iPhone 3G splash page. Next to the price of the phone, you will see a neat little asterisk. Scroll down to the fine print, and what do you find? The following:

*Qualified customers only. 2 year contract required. Based on 3G and EDGE testing. Actual speeds vary by site conditions. Based on iPhone 3G (8GB) and first-generation iPhone (8GB) purchases. Requires new 2-year AT&T rate plan, sold separately.

Did you get that? Qualified customers only. And yet, there is no mention of who qualifies. There lies the conundrum. When Steve Jobs announced the price of the iPhone 3G, he made no mention of any sort of qualification that had to be met, and many believed that $199 was the price anyone should expect to pay for the new iPhone. Luckily, InformationWeek was able to get some information out of AT&T’s Mark Siegel, which should help in clearing all this up. Looking at what Siegel had to say, here is what we know to be true:

• If you are not currently an AT&T customer, you are free and clear to purchase the iPhone 3G at the advertised price of $199 for 8GB or $299 for 16GB, as long as your credit check passes and you qualify for a line of service.
• If you bought an iPhone on or after May 27, 2008, you are eligible to receive an upgrade to the iPhone 3G at no charge. You also get a refund for the difference in price between the iPhone Oldschool and the iPhone 3G, minus a 10% restocking fee. Oh, and you have to give your old iPhone back, of course.
• If you are currently an AT&T iPhone customer, you automatically qualify for the subsidized pricing on a new iPhone 3G
• If you are currently an AT&T customer, but not on an iPhone plan, things get tricky. In order to purchase an iPhone 3G at the subsidized price, you will be subject to some sort of qualification criteria. What is taken into account here is your payment history, how long you have left on your contract, how recent your last upgrade was, and there may be even more to it.
• AT&T’s regular upgrade rules may or may not apply to the iPhone 3G, but the details will be made available prior to the launch in July 11.
• If you are already a customer of a mobile phone provider and want to buy a phone unsubsidized due to being in the middle of your contract, you shouldn’t expect to pay more than $175 over the subsidized price of the phone. Why? Well, since early-termination fees typically cost $175, if one wanted the subsidized price of a phone, they could just cancel their contract and start a new one, resulting in a cheaper price for the phone. Mobile carriers would rather not deal with that hassle. As such, the price of an 8GB iPhone 3G shouldn’t be more than $375 (cost + $175) for those who don’t qualify for the subsidy.

Whew. Did you get all that? Basically, the only people who are sort of in limbo are those AT&T customers who are under contract with a device with anything other than an iPhone. Still, if that is you, we don’t think you should expect to pay more than $375 for an 8GB phone, or $475 for the 16GB version. Everyone else, you are good. You just need to agree to a new 2-year contract when you buy the iPhone 3G.

We all cool now? Let us know if we missed anything here.