I encourage everyone to look at AT&T’s quarterly earnings last quarter and see how much profit per customer they made. Per customer, AT&T makes around a $11 profit each month. Does that sound like the “blood-sucking” you expected?

If AT&T is only making $132 off you each year (most of your monthly costs are going back into the phone subsidies and network), why are you getting mad that they’re taking an additional $200 subsidy to get you an early upgrade when you haven’t paid the last iPhone completely off yet?

Doesn’t make much sense to me.

And here’s a thought — why not hang out until next year when you’re finally eligible for upgrade and then they’ll have the next latest and greatest iPhone, while everyone who got the 3GS will still be mad they have to pay more?

The fact that AT&T will offer $600 in subsidies for signing a 30 month contract is incredible. When you sign a new contract at early upgrade, it’s replacing the current contract you have. You’re not extending it out an additional 2 years.

Verizon would offer the same pricing plans, and if they get the iPhone 2010 and a new one comes 2011, expect people to complain about the same exact thing.

And if you really can’t stand the pricing, check out Rogers in Canada, which offers the same prices for the iPhone with 3 year contracts.

Everyone, if you’re going to be mad at a company for outlandish pricing, be mad at Apple. The iPhone only costs $200 to make, and they’re making AT&T pay them $600 for each one — and then AT&T turns around and cuts $400 off the total cost once you’re eligible. Perhaps if Apple didn’t charge so much in the first place, AT&T could have a more flexible pricing plan in place.

Honestly, I just think some of the reps don’t know what the heck they’re talking about. 95% of iPhone 3G users would be eligible for early upgrade.

Some iPhone users suggest canceling your contract, paying a cancellation fee of a maximum $175, minus $5 for each month you’ve already served on your contract. Then, sign up again for a new contract, and buy an iPhone 3G S at a subsidized cost. Siegel says that would work, but it doesn’t take into account a $36 activation fee, and it’s a lot of hassle for a relatively small savings.

–AT&T spokesman Mark Siegel

I don’t trust an AT&T spokeshole to be honest or accurate, however it clearly shows at least AT&T’s internal position is that the ETF clears the contractual obligations. It also belies a stupefying lack of valuation of $200-$400 dollars.

In the end everybody buying the new phone just makes all those people with 1year left on their contract now have 2 years left on the contract, which is money in the bank for at&t anyway.. so i’m not going to cry over at&t’s misfortune of having a popular phone exclusive on their network.

That’s what the “brouhaha” is all about.

This means that it is not even possible for consumers to compare deals as they are complex functions of phone subsidy (a loan), call minutes, texts, data, contract length, variable termination fees, etc. It is like trying to objectively compare an apple and an orange.

If it were illegal for operators to bundle the cell phone financing and network access terms and illegal to tie phone models to a single operator, all operators would have to compete on price and service for network access. If you need to finance your cell phone purchase there are plenty of banks who can do that. Network operators should operate networks and compete for their customers based on their competence in that field – not by anti-competitive behaviour.

If this all sounds far-fetched, consider the anti-trust implications of the status quo. What is perhaps really far-fetched is that such commercial structures are permitted in that most capitalist of countries, the modern United States.

The competitive situation is, in fact, much better in “socialist” Europe where until recently it was, for example, illegal to subsidize cell phones in Finland, resulting in the lowest and most transparent call and text prices in Europe. Mobile operator Orange’s exclusive iPhone carrier deal has been recently been ruled illegal on competition grounds.

I wonder how much the US operators “donate” to US politics each year!

Does Apple actually receive $699 per phone sold? Does Apple really get the ‘retail’ price from AT&T? *most* products sold at a retail price have a wholesale price attached to them. The retailer pays the wholesale price to the manufacturer.

From what I understand, AT&T is already paying a portion of the monthly account fee to Apple anyway. Do they get full retail for the phone equipment *plus* a revenue cut from each subscriber?

I suspect AT&T is paying a wholesale price to Apple, and part of the deal to get to pay a wholesale price up front is that it’s more or less made up for by the monthly revenue split. Just a hunch – I’ve not seen the confirmed anywhere.

If you have to argue about it like this, you can’t afford it. Give it up and get a Razr or an old model BB

2 year contract = a new phone every 2 years

if you want a new phone every year, you have to pay the price.

What is so difficult to understand?

Here’s the problem as -I- see it:
1- The fact that all the carriers Apple deals with have exclusivity agreements for the their geographic region basically means that the 599/699 pricing for a “no contract” phone is balderdash. That is a purely made up number ($200 of extra pure profit) thanks to the lock-in monopoly. Apple gets to price the phone as they see fit, at some super duper gouging price, because customers don’t have a -reasonable- choice…and that’s good for their Carrier partners.

2- AT&T’s contract basically states, in black and white, that they feel their “subsidy” is worth $175 + 1st month’s rent and activation. Any Joe Schmoe can grab the phone for $235, sit on it for a month and a day, ETF, and walk away “contract-free”. Total=$480
That kills all this other BS talk about the ethics of the subsidies for the contract-free phone. There is NO way AT&T is taking a $400 bath on those phones, therefore any $$$ they derive above and beyond that is purely punitive to “loyal” customers. [Might give some the idea that it is the company's business plan to capitalize on meekness.]

3- AT&T’s contract also states that the ETF is pro-rated for all 3G customers, meaning early adopters are about $55 down on that ETF and have paid AT&T for the first month’s service. That leaves about $120 left +- some, substantially lower than the $200 “premium” they have chosen to levy.

4- What’s with the $18 “upgrade fee”? I didn’t know that kicking a returning customer in the balls for signing a new 2-year contract was considered a smart business move. Although, I guess it is fair, considering they kick new customers in the nuts twice ($36) for activation.

Which leads me to my conclusion: it is bad enough that the marketplace in the US is so “blood-sucking” collusive that we deal with getting nickel and dimed constantly with stupid fees, draconian contracts, outrageous rates, and imposed subsidy models. But when AT&T thinks we’re just too stupid/lazy to realize that $200/$400 of hard-earned cash is a price of CONVENIENCE, the price of hanging onto a 10 digit number, the price of being a “loyal customer”, the price of remaining an indentured servant, well I guess some folks get pissed…and call them names.

Personally, I think they deserve it. Because only a greedy, stupid company could think that sticking a finger in the eyes of their life-blood customers is a good idea.

6 month wait – not bad. Long enough to watch the model go through it’s shakedown at the hands of the masses, then pick it up after a round or two of fixes. :)

The price is NOT 99, 199 or 299. They should put a big fat * next to it and then list – for new subscribers with 2 year commitment for voice / data plan for X. It’s misleading and I’m sick of hearing how iPhone is now 99 as its not.

Now if everyone has such as issue with this then be my guest and buy the iPhone at full cost. There would be hardly no sales as the carrier plans would still be the SAME. I laugh when people say cut the plans in half etc. Umm what do you think pays for all network buildout? faster speeds? more coverage?

If you don’t like how the wireless industry works – don’t use a cell/smartphone. Stick to landlines and wifi when you can find it. All this wireless spectrum you gladly eat up costs money to buy and that price is broken down to you. Just like cable TV. Last I checked HBO wasn’t free.

The person who compared the PC world to telco is right on. I suppose everyone has free broadband at home? Wireless is a SERVICE that you pay for. If Apple would like they are free to purchase their own bandwidth and start their own telco.

And anyone thinking Verizon will be any different or cheaper? You are truely dreaming. I have used every carrier out there over the years and the cheapest is TMO but they have the smallest coverage footprint.

You will not see any change to this pricing as it would set a precedent that would have to apply to every other mobile device and the carriers are not about to give upgrades away.

Apple I always wanted a new G5 so I’ll just take a loaded one for the price of my G4?