Hi, this is David Speiser. I’m going to be contributing to LD on occasion. I’d love to hear your comments and opinions. Please feel free to say hi, and tell me what you think.
Today I’m thinking about the cost of a new iPhone 3G. Many people were astounded by the drastic price reduction Steve Jobs announced at the 2008 WWDC. $200 for an iPhone with 3G data speeds and built-in GPS? Sweet.
Since then however, many people have cried foul. Or at the least they’ve discoursed on the hidden costs of the new iPhone, specifically charges for data service. Anthony Ha at VenturebBeat covered this issue regarding the actual cost of the phone over the lifetime of the mandatory 2 year contract. Anthony and MG Siegler also note the increase in the cost of text messaging. About THAT part I agree with them. It is uber-lame to charge so much for texting, especially when it’s so cheap to do. Walt Mossberg also offered up a review at All Things Digital. One of his less positive comments was in regards to battery life.
What I want to say is this: I don’t think these “hidden costs” are hidden or inappropriate. And I’ll tell you why.
First, there’s the data costs. Yes they’re higher. But you know what? We’re probably going to be transmitting a LOT more data than we used to. Personally I will be using email much more often, both to read and to send, now that the speed is more functional. I also expect to make more use of the web browser since websites should now load at usable speeds even when not connected to WiFi. All that data transfer is going to cost more money, so I think it’s sensible to charge more for the data plan.
Also, and this is not a scientific test, but it makes sense to me that if Walt was using the device to check email and browse the web more (and faster) than was possible with the G1 iPhone, then the battery is going to exhaust more quickly. Did you ever notice that if you’re mousing and typing a lot on your laptop when you’re running off the battery, the battery drains more quickly than if you leave it sitting alone or mostly just read emails? Same deal applies to the phone. If you’re leaving it in your pocket a lot of the time because the web browser’s too slow, you’re going to save a lot of juice and make it through the day on one charge. If you’re checking and sending more email and visiting more websites because you can, the battery will drain faster. Now I believe that 3G data activity also affects power usage differently than Edge data activity, but my point remains. If you’re using the phone more, you’re going to drain the battery faster.
Now don’t get me wrong. I’d prefer that the cost for the data plan remained the same. Heck, I’d rather it was cheaper, or free. And I’d love a longer battery life, infinity + 1 if I could have it. But I can’t. And I don’t think these costs are hidden or inappropriate. To me, the pretty much make perfect sense.
So, you’re ok with paying more for data, simply because AT&T assumes you’re going to use more? I pay $20/mo on AT&T for 1500 SMS, 200 MMS, and unlimited data, and I usually average around 600MB/mo, give or take.
I can blow through that data whether my SIM card is in an EDGE phone or a 3G phone, it doesn’t matter. By your logic, AT&T should be charging higher for ‘3G access plans’, since they’re encouraging you to use the free “CV” streaming video and whatnot.
The idea that you should pay more for the same access as I have, simply because your device makes mobile internet ‘more fun’ or ‘more accessible’ is a load of hooey, and the reason that AT&T doesn’t need to know what phone my SIM card is in. If they feel they can offer unlimited internet for $15 on a 3G Motorola Z9, with the myriad of streaming media services, then there’s no reason they can’t offer the same plan to iPhones.
AT&T had a special cheaper plan for the old iPhone, it was part of the plan to sell more. They’ve just forced everyone to buy their old regular plans for the new iPhone. No more honeymoon for the iPhone users.
AT&T overcharges to quite a horrible extent. Then as if they’re not charging enough to your face, when you get your bill they slip in all of their “regulatory fees” including one they doesn’t actually go to any agency, the so-called Carrier Cost Recovery fee. Why don’t they just charge everything up front and be honest instead of slipping them in afterward?
I agree with Ricky. 3G access costing more $ is all smoke and mirrors, especially since high bandwidth apps (think VoIP) are not permitted, unless than using WiFi. (So Jobs has said.) And here’s the real BS kicker… my v1 iPhone SIM when put in my Nokia N95 gives me 3g access for that same $20/mo not $30.
Regarding “hidden costs” Apple is also saving a few bucks by not including a dock with the new model – it’s $30 extra.
(I’m keeping my v1 model – works fine and the new hardware isn’t compelling enough to upgrade. If they had included a higher megapixel camera, I might have made the leap.)
Hi Ricky, thank you for your comment. Xero and Dave, thank you as well.
Ricky, with all due respect, I think you’re missing my primary point. I’m not arguing that the iPhone does or does not make mobile internet ‘more fun’ or ‘more accessible.’ I’m making a point about these so-called “hidden costs.” I’m saying that they’re not hidden at all. They are amortized over two years.
My G1 iPhone cost me $500 (after a $100 gift card rebate.) The new phone will cost less money up front, only $200.00. The balance (and then some) will be paid back over time through contractual obligations. Over the lifespan of that two year contract, I have to pay a little more for my phone and phone usage. And it is my steadfast opinion that I will consume *significantly* more data using the newer phone than I would have with the old phone. That’s it.
I agree with you (and with Dave Zatz)that AT&T is overcharging. I would prefer they charged less. I think it’s particularly outrageous that they’re charging so much for text messages.
All that being said, I drink the iPhone kool-aid. I don’t mind paying their price to use the device. I have a whole bunch of gripes (again agreeing with one of Dave’s points here) about features they chose not to include, and there may be a future post complaining about those quite soon. But I stand by my post, that these costs are not hidden at all, and are for the most appropriate. Of course, I completely respect your right to disagree and believe I’m a moron. 🙂
I pay more for Sprint’s EVDO than I did for its 2g network. Why wouldn’t AT&T charge more for a newer network?
Yes, the iPhone plan is tied to the SIM card, which can be inserted into other phones bought contract free at an independent retailer or one of two Nokia stores in the country. Just remember, having multiple phones is NOT a standard use case in the U.S. So for most people, AT&T is charging $20/month for EDGE data with the original, and $30/month for 3G data with the new one. I agree with David – that’s a fair (if pricey) upgrade. Faster is better, so you pay more, which passes the common sense test. Where the logic falls apart is for users who live in areas outside of AT&T’s 3G coverage; then it’s just an extra $10 for nothing (though I suppose if you’re feeling generous you could consider it a finance plan that covers the subsidy). There’s no way to rationalize the lack of SMS, though.
It appears that even the $10 increase will not be enough to save AT&T from iphone losses.
Exactly. The data usage on the iphone is killing AT&T.
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I am getting more text messages showing up on my bill than took place on my iphone 3g.I’ve emailed ATT about it and have not heard back yet. BOOOOOO!!! In cases like mine where we can prove over charging, Lets take pics of the bill and the texts on the phone that’ll prove the texts never took place and put them on you tube and blow these crooks out of the water. If anything it’ll show breach of contract and we should be able to get out of the 2 year contract without the fine. Then crack the iphone and go with a better company. The more of us that do this the better chance ATT will fix their S**t!!!!!