The cheaper iPhone 3G will cost users more; AT&T raises monthly fee


iPhone-3G.jpgThe iPhone 3G has finally arrived; people are giddy with the vastly reduced price. What a sweet deal. Imagine getting one of the most talked about iPhones starting at the low price of $199 for the iPhone 3G 8 GB, and $299 for the iPhone 3G 16GB, Not bad, not bad at all! The iPhone 3G price is a huge difference from the first generation iPhone. The first iPhone came out the starting price was $499.

We’ve heard the reduced price rumors for the iPhone 3G for a while. It’s a great feeling to know that the price reduction is true. I’m still wishing we had seen more memory, an updated camera, along with wireless synching of music. I guess I’ll have to look forward to those features in the next generation iPhone.

Shortly after the news about iPhone 3G price drop people started hearing unpleasant news about a change coming to AT&T’s new monthly pricing plan. AT&T has struck a new deal with Apple. AT&T will be raising the monthly minimum service plan from $60 to $70 per month. iPhone 3G users will be paying an extra $240 over the lifetime of the two-year contract.

Why will iPhone 3G users be paying a higher monthly fee? According to analyst’s AT&T will actually be paying Apple a few hundred bucks more per phone than they are actually charging for it, in order to make up the loss AT&T will be forced to tack on the additional fees.

“Less than 20 percent of our customers have integrated devices,” Ralph de la Vega, the head of AT&T’s mobile business, said during the conference call. “And, at the $199 price point, we could have mass adoption and put the iPhone in the hands of people who have never surfed the web on a phone.”

With AT&T subsidizing the iPhone 3G it puts it on par with other smartphones, such as RIM’s BlackBerry and Samsung’s BlackJack.

At the WWDC ’08 keynote address, Steve Jobs mentioned that 56% of people didn’t purchase the iPhone because of its price. Apple quickly learned, what many of the mainstream cellular carriers have already known, that many Americans would prefer not to part with their money up front.

Will people be less likely to buy the iPhone 3G even if they will pay more over time? I doubt it. I’m not an iPhone user but that is only because the rural parts of South Carolina I travel to when I’m in South Carolina have very spotty AT&T coverage, since I rely heavily on my cellular phone for my business the iPhone is not an option. However, if it were open to my web carrier, Verizon, I would be happily sipping the Kool-Aid.

Will the increase in AT&T’s monthly fees stop you from purchasing the iPhone?


ken H

AT&T is ripping off existing customers who want to upgarde to new Iphone 3GS. I just called ATT wireless customer service and its an addition $30 a month because of new data package and adding text message which I already have. The rep said it’s Apples fault that they wanted more money..
Why would I pay $360 extra in monthly fee’s and buy the phone for $299 the same lousy service that ATT provides ??? $659.00
I am serously looking at the Palm pre which is said because I love Apple and am an Apple stockholder but Hate ATT who has a monopoly on this phone. Once verizon starts to offer Iphone I will be going there…

marty theron

I really would like one, but since I have an itouch – and pay nothing for web fees…. why would I leave my family plan for 4 at us cell that costs us $135 a month and I have unlimited texting and web service on that? 2 items but it seems a lot cheaper until the itouch dies…

amit hunnare

hi..! don’t no wht to do but apple is an cute little baby for what my hands are waiting to be…lets c when to be touched…apple u r great but the plan kills me man..stop that plan an hav something open price of abt 299$ to be paid only..thats it…missing u apple

Riley Freeman

I think the iPhone would be better on the sprint network. and only pay the $100 fee for the unlimited plan.

Peter I PAID 500 for a 2G 4Gig Iphone

I am a big fan of apple, I purchased my 2g iphone the first week it was introduced and I love it!!! but this price gouging or ransom is just too much and will be the straw that breaks me!

Why be an early adopter? Apple and At&T have not shown any loyalty whatsoever! First we were told early adopters would not be charged an extra fees… then this!

For all of us iphone 2g users, what are we going to do when our beloved iphones finally die? (inevitably they will) I noticed that all the post says iphone 2g users will be happy to keep their 2g one, but when our 2g iphone does die… will we be forced to buy the 3g and essentially get screwed and pay the additional fees?

I wish Android is out when my iphones (i have 3 under a family plan) finally die so I could make the transition and tell At&T and Apple to shove it!

Once a loyal apple fan…

Mark L.

If you want unlimited text msg then add $20. So the monthly price increase is $30 not $10. This is a deal killer for me. It not just the money it the blatant gouging when we all know the real cost of a text msg is much less than a penny.


Yes, the increased price absolutely stops me from buying the new iPhone. I’m a happy 4 GB iPhone owner, and I bought it on the day it was released. It was a good investment and I’m happily surfing along at the slower EDGE speeds– when I’m not near a Wi-Fi network. Wi-Fi is getting more prevalent every day, so why pay so much more? $240 extra over the 2-year contract is not worth it.


Yeah, look at my big pom-poms rooting for corporate america…..wait…..Apple is part of corporate america…….er….. Apple FTW!


Thanks, Martin; I……I…I had that coming, I guess! Love your pom-poms.


Ramon Says: “$10 spread out among the hundreds of thousands of consumers is not unlike the windfall that the oil companies are enjoying – not out of this pocket.”

First, you are comparing two completely different industries which have little to do with each other therefore bad comparison. Second, oil companies make a whole lot less per gallon of gasoline than does the federal government per gallon of gasoline. People should inform themselves as to where each cent goes before blabbering about “windfall” profits. If oil companies are making so much money, just imagine what the government piece of the pie is. Oil companies drill, refine, and deliver fuel to your local gas station; they provide a useful product to you. The government does absolutely nothing. Companies are in business to make money. The government is in business to screw with your money!


I would have gladly paid the larger price tag for the phone, rather than the increase in monthly fee (and the loss of text messages). The monthly fee is just too much for a dang phone – I don’t care what else it does. And the lock-in with AT&T doesn’t help either.


Yes, yes and yes, the higher price will stop me from upgrading to 3G. It’s too much for too little in return (faster net & gps). However, I know plenty of people who LOVE the $199 price tag and they plan to leave their current contracts with other carriers and jump to AT$T – even with the higher monthly fees.

And Yes, I absolutely think more people plan to give At&t more money over the life of the contract.

Andy Moran

I can understand this misconception coming out of the digg community, but I’d expect better from the Apple Blog.

AT&T isn’t raising their prices at all. This is the lowest 3G data price you will get out of AT&T for *any* phone. You are just now using their 3G data plan instead of their 2G data plan. There is no reason AT&T should be giving major discounts to iPhone users. They are treating iPhone users like they treat their other customers. I’d say that’s more than fair.

Nobody said the price of using a 3G phone was as cheap as the price of owning a 2G phone. If you don’t want to pay for 3G service, don’t buy a 3G phone!


Hard to justify spending $70.00 per month for 450 mins. when I get unlimited minutes from “Metro PCS” for only $45.00.. I really can’t understand why “Metro PCS” can offer so much more for 1/2 what AT&T or any other carrier charge.. I really wanted to buy a 3G iphone for its wireless data only but now it appears that’s not possible.. I guess Apple did figure out a way to stop all the hacking didn’t they. I bet it really cost them sells though. I know a lot of people who have the 1st. generation iphone that were going to upgrade until they heard that you can’t even buy a “3G” without signing an AT&T deal..


I am about to be heading to college so any extra expense is not apreciated. I have a first generation phone and the plan works out well for me. If theyre gonna up my plan anyway I will upgrade but if not I don’t think I will have the money to support my apple habit. To be broke or to have 3G, what to do, what to do. Arg!


Opal:>people weren’t buying as many iPhones as they had hoped

I think this is a sob story. I watched the stevenotes. All of them (I know, sad right, but I was bored at work ;-)) Every time except wwdc08 he goes off on how successful the iphone is, and how much market share they captured in such a small time… IMO the latest pricing change has nothing to do with “giving the iphones to less wealthy people” which is what they are insinuating, but it’s pure marketing, chasing that ever elusive cent.

What I really think happened was that huge numbers of people bought the iphone unlocked already (I know I did in the UK), and use it on “rip as you go” in europe and therefore it’s AT&T who lost out, not Apple, hence the increase in fees, though for some reason this doesn’t equate here in the UK, where I’m sure just as many % iphones are in use on other carriers.


AT&T sucks. And I use to be an AT&T engineer at Bell Labs.

Can the iphone G3 be unlocked and used with any provider?

I have an iPod touch and a blackberry. need to keep it separate

Sachin Patel

@ Opal Tribble
Over here in the UK people are much more accustomed to getting phones for free with contracts, so this move from Apple and O2 will please UK customers immeasurably – the deal with the first generation iPhone was unattractive at best; prohibitive at worst. It’s just a shame it’s worked out worse in the US.

Opal Tribble

@Turbine Seaplane,
If I had the first generation I definitely would not purchase the second. I like the new features but I want to see more. I think we’ll see one before than but I’m just guessing here however when the new one is released I would like them to open it to other carriers, not everyone wants to be locked in to AT&T.

The $10 extra didn’t bother me too much I know that everyone sees it differently. What really annoys me is the in-store activation that will be required. I would rather do that at home. I know why they are doing it to cut down on jailbroken phones but I’m betting people will find ways to get around that.

Thanks for the catch.

Yes, it’s actually more if you get text messages. I was going by the bare minimum I should have made that point clearer.

I’m with you I would rather pay the full price up front. Apple decided to buck the current trend and offer the full price up front but according to stats Americans for the most part did not like that model at all, so in order to make more sales they went the subsidized route, pay less up front, but pay more later.

Up that talk time I like that they also have rollover minutes something I wish Verizon offered.

Sachin Patel,
I’ve heard that a few other countries appear to be getting a better deal on the iPhone 3G. A free iPhone 3G would be nice. I got my current phone (LG) for free. I’m currently hunting around for a replacement.

I think Apple changed its tune because people weren’t buying as many iPhones as they had hoped. Subsidized phones are common in the USA so a much higher priced phone made many I imagine not want to purchase it no matter how much they wanted it.

Peter cultard,
I’m sure they will be unlocked. Their are a few more obstacles that people that want to unlock them have to get through but I’m betting it will happen.

It definitely is a smart move by Apple & AT&T to go this route, not that I like it. I would definitely prefer to pay up front, but a subsidized iPhone would not stop me from buying one if it were available to Verizon customers. My first phone was free, but my next one I’ll have to pay for since it is under two years.


Such practice is not uncommon here in Singapore. Most of the phones sold in the market from telcos are heavily subsidized, and in return, you enter into a 2 year contract. On one hand, they reduce the churn from their subscribers, and they get to recoup the subsidy in the first place. Some phones are so heavily subsidized, you pay $0 for the phone.

As for the iPhone, I’ve already pre-ordered it. Guess that’s the effect of taking so long to get here.


I’m a little surprised really, after Apples rhetoric last year about changing the way phones are used, bought, paid for etc. It just shows you can’t believe what anyone says, when huge sums of money are involved.

Anyway, I’m extremely happy with my unlocked, activated, jailbroken 1.1.4 8gb iphone. The only thing I would consider upgrading for is the GPS, but if Apple actually enabled the proper bluetooth profiles that the phone already has in it’s software, then a $30 bluetooth keyfob GPS would be useful. I gotta keep my 5 year old PDA around just because of this.

Sachin Patel

It seems that, for one, here in the UK we may be getting a better deal on the iPhone than over in the USA. Not only do O2’s tariffs for the iPhone start at only £30 a month ($60), but it seems that they’re also going to be releasing it on Pay as you Go as well, in order to make it more appealing to a younger market. Finally, on certain tariffs, the iPhone will be free.


I’m getting one… I can’t take Edge for one more day and I can’t believe I pay 20 p/m for it!

Based on what I see at the ATT site, it’s a wash for me. They upped the cost for the data plan to 30 (for every phone, not just the iPhone) but, they lowered the talk time costs. It looks like my family plan cost will remain the same for me. One other note… I didn’t see any mention about texting options?


i have a gen1 iphone i purchased just after the big initial price drop. at first i sincerely thought about selling my phone and buying the new 3G version- right up until i heard about service plan price hikes. i honestly wish they would have just stuck with the original plan. you paid what the phone was worth (debatable, sure), and the service plan was competitive and not so much more expensive that it was too hard to swallow. $20 extra was one thing, $30 extra is approaching twice what people are used to paying for monthly cell service.

also what bothers me deeply is that because of this new subsidized scheme, they are getting rid of one of the really impressive parts of buying the phone- home activation through itunes. sure, it’s something you only experience once in the phone’s lifetime but it’s one of those first impressions that lasts.

no, i will not be purchasing the new 3G phone and yes it is because of the higher monthly service cost. i would rather pay the extra $200 up front than pay ANOTHER $10/mo for the entire lifetime of the product.

(@ Shawn- where did you read no text messages are included in that price? i find that extremely hard to believe.)


Will not be purchasing new 3G phone due to price increase. It actually higher than $240 new plan does not include text messages. $360


AT&T’s service is Flintstonian, at best, and a $10.00 increase sounds like they decided on an amount, less by studying the impact would have on their system than by how much they can possibly squeeze out of the consumer. They can make up the difference by garnering a new/larger customer base, but they opted for the jugular instead.

I’m happy with my 8GB iPhone, but I can’t keep throwing money at AT&T simply because they think that they have me by the short ones. $10 spread out among the hundreds of thousands of consumers is not unlike the windfall that the oil companies are enjoying – not out of this pocket.


I have a 1st Gen iPhone and will not be purchasing a new 3G one.

3G is nice, but for the increased monthly costs, there just aren’t enough new features to justify it for me.

Personally, I think the new v2 software will be the big splash, and you certainly don’t need the new phone for that.

Also, I anticipate ANOTHER new iPhone NEXT June, probably with more of the features we all KEEP complaining about and wanting, yet not getting.

I’ll wait until then.

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