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?


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